On March 31, the FTC and Illinois State Attorney General announced a settlement of charges against a large, multistate auto dealer that allegedly discriminated against black consumers and included illegal junk fees for unwanted “add-ons” in customers’ bills.
Continue Reading FTC Imposes Record-Setting $10M Fine Against Multistate Auto Dealer, Settling Charges of Racial Discrimination and Unauthorized Charges

On March 18, the U.S. District Court for the Southern District of Texas issued an injunction against a Texas-based credit repair company that allegedly made false promises to remove negative information from credit reports and filed false identity theft reports to explain negative items on credit reports. The court granted an injunction against the company, finding violations of Section 5 of the FTC Act, the Credit Repair Organizations Act, and the Telemarketing and Consumer Fraud and Abuse Prevention Act. The permanent injunction imposes financial restrictions on the defendants and halts their operations.
Continue Reading FTC, DOJ Halt Credit Repair Operation Over Deceptive Practices

On March 8, the FTC settled with the operators of an online stock trading platform over allegations that the operators fraudulently marketed investment-related services that they claimed would enable consumers to make consistent profits and beat the market.  FTC alleged that the consumers were misled and those who subscribed to the operators’ stock and option trading services were trapped into hard-to-cancel subscription plans with costly charges.
Continue Reading Online Investment Site Settles with FTC, $2.4M Fine

On February 28, the FTC announced that the operators of an alleged credit card interest rate reduction scam will be permanently banned from the debt relief industry as part of court orders resolving charges by the FTC and the Florida AG.  The FTC and Florida AG alleged that the operators engaged in deceptive and abusive practices violating the FTC Act, the Telemarketing Sales Rule, and the Florida Deceptive and Unfair Trade Practices Act in selling credit card interest rate reduction services to consumers.  According to the joint complaint, the operators made telephone calls claiming to permanently and substantially reduce consumers’ credit card interest rates, posed as the consumers’ credit card company representatives or affiliates and allegedly claimed they could save consumers thousands of dollars in credit card interest and enable them to pay off their debt faster.  According to the FTC, the operators left people even deeper in debt after they paid upfront fees of between $995 and $4995, as well as substantial fees to transfer their existing debts to new cards.
Continue Reading FTC Bans Operators of Alleged Debt Relief Scam, $5.3M penalty

On February 15, the CFPB released Bulletin 2022-02 to reiterate the prohibition in the Electronic Fund Transfer Act (EFTA) that financial companies with government benefit contracts may not require consumers to establish an account at a particular financial institution as a condition of receipt of a government benefit.  The bulletin notes that the prohibition under the EFTA ensures that consumers receiving the government benefits, such as Social Security payments, veterans’ benefits, and unemployment insurance have a choice with respect to how they receive their funds.
Continue Reading CFPB Takes Aim at Prepaid Card Providers Distributing Government Benefits

On January 28, the FTC announced that it banned an automotive marketing company and its owner from the auto industry for the next twenty years for allegedly engaging in unfair and deceptive practices in violation of the FTC Act and failing to comply with the Truth in Lending Act’s (TILA) disclosure requirements.  According to the FTC’s opinion, the company sent mail advertisements directing consumers to visit auto sales websites, inaccurately suggesting that these websites were affiliated with a government COVID-19 stimulus program. Consumers also received direct mail advertisements from the company purportedly informing them that they had won specific and valuable cash prizes that could be collected upon visiting a car dealership. Once consumers visited the dealerships as directed, they learned that they had not won the prize listed in the mailings.  The company was also found to violate TILA’s requirements for advertising “closed-end credit” to prominently disclose key financing terms that consumers need to determine the true cost of the advertised car loans.
Continue Reading FTC Order: Auto Marketing Company and Owner Banned From Industry for Misleading Consumers

On January 18, the CFPB filed a proposed final judgment against an Illinois-based third-party payment processor and its founder (collectively, “defendants”), which ceased operations almost three years ago, settling claims that the defendants facilitated payments for telemarketing fraudsters targeting seniors.

Continue Reading CFPB Bans Payment Processor for Engaging in Fraudulent Practices

On January 13, the FTC announced that a leading business credit report provider agreed to settle allegations that it had engaged in deceptive and unfair business practices.  The FTC alleged that businesses complained of costly errors in the credit reports, which the company failed to remedy.  Additionally, the company’s suite of credit-improving products costing business hundreds or thousands of dollars per year failed to provide any real benefit to businesses.  Also, the company’s telemarketers deceptively pitched another service to businesses and falsely claimed that the businesses had to purchase the service for the company to complete the business’s credit profile.  Finally, the company allegedly did not disclose to businesses that the service’s subscription is automatically renewed each year, nor did it properly disclose other renewal practices that led to increasing costs.

Continue Reading FTC: Provider of Business Credit Reports Engaged in Deceptive and Unfair Practices, Refunds Customers

On January 5, the FTC announced that two defendants will be permanently banned from the merchant cash advance and debt collection industries, and required to pay $675,000 to resolve allegations that they used deceptive and illegal means to seize assets from small businesses, non-profits, and religious organizations.  The order results from a 2020 complaint against two New York-based companies engaged in small-business financing, along with several of their owners and officers.

Continue Reading FTC Bans Merchant Cash Advance Provider from Industry

On December 17, the CFPB filed a proposed stipulated final judgment and order against a limited liability company, its principals, and an attorney who allegedly provided advisory services to consumers who sold structured settlements to the company.   The CFPB alleged that the company steered consumers to consider signing away future structured settlement payments for lump-sum payments, and to receive “independent advice” from an attorney who was paid directly by the company who indicated to consumers that the transactions required very little scrutiny.

Continue Reading CFPB Takes Action Against Purchaser of Structured Settlements