Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau proposed a rule to curb excessive credit card late fees. The Bureau alleges that major credit card issuers continue to use late fees that are protected by an expansive immunity provision. Based on the CFPB’s estimates, the proposal could reduce late fees by as much as $9 billion per year.
Commodity Futures Trading Commission
The U.S. Commodity Futures Trading Commission (CFTC) charged Vista Network Technologies, a California-based company, with fraudulent solicitation and misappropriation of customers’ digital asset commodities. In the complaint, the CFTC alleges that Vista fraudulently solicited over $7 million worth of bitcoin from customers. The complaint also alleges that a portion of these assets were misappropriated in a Ponzi-like scheme.
The CFTC filed a civil enforcement action against Yas Castellum LLC of Denver, Yas Castellum Financial LLC of Wailuku, and SAEG Capital General Management LP, charging fraud and misappropriation. Beginning in April 2020, these companies were allegedly involved with three interconnected commodity pool scams that fraudulently solicited and misappropriated pool participant funds.
Federal Communications Commission
Federal Communications Commission Chairwoman Jessica Rosenworcel proposed new rules to block illegal robotexts. If adopted by a vote of the full commission at its March Open Meeting, requirements will include:
- Mobile service providers must block texts that purport to be from numbers for which the actual subscriber has said it does not send legitimate text messages (including government agencies and other well-known entities).
- Providers must block texts carrying invalid, unallocated, or unused numbers.
- Each mobile wireless provider must make public a single point of contact for text senders.
The FCC’s Enforcement Bureau and the Illinois Attorney General’s office signed a Memorandum of Understanding to establish information sharing and cooperation structures to investigate spoofing and robocalls scam campaigns. Forty-four states, as well as Guam and the District of Columbia, have agreed to partnerships with the FCC’s Enforcement Bureau. Both FCC and state investigators seek records, talk to witnesses, interview targets, examine consumer complaints, and take other critical steps to build a record against possible bad actors.
Federal Trade Commission
The Federal Trade Commission (FTC) filed an enforcement action against GoodRx Holdings Inc., the telehealth and prescription drug discount provider. The action, the FTC’s first under its Health Breach Notification Rule, alleges the company failed to notify consumers and others of allegedly unauthorized disclosures of consumers’ personal health information to Facebook, Google, and other companies. Under the settlement, GoodRx agreed to pay a $1.5 million civil penalty.
The FTC announced an order settling a 2020 federal lawsuit against ZyCal Bioceuticals Healthcare Company, Inc. (Zycal) which charged the company with deceptively claiming that their products grow bone and cartilage and relieve joint pain. The order bars the company from making these claims unless supported by randomized controlled clinical trials. The order must still be approved and signed by a judge to become final.
The FTC announced more than $115 million in refunds are being sent to consumers nationwide by MoneyGram as a result of a 2018 action the FTC and the U.S. Department of Justice. The suit alleged MoneyGram failed to crack down on scammers using its payment system in violation of a 2009 settlement and 2012 agreement with the U.S. Department of Justice.
Food and Drug Administration
The U.S. Food and Drug Administration provided draft recommendations for industry on the naming of plant-based foods that are marketed and sold as alternatives to milk. The draft guidance also recommends voluntary nutrient statements for the labeling of some plant-based milk alternatives.
Securities and Exchange Commission
The Securities and Exchange Commission charged Payward Ventures, Inc. and Payward Trading Ltd., both commonly known as Kraken, with failing to register the offer and sale of their crypto asset staking-as-a-service program, whereby investors transfer crypto assets to Kraken for staking in exchange for advertised annual investment returns of as much as 21%. Kraken immediately ceased offering or selling securities through crypto asset staking services or staking programs and will be paying $30 million in disgorgement, prejudgment interest, and civil penalties.
U.S. Department of Justice
The U.S. Department of Justice (USDOJ) charged three individuals with operating a mail fraud scheme that defrauded thousands of U.S. victims, many of whom were elderly and vulnerable. Kimberly Stamps, John Kyle Muller, and Barbara Trickle allegedly conspired to operate a fraudulent mass-mailing scheme that deceived thousands of consumers into paying fees for falsely promised prizes.
USDOJ charged four founders of Forsage, a cryptocurrency investment platform, for their roles in a global Ponzi and pyramid scheme that raised approximately $340 million from investors. The defendants, who are Russian nationals, allegedly advertised Forsage to the public through social media as a legitimate and profitable opportunity, but in reality, Forsage operated as a Ponzi and pyramid investment scheme that took in approximately $340 million from investors.
Other Federal News
A Chicago federal judge dismissed the first-ever Consumer Financial Protection Bureau redlining case against a nonbank mortgage lender. The CFPB had alleged that Townstone Financial, Inc. kept away potential Black applicants by, among other things, putting out a weekly infomercial on which hosts could be heard making disparaging remarks about local majority-Black areas, however, the judge held That the language of the statute prohibiting discrimination related to an “application” did not apply to cases claiming consumers were dissuaded from applying.
A California federal judge ruled that CashCall Inc. must pay $134 million in restitution and a $33 million penalty for a deceptive loan scheme. In a minute order, the court found that an award of restitution under the Consumer Financial Protection Act is “appropriate to ensure that consumers are made whole,” but found that the CFPB’s initial request for $197 million was too excessive because the amount of restitution should not include interests and fees.
The U.S. Attorney’s Office for the Western District of Michigan is conducting a criminal investigation into the Abbot Laboratories’ manufacturing of infant formula. Abbott is facing various lawsuits over its baby formula, including multidistrict litigation alleging it caused a deadly illness in premature babies.
Indiana Attorney General Todd Rokita announced victory in a case against Tiger King’s Timothy Stark in the Court of Appeals of Indiana. The court affirmed the trial court’s holding that Stark was personally liable for funds and assets misappropriated from his nonprofit corporation Wildlife In Need.
Michigan Attorney General Dana Nessel warned residents about unlicensed merchandise scams purporting to support the Spartan Strong Fund after the recent shooting at Michigan State University.
Veteran and Military News
The CFPB took action against auto title lender TitleMax and other corporate entities allegedly operating under TMX Finance., The suit claims the defendants violated the Military Lending Act by extending title loans to military families, charging nearly three times more than the 36% annual interest rate cap.
Other articles in this edition include: