Consumer Financial Protection Bureau
The U.S. Senate voted to confirm Rohit Chopra as the third Director of the Consumer Financial Protection Bureau (CFPB). Chopra was serving as FTC Commissioner, a post he had held since 2018. Chopra issued a statement after he was sworn in, emphasizing “the essential role” the agency plays “within the Federal Reserve System to safeguard household financial stability” and calling for the use of the agencies authority “to promote competition and shift market power toward consumers and law-abiding businesses.”
The CFPB issued a series of orders to collect information about the business practices of large technology companies’ operating payments systems. The initial orders were sent to Amazon, Apple, Facebook, Google, PayPal, and Square. The Bureau stated it will also be studying the payment system practices of Chinese tech giants, including Alipay and WeChat Pay. According to the announcement, the orders compel information on data harvesting and monetization, access restrictions and user choice, and other consumer protections required by laws such as the Electronic Funds Transfer Act and Gramm-Leach-Bliley Act.
The CFPB settled with prison financial services company JPay for allegedly siphoning taxpayer-funded benefits intended to help former prisoners re-enter society. JPay allegedly violated the Consumer Financial Protection Act by charging consumers fees to access their own money on prepaid debit cards that they were forced to use. JPay also allegedly violated the Electronic Fund Transfer Act in requiring consumers to sign up for a JPay debit card to receive government benefits. The consent order limits the fees JPay can charge on release cards going forward and restricts inactivity fees. The order also requires payment of $4 million for consumer redress and $2 million in civil penalties.
The CFPB settled with American Advisors Group (AAG) resolving allegations that AAG used inflated and deceptive home estimates to lure consumers into taking out reverse mortgages. The CFPB also alleges that AAG’s deceptive conduct violated a 2016 administrative consent order. The proposed consent order provides injunctive relief and requires payment of $173,400 in consumer redress and a $1.1 million civil penalty.
Federal Communications Commission
Federal Communications Commission (FCC) Acting Chairwoman Jessica Rosenworcel was designated as Chair of the FCC by President Biden, becoming the first woman to be named to the position in the agency’s almost 100-year history. Gigi Sohn was nominated to serve as an FCC commissioner and fill an open position.
FCC Chairwoman Rosenworcel shared with the other commissioners a proposed rulemaking that would require mobile wireless providers to block illegal text messaging. If adopted by a vote of the full Commission, the rulemaking would explore steps to protect consumers from illegal robotexts, including network level blocking, and applying caller authentication standards to text messaging. The proposal was not made public at the time of the announcement.
Federal Trade Commission
The Federal Trade Commission (FTC) put hundreds of businesses, for-profit education companies, and companies offering money-making opportunities on notice about penalty offenses involving deceptive use of endorsements and other acts and practices that violate the FTC Act. The notices list certain types of conduct that the FTC has determined, in one or more administrative orders (other than a consent order), to be unfair or deceptive in violation of the FTC Act. Companies that receive such notice and nevertheless engage in prohibited practices face civil penalties of up to $43,792 per violation. The notices state that they are not an indication that the FTC has reason to believe a recipient is breaking the law. “Rather, the Commission sends these Notices to ensure that companies understand the law – and that they are deterred from breaking it.”
The FTC issued a new enforcement policy statement warning companies against deploying illegal dark patterns that trick or trap consumers into subscription services. The policy statement was issued as the agency ramps up its enforcement in response to a rising number of complaints about the financial harms caused by deceptive sign up tactics, including unauthorized charges or ongoing billing that is impossible cancel.
The FTC announced a newly updated rule that strengthens the data security safeguards financial institutions are required to put in place to protect their customers’ financial information. The FTC’s updated Safeguards Rule applies to non-banking financial institutions, such as mortgage brokers, motor vehicle dealers, and payday lenders.
The FTC sued Xlear, Inc., a Utah-based company, for violating the COVID-19 Consumer Protection Act, alleging that it falsely pitched its saline nasal sprays as an effective way to prevent and treat COVID-19. The FTC filed the case under Section 19 of the FTC Act and is seeking injunctive relief as well as consumer redress and civil penalties.
In Other Federal News
The Centers for Disease Control and Prevention (CDC) announced a temporary extension of the Framework for Conditional Sailing Order (CSO) for cruise ships through January 15, 2022. The order was issued on October 30, 2020, was set to expire on November 1, 2021. The order’s requirements include that ships must sail with at least 95 percent of people vaccinated or perform a test cruise to demonstrate safety procedures. Due to a federal injunction, the CSO was non-binding for cruise ships arriving in, located within, or departing from a port in Florida. After the expiration of the temporary extension, CDC intends to transition to a voluntary program, in coordination with cruise ship operators and other stakeholders.
Deputy U.S. Attorney General Lisa O. Monaco announced the launch of the Department of Justice’s (DOJ) “Civil Cyber-Fraud Initiative.” DOJ will utilize the False Claims Act to pursue cybersecurity related fraud by government contractors and grant recipients that “put U.S. information or systems at risk by knowingly providing deficient cybersecurity products or services, knowingly misrepresenting their cybersecurity practices or protocols, or knowingly violating obligations to monitor and report cybersecurity incidents and breaches.”
The U.S. Food and Drug Administration (FDA) announced it has authorized the marketing of the first set of electronic nicotine delivery system (ENDS) products to ever be authorized by the FDA through the Premarket Tobacco Product Application pathway. The FDA issued marketing granted orders to R.J. Reynolds Vapor Company for its Vuse Solo closed ENDS device and three accompanying tobacco-flavored e-liquid Vuse pods. The FDA determined that marketing of the products is appropriate for the protection of public health and allowed the products to be legally sold in the U.S.
Other Items of Interest
Attorneys general from across the country partnered with state charity regulators, federal and international law enforcement agencies, and the charity sector to highlight International Charity Fraud Awareness Week (October 18-22). The initiative encourages the participation of all organizations, regardless of size, to discuss fraud in the charity sector and to share with each other best practices to address and prevent it.
California Attorney General Rob Bonta announced charges against three defendants allegedly involved in a scheme to steal hundreds of thousands in public funds from a charity assisting the homeless. The fund of the charity, People Assisting the Homeless, were allegedly used by the defendants for their own purposes after submitting fraudulent referrals and assistance requests for clients who were not homeless and thus ineligible to receive funds. Attorney General Rob Bonta also applauded enactment of legislation authorizing oversight of charitable fundraising on internet platforms. The bill will go into effect on January 1, 2023, with additional regulatory rulemaking beginning January 1, 2022.
Other articles in this edition include:
- Consumer Chief of the Month
- Tackling Money Mules
- Attorney General Consumer Protection News: October 2021