Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau (CFPB or Bureau) and Office of the Comptroller of the Currency fined Bank of America a combined $225 million for failing to disburse state unemployment benefits at the height of the pandemic. Bank of America automatically and unlawfully froze people’s accounts with a faulty fraud detection program, and then gave them little recourse when there was, in fact, no fraud, the regulators allege. The agencies’ actions require Bank of America to undertake a process that is estimated to result in hundreds of millions of dollars in redress to consumers.
The CFPB took action against U.S. Bank for illegally accessing its customers’ credit reports and opening checking and savings accounts, credit cards, and lines of credit without customers’ permission. U.S. Bank must make harmed customers whole and pay a $37.5 million penalty under the terms of a consent order. U.S. Bank allegedly pressured and incentivized its employees to sell multiple products and services to its customers, including imposing sales goals as part of their employees’ job requirements. In response, U.S. Bank employees unlawfully accessed customers’ credit reports and sensitive personal data to apply for and open unauthorized accounts, the Bureau alleged.
The CFPB penalized Hyundai Capital America (Hyundai) for providing inaccurate information to nationwide credit reporting companies and failing to take proper measures to address inaccurate information once it was identified between 2016 and 2020, the Bureau alleged. In total, the CFPB found that Hyundai furnished inaccurate information in more than 8.7 million instances on more than 2.2 million consumer accounts due to outdated, inaccurate systems. The order requires Hyundai take steps to prevent future violations and pay more than $19 million, including $13.2 million in redress to affected consumers who were inaccurately reported as delinquent and a $6 million civil money penalty, making this the CFPB’s largest Fair Credit Reporting Act case against an auto servicer.
The CFPB sued payday lender ACE Cash Express for allegedly concealing free repayment plans from struggling borrowers. The complaint alleges that ACE’s illegal practices caused individual borrowers to pay hundreds or thousands of dollars in reborrowing fees, when they were in fact eligible for free repayment plans, generating at least $240 million in fees for ACE. The Bureau previously filed a 2014 CFPB enforcement action against ACE related to its debt collection practices, and the company is still bound by the order from that case.
Federal Communications Commission
The Federal Communications Commission (FCC) issued a Notice of Apparent Liability (NAL) proposing a $116,156,250 fine against Thomas Dorsher, ChariTel Inc, Ontel Inc, and ScammerBlaster Inc for operating an alleged toll-free traffic pumping robocalling scheme generating revenue for each call it generated. The NAL alleges the defendants generated nearly 10 million prerecorded voice message calls falsely proclaiming to be a “Public Service Announcement” warning toll free customers about the dangers of illegal robocalls and directing recipients to report robocalls to the FCC, phone companies, and the Dorsher entities’ website.
The FCC is alerting consumers to the rising threat of robotexts. The FCC reported consumer complaints about unwanted text messages have risen steadily in recent years from approximately 5,700 in 2019, 14,000 in 2020, 15,300 in 2021, to 8,500 through June 30, 2022, and that texts are increasingly used by scammers to target consumers. In addition, some independent reports estimate billions of robotexts each month – for example, RoboKiller estimates consumers received over 12 billion robotexts in June.
Federal Trade Commission
The Federal Trade Commission (FTC) is sending almost $25 million in payments to 244,745 consumers in the U.S. and abroad who were defrauded by the Next-Gen sweepstakes scheme. More than $19 million in checks will go to U.S. and Canadian consumers. The deadline for consumers to cash their checks or claim their PayPal payments is October 17, 2022.
The FTC took action against grill maker Weber-Stephen Products, LLC, for illegally restricting customers’ right to repair their purchased products. The FTC’s complaint charges that Weber’s warranty included terms that conveyed that the warranty is void if customers use or install third-party parts on their grill products. Weber is being ordered to fix its warranty by removing illegal terms and recognizing the right to repair. Following the FTC’s right to repair report Nixing the Fix, the Commission issued a Policy Statement on Repair Restrictions Imposed by Manufacturers, pledging to ramp up investigations into illegal repair restrictions. The FTC recently announced complaints and orders against Harley-Davidson and the maker of Westinghouse outdoor generators for similar issues.
The FTC has finalized an order against apparel company Lions Not Sheep Products, LLC, and its owner Sean Whalen for falsely claiming that its imported apparel is made in the USA. Under the order, the defendants will pay $211,335. The FTC’s May 2022 complaint alleged that the company added phony Made in USA labels to clothing imported from China and other countries.
U.S. Department of Justice
The U.S. Department of Justice (DOJ) announced the indictment of the CEO of dozens of companies for trafficking in counterfeit Cisco networking equipment with an estimated retail value of over $1 billion. According to the indictment, Onur Aksoy, allegedly ran at least 19 companies as well as at least 15 Amazon storefronts, at least 10 eBay storefronts, and multiple other entities that imported tens of thousands of fraudulent and counterfeit Cisco networking devices from China and Hong Kong and resold them to customers in the United States and overseas, falsely representing the products as new and genuine. The fraudulent and counterfeit products suffered from numerous performance, functionality, and safety problems.
DOJ announced a guilty plea by the CEO of Titanium Blockchain Infrastructure Services Inc. (TBIS) for his role in a cryptocurrency fraud scheme. Michael Alan Stollery pleaded guilty to using false information to lure investors to invest in TBIS’s initial coin offering that raised approximately $21 million from investors in the United States and overseas. Stollery also failed to register the offering with the U.S. Securities and Exchange Commission. He is scheduled to be sentenced on November 18 and faces up to 20 years in prison.
In Other Federal News
The U.S. Department of Education issued proposed regulations that would implement requirements from the American Rescue Plan Act of 2021 by prohibiting private for-profit institutions from counting federal aid for veterans and service members to meet the 10 percent revenue test, known as the “90-10 rule.” The proposed rules would also strengthen the requirements for institutions undergoing changes in ownership, including with respect to for-profit institutions seeking to convert to nonprofit status. Finally, the proposed rules would clarify how incarcerated individuals can begin to access Pell Grants for qualifying prison education programs operated by public and nonprofit institutions.
The U.S. Consumer Product Safety Commission (CPSC) announced that Vornado Air LLC has agreed to pay a $7.5 million civil penalty, resolving charges that the company failed to immediately report to the CPSC that its VH101 Personal Vortex electric space heater contained a defect or created an unreasonable risk of serious injury. Vornado recalled the heater on April 4, 2018. The recall was re-announced on August 22, 2018, after Vornado confirmed the heater was involved in a fatality of a 90-year-old Minnesota man. The CPSC charged the company with having information about the defect as early as 2014 but failing to report it. This was the second failure to report case involving Vornado, which paid a $500,000 civil penalty to the CPSC after it failed to immediately report overheating and fire incidents involving space heaters between 1993 and 2004.
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