The FDIC recently announced a consent order with an Oregon regional bank for violations of Section 8 of RESPA, the FTC Act, and the FRCA, resulting in a civil monetary penalty totaling $425,000. After conducting its investigation, the FDIC found:
Continue Reading FDIC Settles with Bank for Repeat RESPA Violations, Doubling Previous Fine
On January 26, the California DFPI announced its participation in a $22.5MM multi-state into a settlement with a with a Cayman Islands digital asset firm to resolve a securities enforcement action in connection with the platform’s earn interest product program. A North American Securities Administrators Association working group—composed of the DFPI and state regulators from Washington, Kentucky, New York, Oklahoma, Indiana, Maryland, South Carolina, Vermont, and Wisconsin—collaborated in the investigation into the firm. The group alleged that the platform failed to register as a securities and commodities broker but told investors that it was fully in compliance (we discussed similar actions in a previous blog post here). The DFPI’s previous desist-and-refrain order concluded that the earn interest accounts, which enables retail investors to earn interest upwards of 36% APR on crypto assets, constituted the unqualified sale of securities in the form of investment contracts in violation of California law.
Continue Reading Recent Crypto Settlements Signal State and Federal Enforcement Trends
On January 4, the Colorado Attorney General announced that his office entered into assurances of discontinuance (available here and here) with two credit unions that will result in $4 million being refunded to Colorado borrowers who were entitled to refunds of guaranteed automobile protection (“GAP”) fees. These settlements follow an investigation by the Consumer Protection Section of the Colorado Department of Law, which found that the credit unions historically failed to refund unearned GAP fees owed to consumers.
Continue Reading Colorado AG Secures Latest Settlement over Unearned GAP Fees
On January 11, the CFPB and a debt-collection law firm it sued in 2019 for illegal debt-collection practices reached settlement. The CFPB included in its initial complaint against the defendant allegations that the law firm falsely represented to consumers that attorneys were actively engaged in overseeing and filing lawsuits, while in a two year period, such law firm employed less than a dozen attorneys and filed more than 99,000 debt-collection lawsuits with minimal supporting documentation. The CFPB alleged this was a violation of the CFPA and FDCPA, which prohibits collecting debts by using false, deceptive, or misleading representations. If the proposed settlement order is entered by the court, it would require that the law firm to:
On January 4, the CFPB and the New York State Office of the Attorney General filed a complaint against a prominent subprime auto lender in the Southern District of New York. The complaint alleges that the auto lender misrepresented costs in loan agreements and tricked customers into high-cost loans on used cars in violation of the CFPA and New York usury limits. Specifically, the complaint alleges that the auto lender harmed consumers in the following ways:
Continue Reading CFPB and New York AG File Suit Against “Predatory” Auto Lender
On November 29, the OCC released a revised Policies and Procedures Manual relating to the assessment of civil money penalties (“CMP Matrix”), which will be effective as of January 1, 2023. The CMP Matrix is a reference guide for the OCC’s decision making process in evaluating penalties in response to violations of laws, regulations, and conditions imposed in writing. It replaces the prior version released in November 2018, and revises or expands certain guidelines, including:
Continue Reading OCC Revises Policies and Procedures for Civil Money Penalties
On November 22, the CFPB denied a crypto lending institution’s petition for an order modifying a pending civil investigative demand (“CID”) that the Bureau issued to the institution in December of 2021. The CFPB issued the CID as part of an investigation into the institution’s advertisement of certain product offerings, including lines of credit and its “Earn Interest Product” (“EIP”).
Continue Reading CFPB and State Regulators Hone in on Interest-Bearing Crypto Accounts
On December 1, the CFPB and a financial services company filed a stipulated proposed court order seeking the resolution of a CFPB suit alleging that the financial services company made false, misleading, and inaccurate marketing representations to consumers regarding its “high yield” savings account offering. In its original complaint, the CFPB alleged that the financial services company engaged in four separate false representations to consumers in violation of the CFPA:
Continue Reading CFPB Targets Financial Services Company for Deceptive Advertising
On November 3, the FTC and a software company operating internet-based telephone services filed an agreed upon proposed court order, which includes a $100 million fine, following an FTC suit alleging that the software company participated in illegal dark patterns and charged junk fees. In its original complaint, the FTC alleged that the software company provided simple ways to sign up for their phone plans, but made it difficult to cancel those plans, and harmed consumers by:
Continue Reading FTC Action Alleging Dark Patterns Forces Software Company to Pay Damages and Adopt New Practices
Recently, the FTC and California Department of Financial Protection (DFPI) sued several companies and owners for allegedly operating an illegal mortgage relief operation. This action alleges that the defendants’ conduct violated the California Consumer Financial Protection Law (CCFPL), the FTC Act, the FTC’s Mortgage Assistance Relief Services Rule (the MARS Rule or Regulation O), the Telemarketing Sales Rule, and the Covid-19 Consumer Protection Act.
Continue Reading FTC, DFPI Shut Down Mortgage Relief Operation