Consumer Financial Protection Bureau

The Consumer Financial Protection Bureau (CFPB) has ordered Regions Bank to pay $50 million into the CFPB’s victims relief fund and to refund at least $141 million to customers harmed by allegedly illegal surprise overdraft fees. According to the consent order resolving the matter, from August 2018 through July 2021, Regions charged customers surprise overdraft fees on certain ATM withdrawals and debit card purchases, despite telling consumers they had sufficient funds at the time of the transactions. In 2015, the CFPB ordered Regions to refund $49 million to consumers and pay a $7.5 million penalty for charging overdraft fees to consumers who had not opted into overdraft protection and to consumers who had been told they would not be charged overdraft fees.

The CFPB and the Centers for Medicare and Medicaid Services have put nursing care facilities on notice that they may not require that a third-party caregiver personally guarantee payment of a nursing home resident’s bills as a condition of the resident’s admission to the facility. According to the joint letter, such conditions violate the Nursing Home Reform Act and, as discussed in a new CFPB Consumer Financial Protection Circular, subsequent attempts to collect debts from caregivers may violate the Fair Debt Collection Practices Act and the Fair Credit Reporting Act.

The CFPB sued MoneyLion Technologies, an online lender, and 38 of its subsidiaries, for imposing illegal and excessive charges on servicemembers and their dependents. The CFPB alleges that MoneyLion violated the Military Lending Act by charging more than the legally allowable 36% rate cap on loans to servicemembers and their dependents, through a combination of stated interest rates and monthly membership fees.

Federal Trade Commission

The Consumer Financial Protection Bureau (CFPB) has ordered Regions Bank to pay $50 million into the CFPB’s victims relief fund and to refund at least $141 million to customers harmed by allegedly illegal surprise overdraft fees. According to the consent order resolving the matter, from August 2018 through July 2021, Regions charged customers surprise overdraft fees on certain ATM withdrawals and debit card purchases, despite telling consumers they had sufficient funds at the time of the transactions. In 2015, the CFPB ordered Regions to refund $49 million to consumers and pay a $7.5 million penalty for charging overdraft fees to consumers who had not opted into overdraft protection and to consumers who had been told they would not be charged overdraft fees.

The CFPB and the Centers for Medicare and Medicaid Services have put nursing care facilities on notice that they may not require that a third-party caregiver personally guarantee payment of a nursing home resident’s bills as a condition of the resident’s admission to the facility. According to the joint letter, such conditions violate the Nursing Home Reform Act and, as discussed in a new CFPB Consumer Financial Protection Circular, subsequent attempts to collect debts from caregivers may violate the Fair Debt Collection Practices Act and the Fair Credit Reporting Act.

U.S. Department of Justice

The U.S. Department of Justice (USDOJ) announced federal criminal charges against 47 defendants for their alleged roles in a $250 million fraud scheme that exploited a federally-funded child nutrition program during the COVID-19 pandemic. The defendants allegedly obtained, misappropriated, and laundered millions of dollars in Child Nutrition Program funds that were intended as reimbursements for the cost of serving meals to children. The defendants are charged with conspiracy, wire fraud, money laundering, and bribery.

USDOJ released a report regarding digital assets and launched a nationwide network to combat the growing threat posed by the illicit use of digital assets to the American public. The report is titled: The Role of Law Enforcement in Detecting, Investigating, and Prosecuting Criminal Activity Related to Digital Assets. The nationwide Digital Asset Coordinator Network (DAC) is led by the department’s National Cryptocurrency Enforcement Team. The DAC Network comprises over 150 designated federal prosecutors from U.S. Attorneys’ offices and across the department’s litigating components and will serve as the department’s primary forum for prosecutors to obtain and disseminate specialized training, technical expertise, and guidance about the investigation and prosecution of digital asset crimes.

USDOJ obtained a default judgment granting a $10 million civil penalty against two automobile manufacturers for selling “defeat devices” designed to disable or bypass required vehicle emissions controls. The judgment against “Diesel Ops LLC and Orion Diesel LLC of Waterford, Michigan also imposes civil penalties of more than $1.4 million against the owner of the two companies, Nicholas Piccolo. The court entered a permanent injunction against future sales of defeat devices against all of the defendants.

USDOJ announced the sentencing of two defendants to substantial prison time for their participation in a large-scale “grandparent scam.” According to court documents, Timothy Ingram aka “Bleezy,” and Joaquin Lopez, were part of a network of individuals who, through extortion and fraud, induced elderly Americans across the United States to pay up to tens of thousands of dollars each to purportedly help their grandchild or other loved one. In spring 2022, Ingram and Lopez each pleaded guilty to one count of conspiracy under the Racketeer Influenced and Corrupt Organizations Act. The court sentenced Ingram to 108 months in prison and Lopez to 24 months in prison.

In Other Federal News

Boeing agreed to pay $200 million to settle Securities and Exchange Commission charges that it misled investors about the 737 MAX. The SEC charged The Boeing Company and its former CEO, Dennis A. Muilenburg, with making materially misleading public statements following crashes of Boeing airplanes in 2018 and 2019. According to the SEC’s orders, after the first crash, Boeing and Muilenburg knew the planes’ flight control system posed an ongoing safety issue, but nevertheless assured the public that the 737 MAX airplane was “as safe as any airplane that has ever flown the skies.” Later, following the second crash, Boeing and Muilenburg allegedly assured the public that there were no slips or gaps in the certification process with respect to MCAS, despite being aware of contrary information.

The Securities and Exchange Commission announced recovery of $1.1 billion in civil penalties in resolution of charges against 16 Wall Street firms for widespread recordkeeping failures. The firms admitted that their conduct violated recordkeeping provisions of the federal securities laws involving “off channel communications” and agreed to pay combined penalties of more than $1.1 billion, and have begun implementing improvements to their compliance policies and procedures to settle these matters. The firms involved included Barclays Capital Inc., BofA Securities Inc. together with Merrill Lynch, Pierce, Fenner & Smith Inc., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. together with DWS Distributors Inc. and DWS Investment Management Americas, Inc., Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC together with Morgan Stanley Smith Barney LLC, UBS Securities LLC together with UBS Financial Services Inc., Jefferies LLC, Nomura Securities International, Inc., and Cantor Fitzgerald & Co.

The U.S. Food and Drug Administration (FDA) issued a consumer warning about social media trends encouraging people to misuse nonprescription medications. The warning references examples such as a TikTok challenge urging people to take large doses of an allergy medicine to try to induce hallucinations which, according to news reports, led to participants experiencing severe medical reactions requiring emergency care and in some cases deaths.

Other articles in this edition include:

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