Editor's Note
The following document provides a monthly roundup summarizing enforcement actions, guidance, rulemakings, and other public statements from the Consumer Financial Protection Bureau, the Federal Trade Commission, and the occasional state regulator 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. Fair Credit Reporting Act. On January 11, 2024, CFPB issued two advisory opinions to consumer reporting companies to address inaccurate background check reports, as well as sloppy credit file sharing practices. CFPB's advisory opinion on background screening highlights that those reports must be complete, accurate, and free of information that is duplicative, outdated, expunged, sealed, or otherwise legally restricted from public access. CFPB's advisory opinion on file disclosure highlights that consumers are entitled to receive all information contained in their file at the time they request it, along with the source or sources of the information contained within, including both the original and any intermediary or vendor source.
  • Consumer Financial Protection Bureau. Overdraft Fees. On January 17, 2024, CFPB proposed a rule that would close a loophole that exempts overdraft lending services from provisions of the Truth in Lending Act and other consumer financial protection laws. President Joe Biden and CFPB Director Rohit Chopra issued separate statements about the proposed rule.
  • Consumer Financial Protection Bureau. Junk Fees. On January 24, 2024, CFPB proposed a rule that would consider fees for transactions declined in real time to be an abusive practice under the Consumer Financial Protection Act. The rule would cover banks, credit unions, and certain peer-to-peer payment companies. Comment period will end on March 25, 2024.

Enforcement and Litigation

  • California Department of Financial Protection & Innovation. California Consumer Financial Protection Law. On January 9, 2024, DFPI announced that it had issued a consent order against Credova Financial, LLC, as part of an effort to protect consumers from hidden or so-called "junk" fees. According to the consent order, Credova charged convenience fees when consumers chose to pay their installments online or over the phone but failed to disclose information regarding the fees when consumers entered into installment payment contracts. The consent order requires Credova to pay a $50,000 penalty and disclose potential third-party convenience fees to consumers in the future.
  • Consumer Financial Protection Bureau. Fair Debt Collection Practices Act. On January 2, 2024, CFPB filed an amicus brief in the First Circuit arguing that debt collectors are strictly liable for deceptive conduct absent an affirmative showing that the bona fide error defense applies.
  • Consumer Financial Protection Bureau. Telemarketing Sales Rule. On January 10, 2024, CFPB and seven state attorneys general sued Strategic Financial Solutions (SFS) and its affiliates, alleging that the enterprise collected hundreds of millions of dollars from vulnerable consumers by charging illegal advance fees and falsely claiming that its lawyers will negotiate lower payoff amounts. The suit alleges the actions of SFS violate the Telemarketing Sales Rule and New York and Wisconsin state laws. The suit was filed under seal and announced on January 19, 2024.
  • Department of Justice. Food, Drug and Cosmetic Act. On January 12, 2024, Justice announced that Defyned Brands (aka 5 Star Nutrition LLC) pled guilty to a three-count information charging it with distributing misbranded dietary supplements in federal district court in Austin, Texas. The products at issue were marketed as workout supplements and sold at 5 Star Nutrition retail locations. As part of the plea, the company agreed to forfeit $4.5 million and comply with the terms of a compliance program and reporting requirements.
  • Department of Justice. Telemarketing Sales Rule. On January 19, 2024, DOJ announced that the federal district court in Santa Ana, California, had accepted the settlement of its suit against Response Tree LLC and its president for violating the Telemarketing Sales Rule by assisting and facilitating illegal telemarketing campaigns by operating as an unlawful lead generator and consent farm. The court entered but suspended a $7 million civil penalty based on defendants' inability to pay, which suspension will be lifted if their financial condition has been misrepresented. The settlement agreement was first announced by FTC on January 2, 2024, the same day that a settlement agreement in a related case was announced with XCast Labs, Inc. That agreement has not yet been accepted by the court.
  • Federal Trade Commission. Combating Auto Retail Scams Rule. On January 4, 2024, FTC and the State of Connecticut announced that they were taking action against Manchester City Nissan, along with its owner and a number of key employees of the auto dealer, for systematically deceiving consumers about the price of certified used cars, add-ons, and government fees. The case will be decided by the court.
  • Federal Trade Commission. Consumer Location Data. On January 18, 2024, FTC proposed an order that prohibits InMarket Media from selling or licensing consumers' precise location data. This order follows FTC's similar January 9, 2024, order prohibiting data brokers X-Mode Social and Outlogic from selling or licensing consumers' precise location data.
  • Federal Trade Commission. Deceptive Promises. On January 24, 2024, FTC charged online cash advance provider FloatMe and its co-founders with multiple violations of the FTC Act, the Restore Online Shoppers' Confidence Act, and the Equal Credit Opportunity Act. The firm and its co-founders will provide $3 million to FTC to refund customers as part of a settlement order.
  • Federal Trade Commission. Illegal Robocalls. On January 30, 2024, FTC and FCC provided an update on enforcement of "Project Point of No Entry," which targeted Voice over Internet Protocol (VoIP) service providers and warned that they must work to keep illegal robocalls out of the country. FCC's Robocall Response Team said that the interagency effort to combat international robocalls appeared to have reduced apparent illegal robocall traffic across multiple networks.
  • Federal Trade Commission. Telemarketing Sales Rule. On January 31, 2024, FTC announced that a federal district court had entered final orders against a telemarketing company, EduTrek, LLC, and its owners, who made millions of illegal, unsolicited calls to people that were registered on the Do Not Call Registry. A summary of the case and timeline can be found here.

Research and Analysis

  • Consumer Financial Protection Bureau. Student Loan Payments. On January 5, 2024, CFPB published a report on the challenges faced by borrowers in their resumption of student loan payments. Key concerns raised in the report include: long hold times and abandoned calls; significant delays in processing income-driven repayment plan applications; and inaccurate and untimely billing statements. CFPB Director Rohit Chopra issued a statement on the Report's release.

Rulemaking Updates

  • Consumer Financial Protection Bureau. Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications Rule. On January 30, 2024, Chairman of the House Financial Services Committee, Patrick McHenry (NC-10), Rep. French Hill (AR-02), and Rep. Mike Flood (NE-01) sent a letter to CFPB Director Rohit Chopra regarding the Bureau's proposed rule. The lawmakers are urging CFPB to reopen and extend the public comment period by 60 days "given the proposed rule's wide-sweeping implications and existing ambiguities." The rule was proposed on November 7, 2023, and comments closed on January 8, 2024.
  • Federal Trade Commission. Fake Reviews and Testimonials. FTC will hold an informal hearing on its proposed rule banning fake reviews and testimonials at 10 a.m. ET on February 13, 2024.
  • Federal Trade Commission. Combating Auto Retail Scams Rule. On January 18, 2024, FTC issued an order postponing the effective date of the CARS Rule while a petition for review challenging the rule in the Fifth Circuit is pending. No new effective date was announced.
  • Federal Trade Commission. EnergyGuide Labeling Rule. FTC seeks public comments on January 16, 2024, proposed improvements to the Energy Labeling Rule.

Other News of Note

  • Consumer Financial Protection Board. Imposter Scams. On January 16, 2024, CFPB published a new warning to consumers that scammers are using CFPB employees' names to try to defraud members of the public by asking consumers to pay an upfront fee or taxes to participate in a class-action lawsuit or collect lottery winnings, among other scams.

Jonathan Cristol is a regulatory analyst with Davis Wright Tremaine LLP.