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

  • Consumer Financial Protection Bureau & Federal Trade Commission. Fair Credit Reporting Act (FCRA). CFPB & FTC filed a joint complaint and stipulated proposed order against a rental screening subsidiary of a credit reporting agency for alleged violations of 15 U.S.C. §§ 1681-1681x (FCRA) and 15 U.S.C. § 45(a) (FTC Act), related to ensuring maximum possible accuracy of its tenant screening reports and for failing to honor security freeze and lock requests. In particular, the agencies alleged that the subsidiary failed to take steps to ensure the rental background checks that landlords use to decide who gets housing were accurate, and that the subsidiary also withheld from renters the names of third parties that were providing the inaccurate information. (Alleged UDAAP violations: deceptive, unfair).
  • Federal Trade Commission & Commodity Futures Trading Commission. Digital Assets & Fraud. FTC announced a settlement with a bankrupt cryptocurrency company to resolve allegations that the company falsely claimed that customers' accounts were "safe" because they were insured by the FDIC, when those assets were not in fact insured, in violation of 15 U.S.C. § 45(a) (FTC Act) and U.S.C. § 6821 (GLB Act). The settlement permanently bans the company from handling consumers' assets. FTC also sued the company's former CEO for directing and participating in the false claims. Separately, CFTC filed a complaint against the former CEO regarding alleged fraud and registration failures in connection with the company's digital asset platform and its operation of an unregistered commodity pool. Additionally, Comm'r. Pham released a statement in support of the agency's action. (Alleged UDAAP violations: deceptive).
  • Federal Trade Commission. Merchant Cash Advance (MCA). FTC announced that a federal court granted summary judgment against an MCA company, and an individual regarding allegations that they violated 15 U.S.C. § 45(a) (FTC Act Sec. 5), deceived small businesses and other organizations by misrepresenting the terms of MCAs the business provided, and then used unfair collection practices, including sometimes threatening physical violence, to compel consumers to pay. (Alleged UDAAP violations: deceptive, unfair).
  • Federal Trade Commission. Debt Collection. FTC announced that two groups of student loan debt relief companies (#1 & #2) will be permanently banned from the industry and will be required to turn over their assets as part of parallel settlements (#1 & #2) to resolve allegations that the companies violated 15 U.S.C. § 45(a) (FTC Act), 16 C.F.R. Part 310 (Telemarketing Sales Rule), 15 U.S.C. § 6821 (GLB Act). The companies were alleged to have made deceptive claims about repayment programs and loan forgiveness that did not exist. Additionally, the companies claimed to be affiliated with the Department of Education. Finally, they were also alleged to have falsely claimed that payments to the companies would be counted towards reducing their loan balances. (Alleged UDAAP violations: deceptive, unfair).
  • Federal Trade Commission & Wisconsin. "Junk Fees" & UDAAP. FTC and Wisconsin filed a complaint against a group of auto dealerships and several individuals in their capacities as current or former owners and a general manager, for allegedly deceiving consumers by tacking hundreds or even thousands of dollars in "junk fees" as add-ons in credit transactions and for discriminating against American Indian customers by charging them higher financing costs and fees in violation of 15 U.S.C. § 45(a) (FTC Act Sec. 5). These "junk fees" included "add-on" products or services such as Guaranteed Asset Protection Insurance, which were allegedly added without authorization or through deception. (Alleged UDAAP violations: deceptive, unfair).
  • Federal Trade Commission. Income Share Agreements (ISAs) & UDAAP. FTC and New Jersey filed a complaint and stipulated order to resolve allegations that an educational institution and its parent company, used deceptive advertisements to attract students and trap them in multi-year ISAs in violation of 15 U.S.C. § 45(a) (FTC Act Sec. 5) and 16 C.F.R. Part 433 ("Holder Rule"). The company's ads allegedly misrepresented the rates and timelines in which consumers were placed in jobs as well as companies that they partnered with for placements. (Alleged UDAAP violations: deceptive)

Rulemakings & Guidance

Federal Trade Commission. "Junk Fees." FTC proposed a new rule to prohibit "junk fees," defined as hidden and bogus fees that can harm consumers and undercut honest businesses, under, 15 U.S.C. 45(a)(1) (FTC Act, Sec 5(a)). The deadline for comments is 60 days after publication in the Federal Register. Additionally, the agency issued a blog post on the topic. Separately, Chair Khan gave remarks on the rulemaking. (UDAAP regulatory focus: deceptive, unfair).

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