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 & Florida. Operators of Credit Card Systems. FTC and FL Attorney general filed suit
against a chargeback mitigation company for allegedly enabling fraudulent merchants to evade or delay the chargeback process for consumers disputing credit card charges. The complaint alleges that a chargeback management company violated the FTC Act, 15 U.S.C. § 45(a), and the FL Deceptive and Unfair Trade Practices Act, Ch. 501, Pt. 2, FL Stat., by using multiple unfair techniques to prevent consumers from successfully winning chargeback disputes. Such techniques include disputing chargebacks with misleading information about the underlying transaction and even editing webpage screenshots to add disclosures to the screenshot that did not appear on the underlying webpages. The complaint also notes that the company disputed tens of thousands of chargebacks on behalf of companies that the FTC had previously sued for deceiving consumers. (UDAAP Enforcement Focus: Deceptive, Unfair).
- Federal Trade Commission & Pennsylvania. Debt Collection. FTC and Pennsylvania announced that a federal district court issued a stipulated order for permanent injunction
against a debt collection company and an officer and manager at the company after finding that defendants had allegedly engaged in bogus debt collection efforts against businesses and non-profits. The defendants were found to have violated the FTC Act, 15 U.S.C. § 45(a), the Unordered Merchandise Statute, 39 U.S.C. § 3009, and the Pennsylvania Unfair Trade Practices And Consumer Protection Law, 73 P.S. § 201-3, in connection with the selling and collection of payment for publication subscriptions. (UDAAP Enforcement Focus: Deceptive, Unfair). The company is out of business, and the individuals are permanently banned from the debt collection industry.
- Consumer Financial Protection Bureau. Payday Lenders. CFPB issued a complaint against two individuals as co-trustees of revocable trusts for allegedly hiding money through a series of fraudulent transfers in order to avoid paying more than $40 million in restitution and penalties for illegal payday lending activities and transferring significant assets to the trusts in an attempt to evade a 2021 agency order against a payday lender and one of the individual co-trustees. This order detailed alleged unfair and deceptive practices and violations of the Electronic Funds Transfer Act and Consumer Financial Protection Act. (UDAAP Enforcement Focus: Deceptive, Unfair).
Rulemakings and Guidance
- Interagency (Federal). Artificial Intelligence (AI) & Automated Decision Making. Four federal agencies released a joint statement on enforcement efforts against discrimination and bias in automated systems, including those using AI. Separately, the CFPB Director, FTC Chair, EEOC Chair, and DOJ’s Civil Rights Division issued remarks regarding the statement. The CFPB emphasized that their policy statement on abusive conduct "would cover abusive uses of AI technologies." (UDAAP Regulatory Focus: Abusive Deceptive, Unfair). Additionally, The FTC noted that "There is no AI exemption to the laws on the books, and the FTC will vigorously enforce the law to combat unfair or deceptive practices or unfair methods of competition."
Public Statements, Reports & Other Items of Note
- Federal Trade Commission. Servicemembers & Fraud. FTC’s Consumer Protection Bureau Deputy Director testified
before the Senate Committee on Veterans’ Affairs about the work the agency is undertaking related to fraud and threats against veterans and the broader military community. Additionally, the agency called for legislation to restore its authority to seek monetary relief under §13(b). (UDAAP Regulatory Focus: Deceptive, Unfair).
- Consumer Financial Protection Bureau. Junk Fees. CFPB Senior Advisor Shearer appeared before a Pennsylvania State House Committee to testify at a hearing on “junk fees.” His remarks included a discussion of federal efforts to crack down on the practice and measures states can take against junk fees where statutes have been enacted that generally prohibit unfair or deceptive acts or practices. He emphasized the role of state governments to help consumers harmed by “unlawful and unscrupulous business practices” as “States have unique insight into how they can protect their own citizens, and they can often tailor their laws and rules more precisely and act more swiftly than the federal government can.” (UDAAP Regulatory Focus: Deceptive, Unfair).
Michael Buckalew is a regulatory analyst with Davis Wright Tremaine LLP.