Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau (CFPB or Bureau) proposed a rule to establish a public registry of supervised nonbanks’ terms and conditions in form contracts that claim to waive or limit consumer rights and protections. Under the proposal, the CFPB would seek information on contract terms and conditions purporting to waive any constitutional, statutory, or common law legal protection, right, or defense; restrict the ability of consumers to complain; limit the time or place for consumers to bring legal actions; limit liability amounts; waive class action rights; and/or impose arbitration provisions. Both company information and information about the use of the terms and conditions are to be published.
The CFPB reached a settlement in its lawsuit against law firm Forster & Garbus, LLP for allegedly illegal debt-collection practices. If approved by the court, the proposed settlement would prohibit the firm from filing any new lawsuit against a consumer unless it has specific documents supporting the debt and certifies that an attorney reviewed those documents. The order would also require the company to dismiss any pending lawsuit where it cannot satisfy these requirements and pay a civil penalty of $100,000.
The CFPB issued new guidance regarding negative option subscription services. The circular highlights examples of unlawful behavior by companies that have used dark patterns and other manipulative tactics to trick consumers into paying recurring charges for products and services they do not want.
Federal Trade Commission
The Federal Trade Commission (FTC) is requiring HomeAdvisor, Inc. to pay up to $7.2 million for using deceptive and misleading tactics in selling home improvement project leads to service providers, including small businesses operating in the “gig” economy. The proposed order also bars HomeAdvisor from deceptive conduct and sets up two redress funds to provide money to defrauded service providers.
The FTC finalized a consent order requiring Credit Karma to pay $3 million and halt allegedly deceptive “pre-approved” claims. The FTC’s complaint, first announced in September 2022, alleged that the company used claims that consumers were “pre-approved” and had “90% odds” to entice them to apply for offers that, in many instances, they ultimately did not qualify for.
The FTC proposed a new rule that would ban employers from imposing noncompete agreements on their workers. In announcing the proposed rule, the agency stated that the use of such agreements is “a widespread and often exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses.” The statement also claims that the proposed rule “could increase wages by nearly $300 billion per year and expand career opportunities for about 30 million Americans.”
The FTC is requiring investment advice company WealthPress to refund more than $1.2 million to consumers and pay a $500,000 civil penalty for allegedly deceiving consumers with false claims about their services. The settlement marks the first time that the FTC has collected civil penalties against a company that received the Notice of Penalty Offenses regarding money-making opportunities sent last October, and the first civil penalties for violations of the Restore Online Shoppers’ Confidence Act.
The FTC issued an order requiring LCA-Vision, doing business as LasikPlus and Joffe MediCenter, to pay $1.25 million for using allegedly deceptive bait-and-switch advertising to trick consumers into believing they could have their vision corrected for less than $300. In reality only 6.5 percent of consumers who attended consultations were eligible for the advertised promotional price for both eyes and typically were quoted a price between $1,800 and $2,295 per eye.
The FTC opened a claims process for former AT&T customers who were subject to data throttling by AT&T but have yet to claim a refund stemming from a $60 million 2019 settlement of allegations that the wireless provider charged customers between 2011 and 2015 for “unlimited” data plans while reducing their data speeds, a practice known as throttling. $7 million in consumer redress remains to be distributed.
Other Federal News
The U.S. Consumer Product Safety Commission (CPSC) announced Peloton agreed to pay a $19 million civil penalty in settling charges the company knowingly failed to immediately report to CPSC that its Tread+ treadmill contained a defect that could create a substantial product hazard and created an unreasonable risk of serious injury to consumers. The settlement also resolves CPSC’s charges that Peloton knowingly distributed recalled treadmills in violation of the Consumer Product Safety Act.
The Federal Communications Commission (FCC) issued a notice of proposed rulemaking to strengthen the Commission’s rules for reporting data breaches. The proposed rule would among other things require carrier notification of the FCC as soon as practicable and customers without unreasonable delay after the breach unless requested by law enforcement.
The Securities and Exchange Commission charged the creator of an alleged crypto fraud scheme and seven others in connection with CoinDeal, an enterprise that raised more than $45 million from sales of unregistered securities to tens of thousands of investors worldwide. According to the SEC’s complaint the defendants falsely claimed that investors could generate extravagant returns by investing in a blockchain technology called CoinDeal that would be sold for trillions of dollars to a group of prominent and wealthy buyers.
The U.S. Department of Justice (USDOJ) announced a months-long disruption campaign against the Hive ransomware group that has targeted more than 1,500 victims in over 80 countries around the world, including hospitals, school districts, financial firms, and critical infrastructure. The FBI penetrated Hive’s computer networks, captured its decryption keys, and offered them to over 300 victims worldwide who were under attack, preventing victims from having to pay $130 million in ransom demanded. In addition, the FBI distributed over 1,000 additional decryption keys to previous Hive victims. The Department, in coordination with German and Netherlands law enforcement, also seized control of the servers and websites that Hive uses to communicate with its members.
USDOJ arrested and charged the founder and majority owner of a cryptocurrency exchange with processing more than $700 million in illicit funds and violating U.S. regulatory safeguards, including anti-money laundering requirements. Anatoly Legkodymov, 40, a Russian national operated Bitzlato Ltd., a cryptocurrency exchange which allegedly became a haven for criminal proceeds and funds intended for use in criminal activity. Concurrent with the arrest, European law enforcement agencies dismantled Bitzlato’s digital infrastructure, seized Bitzlato’s cryptocurrency, and took other enforcement actions.
USDOJ reached a settlement agreement with Meta Platforms Inc. (Meta), formerly known as Facebook Inc., to prevent discriminatory advertising that violates the Fair Housing Act. As required by the settlement, Meta has now built a new system to address algorithmic discrimination. The agreement sets compliance targets for the system and requires independent compliance monitoring through June 27, 2026. This is the first agreement subjecting Meta to court oversight for its advertisement targeting and delivery system.
Ohio Attorney General Dave Yost launched a new training and accountability resource for Ohio nonprofits called Charitable University or CharitableU. This online learning platform hosts a series of short webinars and resources designed to educate members of charity boards about their legal obligations, as well as best practices for running their organizations.
Minnesota Attorney General Keith Ellison filed a lawsuit against Minnesota nonprofit ThinkTechAct Foundation and its leaders for misusing funds and extensive governance violations. The complaint asks the court to dissolve ThinkTechAct, impose civil penalties on the individual defendants, and prevent the individual defendants from serving as officers or directors of any nonprofit or charitable corporation in Minnesota in the future.
California Attorney General Rob Bonta urged vigilance against fraudulent crowdfunding in the wake of recent mass shootings in California. Bonta also highlighted a variety of state, local, and community entities providing assistance and support — including immediate housing, financial, funeral, and mental health resources — to crime victims, survivors, and their families. However, Bonta warned, a number of crowdfunding pages often formed in response to crises may lack the experience, contacts, and staff needed to fulfill their commitments. Before donating online, Attorney General Bonta urged Californians to do their research.
Other articles in this edition include: