Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau (CFPB or “Bureau”) announced an initiative to reduce so-called “junk fees” charged by banks and other financial institutions. Noting that credit card late fees and bank charges for overdraft and non-sufficient funds fees cost consumers nearly $30 billion in 2019, the Bureau published a request for information (RFI) seeking comment (by March 31) to guide its policy direction. The RFI seeks comments from consumers and institutions regarding such fees including consumers’ experiences and institutional costs that such fees may offset, and obstacles to including fees in the up-front price that consumers shop for.
The CFPB released a report detailing consumer complaint response deficiencies of the big three credit bureaus and questioning their ability or willingness to comply with the Fair Credit Reporting Act. The report found the three companies changed how they respond to complaints in 2020 and thereafter reported relief in less than 2% of complaints, down from nearly 25% in 2019.
The CFPB announced it will begin examining the in-house lending practices of post-secondary schools, including private and for-profit colleges. The CFPB expressed concern about the borrower experience with institutional loans because of past abuses at schools, like those operated by Corinthian and ITT, where students were allegedly subjected to high interest rates and strong-arm debt collection practices. Schools have not historically been subject to the same servicing and origination oversight as traditional lenders.
The CFPB has resolved its lawsuit against payment processor BrightSpeed Solutions (BrightSpeed) and its founder Kevin Howard. BrightSpeed allegedly knowingly assisted companies that fraudulently claimed to offer technical-support services and products to consumers over the internet, but actually tricked consumers into purchasing expensive and unnecessary antivirus software or services. The defendants will pay a civil penalty of $500,000 and agreed to a permanent ban on providing multiple consumer financial products and services.
The CFPB sued United Debt Holding Group (UHG), its affiliates, and owners for illegal debt collection practices. In addition to UHG, the suit names as defendants United Debt Holding, JTM Capital Management, and their owners, Craig Manseth, Jacob Adamo, and Darren Turco. The Bureau alleges that the defendants placed consumer debt with, or sold consumer debt to, collection companies that used unlawful and deceptive collection tactics and that the defendants knew, or should have known, the collection companies made false threats and false statements to consumers.
The CFPB settled a case filed against it by consumer advocates, who alleged that the Bureau’s 2019 creation of a Taskforce on Federal Consumer Financial Law violated the Federal Advisory Committee Act’s (FACA) requirements. In resolving the suit, the CFPB stipulated that its actions violated the law and agreed to release all taskforce records that would have been made public if the CFPB had complied with FACA’s requirements.
Federal Trade Commission
The Federal Trade Commission (FTC) announced that in 2021, consumers reported losing about $770 million to fraud initiated on social media—about one fourth of all reported fraud losses for the year and an 18-fold increase from 2017. According to the FTC’s latest Consumer Protection Data Spotlight, investment scams topped the list of total reported dollar losses, followed by romance scams. The largest number of reports came from people who lost money to online shopping scams.
Amid increasing numbers of COVID-19 cases due to the Omicron variant, the FTC ordered more than 20 marketers nationwide to stop making baseless claims that their products and therapies can treat or prevent COVID-19. Most of the demands were sent to companies using social media platforms to sell their products, and in those instances the agency also notified the platform of its demand.
The FTC is returning more than $10 million to consumers who were charged undisclosed fees by online lender LendingClub Corporation. The FTC is distributing refunds directly to more than 15,000 LendingClub customers and encouraging additional LendingClub customers to apply for refunds. The FTC is sending refunds via PayPal to 15,748 LendingClub customers who complained to the company or the FTC about the hidden fees. Recipients have until February 16, 2022, to accept the payments.
To settle FTC charges that it engaged in deceptive and unfair practices, Dun & Bradstreet has agreed to clean up small business credit reporting processes and refund business customers that purchased the company’s products in the belief that using the products would improve their business credit scores and ratings.
Lead generation company ITMedia Solutions LLC agreed to $1.5 million in civil penalties and face restrictions on their operations, settling FTC claims that it deceptively collected sensitive information from millions of consumers under the guise of connecting them with lenders. The defendants obtained Social Security numbers and bank account information, then sold that information to marketing companies and others without regard for how the information would be used, according to the complaint.
The FTC issued its biennial report to Congress on the National Do Not Call Registry. More than 244 million people have placed their telephone numbers on the registry. Per the report, the FTC received more than five million Do Not Call complaints in fiscal year (FY) 2021. Imposter scam and warranty protection scam calls led list of commonly reported call topics in FY 2021, followed by calls related to reducing debt and medical needs and prescriptions.
The FTC issued a new advisory opinion clarifying that the Holder Rule does not preempt attorney’s fee recoveries when otherwise authorized to seek such fees under state, local or federal law as some courts have concluded.
In Other Federal News
The Consumer Product Safety Commission (CPSC) announced the voluntary recalls by three residential elevator companies due to risk of serious injury or death to young children. A warning was issued to a fourth elevator company. Bella Elevator, LLC, Inclinator Company of America, and Savaria Corporation worked with CPSC to announce three separate voluntary recalls of about 69,000 residential elevators. CPSC is warning consumers to stop using elevators manufactured by a fourth company – Waupaca Elevator Company, Inc., – after it refused to cooperate with a recall.
The FBI Internet Crime Complaint Center issued a public service announcement warning about malicious Quick Response (QR) codes. Per the announcement, cybercriminals are tampering with QR codes to redirect victims to malicious sites that steal login and financial information. In addition, the malicious sites may embed malware to gain access to the victim’s device, and redirect payment for cybercriminal use.
The Commodity Futures Trading Commission obtained a consent order requiring a Kentucky man to pay nearly $17 million in relief payments to consumers whose money he misappropriated. Investors paid William S. Evans III (d/b/a Turning Point Investments) funds to use for futures trading, but Evans and his wife Frances actually used the money for personal use and to pay other participants in a Ponzi-like scheme.
Other articles in this edition include:
- Consumer Chief of the Month
- Communities of Color, Fraud, and Consumer Protection Agencies
- Attorney General Consumer Protection News: January 2022