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On November 21, a Washington-based bank confirmed through a public filing that it entered into a consent order with the FDIC alleging that the bank engaged in unsafe or unsound banking practices, primarily related to products offered through a fintech partner. In particular, the FDIC determined that in connection with the bank’s relationship with the fintech, the bank engaged in, among other things, deceptive and unfair acts and practices in or affecting commerce by making implied claims that credit products with non-optional debt cancellation features were unemployment insurance, approving consumers who did not qualify for the debt cancellation feature, and misrepresenting the fees and benefits for those products.Continue Reading FDIC Issues Order Against Bank Over Fintech Partnership

On November 21, the FTC voted 3-0 to approve the omnibus resolution authorizing the use of compulsory process in nonpublic investigations involving products and services that use or claim to be produced using artificial intelligence (AI) or claim to detect its use. The resolution will make it easier for FTC staff to issue civil investigative demands (CIDs), which are a form of compulsory process similar to a subpoena, in investigations relating to AI, while retaining the Commission’s authority to determine when CIDs are issued. This resolution will be in effect for 10 years. Continue Reading FTC Approves Compulsory Process for AI-related Products and Services

On November 20, the CFPB, along with 11 state attorneys general and state regulators, entered into a stipulated final judgement and order with a Delaware-based company and two affiliated companies (“defendants”) in the education financing sector to settle allegations in violation of the CFPA, TILA/Regulation Z, and the FDCPA in connection with the defendants’ unlawful practices in originating, servicing, collecting, and enforcing income sharing agreements (“ISA”) (we have discussed ISAs in prior blog posts here and here). Continue Reading CFPB Settles Claims Against Operator of Training Program for Activities Arising out of Income Share Agreements

On November 15, the CFPB issued an order requiring an Illinois-based fintech lender to pay $15 million in fines. The order additionally prohibits the company from operating in certain lines of business and requires revision of its executive compensation policies.Continue Reading CFPB Files Action Against Fintech for Allegedly Violating Previous Order, Deceiving Customers, Withdrawing Funds Without Consent

On November 2, the FTC entered into a settlement agreement with a Manhattan-based fintech company for $18 million over alleged deceptively marketed cash advances to consumers and impeding customers’ ability to cancel memberships. The FTC alleged that the fintech company violated the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA).Continue Reading FTC Settles with Fintech for $18M over Deceptive Cash Transfers and Difficult-to-Cancel Memberships

On November 7, the FTC and the State of Florida settled with a chargeback mitigation company and its owners for $150,000. The chargeback company was allegedly using deceptive practices, including referencing disclaimers that were not actually shown to the customers during the checkout process, to prevent consumers from disputing credit card charges through the chargeback process.Continue Reading FTC, Florida Settle with Chargeback Mitigation Company for $150K

On October 24, the FTC and the Wisconsin Department of Justice (DOJ) announced a $1.1 million settlement with a group of Wisconsin auto dealers for allegedly charging customers illegal junk fees and unlawfully discriminating against American Indian customers. The action was brought under the FTC Act, the Equal Credit Opportunity Act (ECOA), the Wisconsin Deceptive Trade Practices Act, and the Wisconsin Consumer Act.Continue Reading FTC and Wisconsin DOJ Agree to $1.1M Settlement with Auto Dealers over Unlawful Junk Fees and Discrimination Against American Indian Customers

On October 17, the CFPB took action against a nonbank fintech company for allegedly deceiving consumers about the speed and cost of remittance transfers through its mobile app. The Bureau also alleges that the company illegally forced consumers to waive their legal rights, failed to provide consumers with legally required disclosures and receipts, and failed to properly investigate consumer disputes and errors. The CFPB is ordering the company to refund affected consumers nearly $1.5 million in fees and pay a $1.5 million penalty into the CFPB’s victims relief fund.Continue Reading CFPB Acts Against Fintech Operator of Mobile App for Illegal International Money Transfers

On September 8, the FTC’s Chief Administrative Law Judge (“ALJ”) issued an initial decision finding that a company providing tax filing software services engaged in deceptive advertising practices in violation of Section 5 of the FTC Act. In March of 2022, the FTC filed an administrative complaint alleging that the company’s advertisements misled consumers into believing that any user could file their taxes for free on the company’s platform, when in reality, the free service offerings were only available to approximately one third of tax filers.Continue Reading FTC Judge Orders Tax Filing Software Company to Stop Advertising Products as “Free”

On August 28, the CFPB announced a proposed settlement with Utah-based credit repair telemarketing company and its affiliates for allegedly committing deceptive acts and practices in violation of the Telemarketing Sales Rule (TSR) and the Consumer Financial Protection Act (CFPA) by collecting illegal “advance fees.” The CFPB alleged the defendants charged consumers a fee for telemarketed credit repair services when they signed up for the services, and then monthly thereafter, without (i) waiting for the timeframe in which they represented their services would be provided to expire; and (ii) demonstrating that the promised results have been achieved, in the form of a consumer report issued more than six months after those results were achieved, as required by the TSR. Continue Reading CFPB Reaches $2.6 Billion Settlement with Credit Repair Company

On August 22, the CFPB filed a lawsuit against an installment lending company and several of its subsidiaries in South Carolina federal court, alleging that the company engaged in illegal “loan-churning” practices that generated hundreds of millions of dollars in loan costs and fees. The CFPB’s complaint alleges that many of the installment lender’s “loan-churning” practices constituted unfair, deceptive, and abusive acts or practices (“UDAAPs”) in violation of the CFPA. Specifically, the CFPB alleges that the installment lender harmed consumers by:Continue Reading CFPB Sues Installment Lender for Alleged Loan Churning Operation