The following document provides a monthly roundup summarizing enforcement actions, guidance, rulemakings, and other public statements from the Consumer Financial Protection Bureau and the Federal Trade Commission regarding the prohibition on unfair, deceptive, or abusive acts or practices (UDAAP) in the marketplace for consumer financial services.


Enforcement and Litigation

  • Federal Trade Commission & Utah. Fraud & Endorsements. The FTC and Utah Division of Consumer Protection publicized an agreement with the principals of a Utah-based real estate investment training company to resolve allegations that defendants used false promises to sell consumers a series of expensive real estate investment training programs. According to the complaint, defendants enlisted real estate television celebrities to endorse the programs. The agencies asserted the companies and individuals violated 15 U.S.C. § 45, 16 C.F.R. Part 310, and the Utah Consumer Sales Practices Act, Utah Code § 13-11-1 et seq., the Business Opportunity Disclosure Act, Utah Code § 13-15-1 et seq., and the Telephone Fraud Prevention Act, in the marketing and sale of real estate training services. Under the agreement, defendants will pay $15 million and be banned from selling moneymaking opportunities. (UDAAP Enforcement Focus: Deceptive).
  • Federal Trade Commission. Student Loans. The FTC took action to stop a pair of alleged student loan debt relief schemes (#1 and #2) that it says bilked students out of approximately $12 million by using deceptive claims about repayment programs and loan forgiveness that did not exist. The company claimed to be or be affiliated with the Department of Education and that payments to the companies would be counted towards reducing their loan balances. In both cases, the defendants are accused of violating 15 U.S.C. § 45(a), 16 C.F.R. Part 310, 15 U.S.C. § 6821. In one of the cases, defendants were also accused of violating CARES Act (45 CFR Part 182). (UDAAP Enforcement Focus: Deceptive, Unfair).
  • Federal Trade Commission. Debt Collection. The FTC announced that a federal court issued stipulated orders for permanent injunction and monetary judgment to resolve allegations that several individuals and their affiliated companies provided fraudulent credit card debt relief services by engaging in deceptive telemarketing, making phony debt relief promises, and charging deceptive up-front fees to consumers, all in violation of 15 U.S.C. § 45 and 16 C.F.R. Part 310. The individuals were accused of taking tens of millions of dollars from people by falsely promising to eliminate or substantially reduce their credit card debt. (UDAAP Enforcement Focus: Deceptive).
  • Federal Trade Commission. Debt Relief & Advertising. The FTC will refund payments totaling more than $557,000 to consumers who paid a Florida-based telemarketing company that made misrepresentations and omissions regarding debt relief services through permanently reduced credit card interest rates. Additionally, the complaint alleged that the company failed to deliver on its promise that consumers would be able to pay off their debt faster and save thousands of dollars using their services, all in violation of 15 U.S.C. § 45(a), and misrepresented material aspects of the company’s debt relief services, in violation of 16 C.F.R. § 310.3(a)(2)(x), among other federal and state laws. (UDAAP Enforcement Focus: Deceptive, Unfair).
  • Consumer Financial Protection Bureau. Installment Lenders. The CFPB released a consent order and stipulation requiring a large installment lender to pay $20 million in redress and penalties to resolve accusations of failing to refund interest charged to 25,000 customers who cancelled purchases within a purported “full refund period,” and for deceiving borrowers about needing to purchase add-on products to receive a loan, all in violation of 15 U.S.C. § 45. The company is accused of directing and training its employees to imply that the optional add-on products would be cancelled within 30 to 45 days of the purchase and in some cases customers were not provided a full refund of interest attributable to the products. (UDAAP Enforcement Focus: Abusive, Deceptive, Unfair).
  • Pennsylvania Attorney General. Fintech & Debt Collection. The PA AG reached an $11 million settlement with a digital finance company to resolve claims that it had preyed on and targeted low-income Pennsylvanians via “rent-to-own” agreements and then concealed the balances owed. The company also allegedly engaged in deceptive collection practices by locking consumers into binding agreements while misleading consumers about the details in those agreements. The company is alleged to have violated: the Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201-1, et. seq.; (ii) the Rental-Purchase Agreement Act, 42 Pa.C.S.A. §§ 6901, et seq.; (iii) the Goods and Services Installment Sales Act, 12 Pa.C.S.A. §§ 6301, et seq.; and (iv) the Fair Credit Extension Uniformity Act, 73 P.S. §§ 2270.1, et seq. (UDAAP Enforcement Focus: Deceptive).

 

Rulemakings and Guidance

  • Federal Trade Commission. Artificial Intelligence (AI) & Privacy. The FTC issued a policy statement, warning that the increasing use of consumers’ biometric information and related technologies, including those powered by machine learning, raises significant consumer privacy and data security concerns and the potential for bias and discrimination in violation of Sec. 5 of the FTC Act, 15 U.S.C. § 45. Included in the guidance are concerns related to using AI-generated biometric technology to access consumer bank accounts. (UDAAP Regulatory Focus: Deceptive, Unfair).

 

Michael Buckalew is a regulatory analyst with Davis Wright Tremaine LLP.