Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau (CFPB) sued pawn lenders FirstCash, Inc. and Cash America West, Inc. for allegedly violating the Military Lending Act (MLA) by charging higher than the allowable 36% annual percentage rate (APR) on pawn loans to active-duty servicemembers and their dependents. The loans allegedly had APRs that frequently exceeded 200%. The CFPB also alleges that FirstCash violated a 2013 CFPB order against its predecessor company prohibiting MLA violations.
The CFPB issued an advisory opinion regarding requirements for businesses that screen consumers, including during the rental and employment application process. Regulators are concerned about false identity matching, where an applicant is disqualified from rental housing or a job based on having the same name as another individual with negative information in their credit history. Specifically, the CFPB affirmed that the practice of matching consumer records solely through the matching of names is illegal under the Fair Credit Reporting Act.
Federal Communications Commission
The Federal Communications Commission (FCC) has voted to approve the transfer of control of TracFone Wireless from América Móvil to Verizon Communications. The FCC found that the transaction, as modified by Verizon’s enforceable commitments, will make Verizon and TracFone stronger providers of prepaid and Lifeline services (discount monthly service rates for low-income consumers). Given the communities that TracFone primarily serves within the U.S., the FCC adopted a number of binding conditions to address potential harms and to ensure the transaction will be in the public interest including protecting low-income consumers from price increases and guaranteeing the availability of affordable 5G devices and service offerings to underserved consumers.
The FCC entered into a $19.5 million consent decree with T-Mobile to resolve its investigation into the carrier’s 12-hour 911 outage in June 2020. According to the consent decree, the outage caused a complete failure of more than 23,000 calls and more than 40,000 other calls were transmitted with incomplete location or call back information.
The FCC’s Office of Inspector General issued an advisory regarding fraud in the Emergency Broadband Benefit (EBB) program which is designed to enhance availability of internet access to households with children in the national free school lunch program. According to the advisory, EBB providers’ sales agents are enrolling households by falsely claiming an eligible dependent child during the eligibility verification process.
Federal Trade Commission
The Federal Trade Commission (FTC) is sending nearly $60 million to more than 140,000 Amazon drivers for tips allegedly unlawfully withheld by Amazon from drivers between 2016 and 2019. Amazon agreed to settle the case and surrender all the money it withheld from its drivers.
The FTC is sending 34,893 checks and PayPal refunds totaling more than $2 million to consumers who lost money through an allegedly deceptive direct mail publications scheme that allegedly tricked consumers into buying pamphlets, newsletters, and other publications through false promises and deceptive marketing. Agora Financial, LLC, NewMarket Health, and other related defendants’ publications, included The Doctor’s Guide to Reversing Diabetes in 28 Days, which made unsubstantiated medical claims and Congress’ Secret $1.17 Trillion Giveaway, which allegedly made false claims about government benefits.
U.S. Department of Justice
The U.S. Department of Justice (USDOJ) announced the liquidation of approximately $56 million in cryptocurrency fraud proceeds seized from the self-described “number one promoter” of BitConnect, a cryptocurrency. This liquidation is the largest single recovery of a cryptocurrency fraud by USDOJ to date. Glenn Arcaro pleaded guilty to participating in a massive conspiracy to defraud BitConnect investors in the U.S. and abroad, in which investors were fraudulently induced to invest over $2 billion. The BitConnect scheme is the largest cryptocurrency fraud scheme ever charged criminally.
USDOJ sued Uber Technologies Inc. (Uber) for charging “wait time” fees to passengers who, because of disability, need more time to enter a car. The lawsuit alleges that Uber violated Title III of the Americans with Disabilities Act, which prohibits discrimination by private transportation companies like Uber. In April 2016, Uber allegedly began charging passengers wait time fees in a number of cities, eventually expanding the policy nationwide. Wait time fees start two minutes after the Uber car arrives at the pickup location and are charged until the car begins its trip.
USDOJ announced a Texas vape shop owner pleaded guilty to a felony charge relating to the importation of counterfeit vaping products. Muhammad Uzair Khalid pleaded guilty to one count of trafficking in counterfeit goods, in violation of 18 U.S.C. § 2320(a)(1). Uzair admitted that, from October 2017 to November 2019, he intentionally and unlawfully imported counterfeit vaping-related items from China, including counterfeit vaping atomizers, labels, boxes, and bags for vaping-related products.
USDOJ announced the indictment of three men charged with running a fraudulent mass-mailing scheme that tricked consumers, many of whom were elderly and vulnerable, into paying $13 million in fees for falsely promised cash prizes. Shawn Phillips, Jeffrey Novis, and Phillip Priolo were charged with conspiracy to commit mail fraud and wire fraud, and multiple counts of mail fraud and wire fraud.
In Other Federal News
The Board of Governors of the Federal Reserve, the CFPB, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and state financial regulators issued a joint statement to communicate to mortgage servicers the agencies’ supervisory and enforcement approach as risks associated with the COVID-19 pandemic continue to change. The agencies state that servicer flexibility provided by their prior April 2020 joint statement is no longer necessary and they will use their supervisory and enforcement authority to address Regulation X mortgage servicing violations that occur going forward. Such flexibility included granting forbearances without providing certain notices normally required when servicers have not received a complete loss mitigation application.
The Federal Bureau of Investigation warned of recent spear phishing email campaigns targeting consumers of brand-name companies, also known as brand-phishing, through their online user IDs and associated email accounts. According to the release, cyber criminals are believed to be developing and selling scamming tools to trick consumers of brand-name companies into revealing personal account information to compromise accounts and bypass online security protocols, most notably two-factor authentication.
Other articles in this edition include: