Consumer Financial Protection Bureau

The Consumer Financial Protection Bureau (CFPB) and New York Attorney General Letitia James took action against companies that allegedly took advantage of 9/11 victims. RD Legal Funding, two related entities, and the companies’ founder and owner, Roni Dersovitz, allegedly engaged in deceptive and abusive acts in connection with offering cash advances to people on their settlement payouts from victim-compensation funds. If entered by the court, the proposed settlement will provide more than $600,000 in debt relief for consumers, bar the defendants from doing business with any potential recipients of governmentally created 9/11 victim-compensation funds, and impose a $1 civil money penalty. Imposition of the $1 civil money penalty allows consumers in the case to potentially obtain compensation from the CFPB’s victims relief fund.

The CFPB settled with Carrington Mortgage Services over allegations the company denied homeowners CARES Act protections. According to the consent decree, Carrington misled certain homeowners who had sought a forbearance under the CARES Act into paying improper late fees, deceived consumers about forbearance and repayment options, and inaccurately reported the forbearance status of borrowers to credit reporting companies To resolve the case, Carrington agreed to repay any late fees not already refunded, repair its faulty business practices, and pay a $5.25 million penalty that will be deposited into the CFPB’s victims relief fund.

Federal Trade Commission

The Federal Trade Commission (FTC) announced a $100 million settlement with internet phone service provider Vonage arising from allegations the company imposed unlawful fees and created unfair and deceptive obstacles to those who try to cancel their service. The FTC alleges that the company used dark patterns to make it difficult for consumers to cancel and often continued to illegally charge them even after they spoke to an agent directly and requested cancellation. Under the proposed court order, Vonage will be required to pay $100 million in refunds to consumers harmed by the company’s actions, make its cancellation process simple and transparent, and stop charging consumers without their consent.

The FTC issued a Policy Statement regarding its interpretation of Section 5 of the FTC Act and its intent to rigorously utilize that authority to police unfair methods of competition. The statement reversed a 2015 statement in which the Commission declared that it would apply Section 5 using the Sherman Act “rule of reason” test, which asks whether a given restraint of trade is “reasonable” in economic terms. The new statement replaces that policy and explains that limiting Section 5 to the rule of reason contradicted the text of the statute and Congress’s clear desire for it to go beyond the Sherman Act. The vote to adopt the policy statement was 3-1 with Commissioner Wilson voting no and issuing a dissenting statement.

The FTC is sending payments totaling more than $9.8 million to consumers who were harmed by Illinois-based Napleton Automotive Group’s allegedly unlawful fees and discriminatory practices. The agency is sending 66,355 checks, averaging $147 each. The FTC and the State of Illinois sued Napleton Automotive Group in March 2022, alleging that Napleton employees were sneaking illegal junk fees for unwanted “add-ons” onto vehicle purchases and discriminating against Black consumers.

The FTC settled with DK Automation and its owners, Kevin David Hulse and David Shawn Arnett for making unfounded claims of big returns to entice consumers into moneymaking schemes involving Amazon business packages, business coaching, and cryptocurrency, according to the FTC’s complaint. A proposed court order would require the defendants to pay $2.6 million to be used to refund consumers and requiring them to cease any deceptive earnings pitches.

The FTC is exploring changes to the Business Opportunity Rule, seeking comment from the public on the rule’s effectiveness and a potential expansion to the rule to cover other types of money-making opportunities, such as coaching or mentoring programs, e-commerce opportunities, or investment opportunities. The FTC is inviting the public to comment not only on the potential expansion of the rule, but also on the effectiveness of the existing rule, including whether it should be retained or eliminated, as well as other changes that should be made to the rule. Comments will be accepted for 60 days after the notice is published.

In Other Federal News

The Federal Communications Commission (FCC) announced that for the first time, a provider of voice services was cut off from other networks for allegedly failing to meet robocall mitigation requirements. Global UC was ordered removed from the Robocall Mitigation Database which, according to the agency’s order “requires all intermediate providers and terminating voice service providers to cease accepting the Company’s traffic.”

The FCC clarified that “ringless voicemails” are subject to robocalling rules. Callers must obtain a consumer’s consent before delivering a message to a consumer’s mailbox without ringing their cell phone. The unanimous decision by the full Commission finds that ringless voicemails are, in fact, “calls” that require consumers’ prior express consent. The declaratory ruling and order denies a petition filed by All About the Message, LLC, which asked the Commission to find that delivery of a message directly to a consumer’s cell phone voicemail is not a call protected by the TCPA.

The U.S. Food and Drug Administration (FDA) issued warning letters to five firms for selling E-cigarettes that look like toys, food, and cartoon characters. The FDA alleged that the products were likely to promote use by youth and that none of the manufacturers submitted a premarket application for any of the unauthorized products, some of which were designed to imitate foods like popsicles, look like toys such as glow sticks, Nintendo Game Boys, and walkie-talkies, and youth-appealing characters from TV shows, movies, and video game characters, including “The Simpsons,” “Family Guy,” and “Squid Game.”

The Securities and Exchange Commission (SEC) announced charges against the creator of an alleged global cryptocurrency Ponzi scheme and three promotors in connection with a $295 million fraud. Douver Torres Braga, Joff Paradise, Keleionalani Akana Taylor, and Jonathan Tetreault were charged for their roles in Trade Coin Club, an alleged fraud that victimized more than 100,000 investors worldwide.

The SEC charged Goldman Sachs Asset Management, L.P. (GSAM) for failing to follow its policies and procedures involving ESG investments. Under the SEC’s order, GSAM agreed to pay a $4 million penalty related to its alleged failure to develop standards for Environmental, Social, and Governance (ESG) investments for one product and its failure to follow policies and procedures once they were established.

The U.S. Department of Justice announced the arrest of two Estonian citizens in Tallinn, Estonia, for their alleged involvement in a $575 million cryptocurrency fraud and money laundering conspiracy. According to court documents, Sergei Potapenko and Ivan Turõgin, both 37, allegedly defrauded hundreds of thousands of victims through a multi-faceted scheme involving the defendants’ cryptocurrency mining service called HashFlare and a cryptocurrency bank called Polybius Bank. In reality, Polybius was never actually a bank, and never paid out promised dividends and the revenue generated by HashFlare was allegedly grossly overstated.

Charities News

District of Columbia Attorney General Karl Racine announced that his office succeeded in stopping a charity that provides affordable housing to low-income District residents, from attempting to sell their property for allegedly private purposes in violation of District non-profit law. In response to the District’s request for a temporary restraining order, the court paused the property sale while it considers Janet Keenan Housing Corporation’s request for approval to sell its property. In addition to the request for emergency relief, the District also filed a complaint against the organization for violations of the District’s Nonprofit Corporation Act and common law.

Attorneys general from across the country provided tips to potential charitable donors in advance of Giving Tuesday. California Attorney General Rob Bonta, Florida Attorney General Ashley Moody, Indiana Attorney General Todd Rokita, Massachusetts Attorney General Maura Healey, New York Attorney General Letitia James, and Virginia Attorney General Jason Miyares urged donors to use caution to ensure their contributions benefitted legitimate charitable institutions.

Other articles in this edition include:

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