Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau (CFPB) took action against the former executive officer of Integrity Advance, a short-term, online lender, James Carnes, and his wife Melissa, 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. James Carnes allegedly attempted to evade a 2021 order requiring him and Integrity Advance to pay restitution and penalties to the CFPB’s victims relief fund. The CFPB is seeking injunctive relief, as well as a money judgment for the value of the fraudulently transferred funds.
The CFPB issued guidance to debt collectors covered by the Fair Debt Collection Practices Act (FDCPA) reaffirming that a debt collector is prohibited from suing or threatening to sue to collect a time-barred debt. The guidance noted that an FDCPA debt collector who brings or threatens to bring a state court foreclosure action to collect a time-barred mortgage debt may violate the FDCPA and Regulation F. This prohibition applies even if the debt collector has no knowledge that the debt is time barred.
Federal Communications Commission
The Federal Communications Commission (FCC) proposed new rules that would require companies with existing authorizations to provide international telecommunications services to and from the United States to file renewal applications at the FCC. The FCC proposed rules are designed to establish a careful review of foreign-owned authorization holders as part of a renewal process involving close consultation with national security, law enforcement, and other members of the Executive Branch.
Federal Trade Commission
The Federal Trade Commission (FTC) approved a final consent order against The Bountiful Company for allegedly abusing a feature of Amazon.com to deceive consumers into thinking that its supplements had more product ratings and reviews, higher average ratings, and “Amazon’s Choice” badges. This case marked the FTC’s first law enforcement action challenging “review hijacking,” in which a marketer steals or repurposes reviews of another product. In addition to injunctive relief the company agreed to pay $600,000 in relief for consumers.
The FTC filed a lawsuit to stop Nexway, a multinational payment processing company, from serving as a facilitator for tech support scammers through credit card laundering. Under terms of the settlement the defendants are prohibited from any further alleged payment laundering and required to closely monitor other high-risk clients for illegal activity. The FTC’s complaint against Nexway alleged that Nexway, and its subsidiaries, were at the center of several offshore tech support scams, processing tens of millions of dollars in charges and giving scammers access to the U.S. credit card network.
The FTC sent 41,934 checks, totaling more than $1.1 million, to consumers who were charged for deceptive “free trial” offers for tooth whiteners and other similar products. The FTC filed a complaint in August 2017, alleging that the defendants used hidden disclosures, deceptive claims, and confusing terms to scam people into providing their personal information, supposedly to pay a nominal fee for tooth whiteners. However, the defendants actually charged consumers for two ongoing subscriptions to identical products until the consumers actively canceled the subscription. As a result, consumers who believed they had bought a single trial product for about $5 were charged without their knowledge approximately $200 a month until they canceled both subscriptions. Under the settlement orders, the defendants will provide refunds to defrauded consumers.
U.S. Department of Justice
The U.S. Department of Justice (USDOJ) seized virtual currency worth an estimated $112 million linked to various cryptocurrency investment scams. The virtual currency accounts were allegedly used to launder earnings from various cryptocurrency confidence scams. In these schemes, fraudsters cultivate long-term relationships with victims met online, eventually enticing them to make investments in fraudulent cryptocurrency trading platforms. However, the funds sent by victims for these investments were instead funneled to cryptocurrency addresses and accounts controlled by scammers and their co-conspirators.
In Other Federal News
The Federal Trade Commission, the Civil Rights Division of the U.S. Department of Justice, the Consumer Financial Protection Bureau, and the U.S. Equal Employment Opportunity Commission released a joint statement outlining a commitment to enforce their respective laws and regulations to promote responsible innovation in automated systems. All four agencies discussed concerns about the possible harmful uses of automated systems.
Ohio Attorney General Dave Yost filed a lawsuit against Ohio Clean Water Fund, an allegedly sham charity that falsely claimed to be collecting donations to benefit residents of East Palestine following the Norfolk Southern train derailment. The complaint alleges that the head of the charity, Mike Peppel, pocketed at least $131,000 of the $141,000 raised from more than 3,000 donors.
Veteran and Military News
Led by Virginia Attorney General Jason Miyares, a bipartisan group of 34 attorneys general filed an amicus brief asking the Supreme Court of the United States to hear the case Rudisill v. McDonough and to protect veterans’ rights. The Department of Veterans Affairs (VA) denied Rudisill his benefits under the Montgomery GI Bill, even though he had completed multiple requisite periods of service and was entitled up to 48 months of educational support. The decision was overturned at the trial court level, but the US Court of Appeals for the Federal Circuit upheld the VA’s decision.
Both the CFPB and the FTC testified before the U.S. Senate Committee on Veterans’ Affairs about the work the agencies are doing to crack down on fraud and related scams targeting veterans and the broader military community. The FTC testified that in addition to law enforcement actions, education and outreach is a vital part of the Commission’s consumer protection and fraud prevention work. Identity theft has been a major focus of the FTC.
The Department of Veteran Affairs announced that Veterans and their survivors have filed more than 500,000 claims for toxic exposure-related benefits under the PACT Act since President Biden signed it into law Aug. 10, 2022. To date, VA has awarded more than $1 billion in earned benefits to Veterans and survivors who filed PACT Act-related claims.
Other articles in this edition include: