Download Wiley Consumer Protection (January 4, 2021) | Wiley Rein LLP
Welcome to Wiley’s update on recent developments and next steps in consumer protection in the Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC). In this newsletter, we analyze recent regulatory announcements, recap key enforcement actions, and preview upcoming deadlines and events. We also include links to our articles, blogs and webinars with more analysis in these areas. We understand that staying on top of the rapidly changing regulatory landscape is more important than ever for companies looking to deliver new and breakthrough technologies.
FTC data shows that gift cards remain the preferred payment method for scammers. At December 21, the Federal Trade Commission (FTC) issued a new data analysis showing that since 2018, gift cards remain the most common payment method when consumers report financial losses due to scams. The most common scams involving gift cards as a method of payment include government impostors, family impostors, business impostors, and fraudulent tech support programs. The scammers of these schemes convince consumers to pay with gift cards. The FTC begins a new campaign partnering with retailers across the country to prevent consumers from being victimized. Information and advice for consumers can be found here.
The CFPB issues an advisory opinion on the application of the ECOA to special purpose credit programs. At 22 december, the Consumer Financial Protection Bureau (CFPB) issued a Advisory opinion to resolve regulatory uncertainty regarding Regulation B, which implements the Equal Credit Opportunity Act (ECOA), regarding Special Purpose Credit Programs (SPCP). The ECOA and Regulation B prohibit discrimination on certain grounds in any aspect of a transaction, but clarify that it is not discrimination for for-profit organizations to provide PPSC to meet certain social needs. The CFPB advisory opinion aims to clarify what content an organization should include in a written plan that administers an ECOA and B-compliant SPCP, and the type of research and data that may be appropriate to inform a determination that an SPCP is necessary to benefit a certain class of persons.
The CFPB issues compliance assistance sandbox approval orders to two entities. At December 30, the CFPB has issued Compliance Assistance Sandbox (CAS) approval orders for Synchrony and PayActiv. The CAS approval orders issued by the CFPB provide entities facing regulatory uncertainty a “safe harbor” from liability under certain specified legal provisions, subject to good faith compliance with the terms of the order. Synchrony has obtained its CAS approval order for its plan to offer a “dual-functionality credit card,” which provides for secure use upon issuance, but allows customers to meet certain eligibility thresholds over time. get unsecured features. The Synchrony card is designed for consumers with a limited or damaged credit history as a method of building a favorable credit history. The Ordinance provides a safe haven for the business from liability under the Truth in Lending Act (TILA) and Regulation Z, to the extent that its conduct complies with the Ordinance. PayActiv’s CAS approval order, meanwhile, is tied to certain aspects of its Earned Wage Access (EWA) products. These EWA products allow employees to access their earned but unpaid wages before payday. The Order confirms that the Payactiv EWA Program, in the circumstances described in its request, does not imply the offer or extension of “credit” as defined by Regulation Z.
Important enforcement measures
CFPB settles any violations of the funds transfer rule with the money transfer provider. At December 21, the CFPB announced that it was settling with Envios de Valores La Nacional (La Nacional) alleged violations of the Electronic Fund Transfer Act (EFTA) and the Remittance Transfer Rule. The funds transfer rule, which implements EFTA, requires providers to honor money transfer cancellation requests and reimburse fees and taxes when funds are not available on time. . The CFPB concluded that La Nacional had broken the fund transfer rule thousands of times since 2013. Consent order demands that La Nacional adopt a compliance plan to ensure that its fund transfer actions comply with applicable federal consumer finance laws.
CFPB resolves suspected auto loan credit report violations with Santander. At 22 december, the CFPB issued a Consent order against Santander Consumer USA Inc. (Santander) after the agency found it violated the Fair Credit Reporting Act (FCRA). Specifically, the CFPB found that Santander provided erroneous consumer loan data to consumer information agencies (CRAs) in connection with unsecured leases and auto loans. The CFPB alleges that the information Santander provided to rating agencies between 2016 and 2019 contained systemic errors that could have negatively impacted consumer credit ratings in many cases. The CFPB consent order requires Santander to take a number of steps to prevent future violations and imposes a civil penalty of $ 4,750,000.
FTC settles with the maker of Superglue for making “Made in USA” misleading claims. At 22 december, the FTC settled charges with Chemence, Inc. (Chemence) that the company supplied pre-labeled and prepackaged glues with deceptive “Made in USA” labels. The FTC complaint alleges that Chemence also violated a 2016 Settlement Order with the agency. The Proposed settlement demands that Chemence pay the FTC $ 1.2 million, the highest monetary judgment ever recorded for a Made in USA case.
The CFPB issues a consent order against a provider and manager of student loans. At 22 december, the CFPB published a Consent order v Discover Bank, The Student Loan Corporation and Discover Products, Inc. (collectively, Discover) after the agency found Discover had violated an agency’s prior consent order, EFTA and the Consumer Financial Protection Act of 2010 (CFPA). The agency alleged that Discover violated a 2015 order by distorting the minimum loan payments consumers owed, the amount of interest paid by consumers, and other important information, such as interest rates, payments , expiration dates and availability of rewards, and that it has failed to provide a full remedy to the consumer under the order. Further, the CFPB found that Discover violated EFTA and CFPA by, among other things, withdrawing payments from more than 17,000 consumer accounts without valid authorization. The CFPB consent order requires Discover to pay a civil fine of $ 25 million.
Defendants settle FTC charges that they participated in the “Sanctuary Belize” real estate scam. At December 29, the FTC announcement settlements with ten individual and corporate defendants over charges that they participated in, benefited from or controlled the allegedly deceptive marketing of the “Sanctuary Belize” real estate development in southern Belize. Specifically, the FTC complaint in the United States District Court for the District of Maryland alleges that the defendants misled consumers about the amenities of the development, the time it would take for the project to be completed and the ability to resell the purchased lots. The defendants agreed to general orders limiting their future business practices and requiring them to give up assets likely equal to more than $ 500,000 in consumer redress.
CFPB settles with military lender over CFPA, EFTA and MLA violations. At December 30, the CFPB announcement a settlement with Omni Financial of Nevada (Omni) for alleged violations of the CFPA, EFTA and the Military Lending Act (MLA). Omni specializes in loans to consumers affiliated with the military. The MLA provides protections for military personnel and their dependents with respect to consumer credit extensions, including prohibiting requirements that loans to military borrowers must be repaid by attribution of income. The CFPB found that Omni had repeatedly violated the MLA’s ban on attribution requirements since October 2016. The CFPB also found that Omni had violated the CFPA and EFTA by requiring consumers to authorize Omni to withdraw funds from their accounts as a condition of receiving credit. CFPB Consent order forces Omni to pay a civil fine of $ 2.175 million.
Deadlines and upcoming events for comments
Agencies are seeking comments on the role of prudential guidance. Comments are due January 4th on a NPRM issued by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration and the CFPB (collectively, the Agencies) which would codify the 2018 Inter-agency statement clarifying the role of prudential guidance (the 2018 Declaration). By codifying the 2018 Declaration, the NPRM would confirm that the Agencies intend to respect the limits of administrative law in exercising oversight responsibilities. Consequently, the prudential guidelines do not create binding legal obligations for the public.
The FTC is seeking research presentations for PrivacyCon 2021. The FTC has called for research presentations on a wide range of privacy and security issues as part of its sixth ConfidentialityCon, to be held on July 27, 2021. The FTC is researching issues such as evolving privacy and security risks; privacy and security issues associated with working from home; the costs and benefits of privacy and security; the effectiveness of information on consumer privacy and security; algorithmic bias and fairness in algorithms; and consumer privacy technologies. Research submissions are due April 9, 2021 and more information on submitting presentations can be found here.