Consumer Financial Protection Bureau

The Consumer Financial Protection Bureau (CFPB or Bureau) issued a series of bulletins in February providing guidance regarding the Bureau’s interpretation of legal requirements related to a range of financial services. Bulletins included guidance for student loan servicers handling of accounts of borrowers eligible for public service loan forgiveness, providers of prepaid cards used to obtain government benefits, and computer models used to determine home values.

Federal Communications Commission

The Federal Communications Commission (FCC) proposed a $45 million fine against a company that conducted an apparently illegal robocall campaign to sell health insurance under the pretense that the annual enrollment period had been reopened due to the coronavirus pandemic. Interstate Brokers of America allegedly made 514,467 unlawful robocalls without subscribers’ prior express consent or an emergency purpose. This is the largest Telephone Communications Privacy Act robocall fine ever proposed by the Commission.

The FCC found that Vonage and Bandwidth failed to meet STIR/SHAKEN implementation commitments and stripped them of a partial exemption to the rules. The finding was based on the carrier’s admissions that certain requirements of the rules designed to identify and intercept illegal robocalls had not been met. The order also referred the carriers to the FCC’s Enforcement Bureau for possible enforcement action.

The FCC reported that it has sent fifteen cease and desist letters to voice service providers suspected of facilitating illegal robocall traffic. Recipients of cease-and-desist letters were ordered to take steps to effectively mitigate illegal traffic within 48 hours. They were also asked to inform the commission and the Traceback Consortium within 14 days of the steps taken to implement effective measures to prevent robocallers from using the providers’ networks to make illegal calls.

Federal Trade Commission

The Federal Trade Commission (FTC) sued a Florida-based group of telemarketers who deceptively marketed “extended automobile warranties” to hundreds of thousands of consumers nationwide. According to the complaint, American Vehicle Protection Corp. and related defendants bilked consumers out of more than $6 million over the last four years, pretending to represent their dealer or car manufacturer, and providing coverage much more limited than represented.

Securities and Exchange Commission

The Securities and Exchange Commission (SEC) and 32 state securities departments obtained a $100 million settlement from BlockFi Lending LLC (BlockFi) for allegedly failing to register the offers and sales of its retail crypto lending product in violation of federal and state securities laws. BlockFi agreed to pay a $50 million penalty to the SEC and $50 million to the states, cease its unregistered offers and sales of the lending product, BlockFi Interest Accounts, and bring its business into legal compliance within 60 days.

The SEC, Commodity Futures Trading Commission (CFTC), and 27 state securities regulatory agencies charged a Los Angeles precious metals dealer and its owner with orchestrating a $68 million fraudulent scheme targeting elderly persons nationwide. The agencies allege that defendants Safeguard Metals LLC and its principal, Jeffrey Santulan a/k/a Jeffrey Hill operate an ongoing nationwide fraud that solicited and received approximately $68 million in investor funds to purchase precious metals and fraudulently overpriced silver coins.

 In Other Federal News

The Consumer Product Safety Commission (CPSC) filed an administrative complaint over a suffocation hazard posed by infant loungers manufactured by Leachco, Inc. The complaint follows reports of two infant deaths, and the company’s alleged refusal to undertake a voluntary recall of the Podster, Podster Plush, Bummzie, and Podster Playtime infant loungers. The lawsuit comes on the heels of a commission finding on January 20, 2022 that public health and safety necessitated warning the public of the suffocation hazard presented by the Podster.

The CPSC warned parents to protect children from tip-over injury or death by anchoring their TVs and furniture to the wall. A new CPSC report on furniture, TV, and appliance tip-over injuries and fatalities shows an estimated annual average (2018-2020) of 22,500 consumers required hospital emergency department treatment for tip-over injuries, nearly 44% of whom were children. The CPSC reports decreases in injuries from 2011 to 2020, largely due to a decline in injuries involving TVs, but that more work remains to be done. The agency’s “Anchor It!” educational campaign offers guidance to protect families from tip-over risks.

The Federal Bureau of Investigation warned mobile carriers and the public of the increasing use of Subscriber Identity Module (SIM) swapping by criminals to steal money from hard and virtual currency accounts. In 2021, IC3 received 1,611 SIM swapping complaints with adjusted losses of more than $68 million, a more than 500% increase in complaints and losses compared to 2020. SIM swapping is a malicious technique where criminal actors target mobile carriers to gain access to victims’ bank accounts, virtual currency accounts, and other sensitive information.

The United States Department of Education approved $415 million in borrower defense claims of nearly 16,000 former students at for-profit colleges. The approved claims include approximately 1,800 filed by former students at DeVry University, which the department determined made widespread misrepresentations about its job placement rates. Students at Westwood College, ITT Technical Institute’s nursing program, and Minnesota School of Business/Globe University’s criminal justice program will also receive relief, as will additional students at Corinthian Colleges and Marinello Schools of Beauty whose applications were received after prior announcements of relief concerning those schools.

Seven federal agencies launched a national public awareness campaign to fight romance scams. The “Dating or Defrauding?” campaign highlights the high cost of romance scams with more than $547 million in consumer losses reported to the FTC in 2021. The agencies participating include the CFTC, CFPB, Federal Deposit Insurance Corporation, FTC, U.S. Treasury Financial Crimes Enforcement Network, U.S. Immigration and Customs Enforcement, and U.S. Postal Inspection Service. Educational materials and other information from each agency are provided on the “Dating or Defrauding?” website.

Other articles in this edition include:

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