Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau (CFPB) took action against Portfolio Recovery Associates, one of the nation’s largest debt collectors, for violating a 2015 CFPB order and engaging in other violations of law. The CFPB filed a proposed order that would require Portfolio Recovery Associates to pay more than $12 million to consumers harmed by its illegal debt collection practices, in addition to a $12 million penalty that would be deposited into the CFPB’s victims relief fund. Portfolio allegedly continued to collect on unsubstantiated debt, collected on debt without providing required documentation and disclosures to consumers, threatened legal action against consumers without offering or possessing required documentation, and filed lawsuits to collect on debt outside the statute of limitations. Portfolio also allegedly failed to thoroughly investigate and resolve consumer disputes about the company’s credit reporting.
The CFPB said that its recent supervisory exams have turned up an array of unlawful “junk fees” charged on bank accounts, mortgages, and other loans. The White House also urged states to join in this fight against “junk fees.” In a “Supervisory Highlights” report, the CFPB outlined real-world examples of fee practices that its examiners have identified as unfair, deceptive or abusive, including repeated nonsufficient funds fees charged by banks and late fees charged by loans servicers in excess of authorized terms. This report was released while the White House was hosting an event for hundreds of state lawmakers, encouraging them to take their own actions to ban or limit questionable fees.
The CFPB released a bulletin warning servicers of their obligation to halt unlawful conduct with respect to private student loans that have been discharged by bankruptcy courts. The bulletin highlights recent findings by examiners that certain loan servicers were illegally returning loans to collections after bankruptcy courts had discharged the loans. The CFPB is directing these servicers to return illegally collected payments to affected consumers and immediately cease these unlawful collection tactics.
Consumer Product Safety Commission
The U.S. Consumer Product Safety Commission (CPSC) warned consumers to immediately stop using TureClos bicycle helmets because the helmets do not comply with federal safety standards. The helmets can fail to protect riders in the event of a crash, posing a risk of head injury. The helmets allegedly do not comply with the positional stability, retention system, impact attenuation, and labeling requirements of the mandatory federal safety standard for bicycle helmets. The bicycle helmets were purchased by American consumers online at www.walmart.com from March 2022 through November 2022.
CPSC also warned consumers to stop using the GLBSUNION and CUZMAK digital display carbon monoxide (CO) detectors. The CO detectors fail to alert consumers to the presence of carbon monoxide. More than two hundred people in the United States die every year from accidental, non-fire related CO poisoning associated with consumer products. The CO detectors were sold on Amazon.com.
Federal Communications Commission
The Federal Communications Commission (FCC) adopted its first regulations specifically targeting the increasing problem of scam text messages sent to consumers. The new rules will require mobile service providers to block certain robotext messages that are highly likely to be illegal. The order requires blocking text messages that appear to come from phone numbers that are unlikely to transmit text messages. A second rule will also require each provider to establish a point of contact for text senders which senders can use to request text blocking.
The FCC also adopted rules to combat illegal robocalls, including by requiring provider obligations to implement the STIR/SHAKEN caller ID authentication framework. The new rules will require providers that receive unauthenticated IP calls to use STIR/SHAKEN to validate those calls. The new rules will also expand robocall mitigation requirements. All providers, regardless of their STIR/SHAKEN implementation status, will now be required to take “reasonable steps” to mitigate illegal robocall traffic and submit a certification and mitigation plan to the FCC’s Robocall Mitigation Database. These filings will now also include additional details on a provider’s role in the call chain, STIR/SHAKEN implementation obligations, and any recent formal law enforcement or regulatory action or investigation into suspected unlawful robocalling.
Federal Trade Commission
The Federal Trade Commission (FTC) finalized an order requiring Epic Games, the maker of Fortnite, to pay $245 million to consumers to settle charges that the company used design tricks to deceive players into making unwanted purchases and let children rack up unauthorized charges without any parental involvement. The FTC alleged that Epic deployed a variety of design tricks known as dark patterns aimed at getting consumers to make unintended in-game purchases. Fortnite also made it easy for children to make purchases while playing Fortnite without requiring any parental consent.
The FTC issued a proposed order banning online counseling service BetterHelp, Inc. from sharing consumers’ health data, including sensitive information about mental health challenges, for advertising. According to the FTC’s complaint, BetterHelp violated Section 5 of the FTC Act by providing consumers’ health questionnaire information, email addresses and IP addresses to third-party advertising platforms, including Facebook, despite telling consumers that it would only use or disclose their personal health data to provide counseling services and for other limited purposes. The proposed order also requires the company to pay $7.8 million to consumers.
The FTC proposed a “click to cancel” rule for recurring subscriptions and memberships that would require sellers to make it as easy for consumers to cancel their enrollment as it was to sign up. The “click to cancel” provision, along with other proposals, addresses concerns about consumers’ difficulty cancelling unwanted subscription payment plans for all types of memberships.
The FTC filed lawsuits against three Utah-based distributors for the multi-level marketing company doTERRA International, LLC. The distributors, all current or former healthcare practitioners, made claims that the company’s essential oils and dietary supplements could treat, prevent, and even cure COVID-19. The distributors allegedly made these claims in a series of webinars in early 2022 and touted their medical expertise in recommending the products.
The FTC and RagingBull.com, a company the FTC says used bogus earnings claims to trick consumers, have reached a settlement under which the FTC is sending payments totaling nearly $2.4 million to consumers who paid subscription fees to the online stock trading site. The FTC sued Raging Bull in December 2020 as part of Operation Income Illusion. In the lawsuit, the FTC alleged that the company used fake earnings claims to trick people into paying for investment strategies and recommendations, and then trapped them into hard-to-cancel subscription plans with costly fees. The FTC’s complaint noted that consumers who purchased the site’s services lost millions of dollars in their investments.
Securities and Exchange Commission
The Securities and Exchange Commission proposed a Cybersecurity Risk Management Rule that establishes requirements for broker-dealers, clearing agencies, major security-based swap participants, the Municipal Securities Rulemaking Board, national securities associations, national securities exchanges, security-based swap data repositories, security-based swap dealers, and transfer agents (collectively, “Market Entities”) to address their cybersecurity risks. The proposal would require all Market Entities to implement policies to address cybersecurity risks and, at least annually, review and assess the effectiveness of their cybersecurity policies.
Ohio Attorney General Dave Yost announced the shuttering of eight “knock-off” sham charities. The court ordered that the articles of incorporation be canceled for the following groups: American Cancer Society of Cincinnati Inc., American Cancer Society of Cleveland Inc., American Cancer Society of Ohio Inc., American Cancer Foundation of Cincinnati Inc., American Cancer Foundation of Cleveland Inc., American Cancer Foundation of Ohio Inc., American Cancer Foundation of Columbus Inc., and United Way of Ohio Inc.
Veteran and Military News
Last summer, New York Attorney General Letitia James and the FTC recovered $34.2 million from Harris Jewelry for servicemembers and veterans who were scammed by the jewelry retailer. In the agreement, Harris Jewelry was required to provide more than $12 million in refunds for more than 46,000 servicemembers who paid for lifetime protection plans. The deadline to file a claim online for a refund is April 15 for eligible servicemembers and veterans.
Other articles in this edition include: