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 7, the FTC announced that a California-based lead generator agreed to settle with the FTC for $1.5 million to resolve allegations that through a number of its subsidiaries, the company induced consumers into sharing their personal financial information and then sold that information from these loan applications as “leads” to a variety of entities without regard to whether these entities are lenders or use the consumers’ data to make loans.

Continue Reading Lead Generator Settles with FTC Over Alleged FCRA and FTC Act Violations

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 October 28, the FTC issued a new enforcement policy statement warning companies against deploying “illegal dark patterns” that trick or trap consumers into subscription services, and often making websites difficult to navigate to find cancellation or refund options.  The statement is intended to assist marketers by providing specific guidance on the FTC’s interpretation of existing law as it applies to “negative option marketing” through deceptive sign up tactics, including unauthorized charges or ongoing billing that is impossible to cancel.  The policy statement notes that “[n]egative option offers come in a variety of forms, but all share a central feature: each contains a term or condition under which the seller may interpret a consumer’s silence or failure to take affirmative action to reject a good or service or to cancel the agreement as acceptance or continuing acceptance of the offer.”  Examples include automatic renewals, free trials that convert to pay features, and continuous periodic shipments that continue until the customer cancels the shipment.
Continue Reading FTC to Increase Enforcement Against “Dark Patterns” Directed at Consumers

On October 27, the FTC announced a final rule amending the Standards for Safeguarding Customer Information, known as “the Safeguards Rule,” under the Gramm-Leach-Bliley Act, which is applicable to a broad range of non-banking financial institutions, such as check-cashing businesses, payday lenders, mortgage brokers, nonbank lenders, personal property or real estate appraisers, professional tax preparers, courier services, and credit reporting agencies to develop, implement, and maintain a comprehensive security system to keep their customers’ information secure.

Continue Reading FTC Finalizes Safeguard Rules for Non-Bank Financial Institutions

The U.S. District Court for the Northern District of Illinois recently used Section 19 of the FTC Act to impose a $5 million restitution award after the original restitution award under Section 13(b) was vacated by the Seventh Circuit based on its ruling that monetary relief was not available under Section 13(b).

Continue Reading Court Agrees with FTC: Can Seek Relief under Section 19

On September 8, the FTC approved final revisions that would bring several rules implementing parts of the Fair Credit Reporting Act (FCRA) in line with the Dodd-Frank Act, which transferred rulemaking authority related to parts of the FCRA to the CFPB, and thereby narrowed the FTC’s FCRA rulemaking authority for these rules.  As such, the FTC approved changes that clarify that in some cases these FCRA rules enforced by the FTC apply only to motor vehicle dealers, which were specifically excluded from the scope of Dodd-Frank’s requirements.  The FTC previously sought comment on the proposed rule changes last year.
Continue Reading FTC Approves Changes to FCRA Rules; Clarifies Application to Motor Vehicle Dealers

On June 15, the Senate swore in President Biden nominee Lina Khan as Chair of the FTC following confirmation by vote of 69-28.  Her current term on the Commission will expire on September 25, 2024.  Khan noted that she looks forward to working with her colleagues “to protect the public from corporate abuse.”  In her role as Chair, Khan replaces former Acting Chair, Rebecca Kelly Slaughter, who served in the role since January 2021.  Prior to becoming Chair of the Commission, Khan was an Associate Professor of Law at Columbia Law School. She also previously served as counsel to the U.S. House Judiciary Committee’s Subcommittee on Antitrust, Commercial, and Administrative Law, legal adviser to FTC Commissioner Rohit Chopra, and legal director at the Open Markets Institute.  Chopra, who is awaiting Senate confirmation as the Director of the CFPB, remarked in his official statement that the “overwhelming support in the Senate for Lina Khan’s nomination to serve on the [FTC] is a big win for fair competition in our country.  There is a growing consensus that the FTC must turn the page on the failed policies spanning multiple administrations.  Lina has an extraordinary record of achievement, and she will be instrumental in helping the Commission chart a new course grounded in rigor and reality.”

Continue Reading Lina Khan Sworn in as New FTC Chair

On June 10, the Federal Trade Commission (FTC) filed an amended complaint for civil money penalties and other relief under Section 5 of the FTC Act prohibiting “unfair or deceptive acts or practices” and Section 521 of the Gramm-Leach-Bliley Act (GLBA) prohibiting the use of fraudulent statements to obtain consumer information.  Setting aside the substance of the allegations, the amended complaint is informative because while the initial complaint sought consumer redress under Section 13(b) of the FTC Act, the Supreme Court’s recent unanimous decision in AMG Capital Management foreclosed this avenue to consumer redress for the FTC, and thus the amended complaint removes that reference while otherwise replicating the substantive allegations of the initial complaint.  Further, in a creative side-step to its Section 13(b) predicament, the FTC claims authority to obtain civil penalties under the GLBA because it empowers the FTC to enforce it “in the same manner and with the same power and authority as the [FTC] has under the Fair Debt Collection Practices Act [FDCPA].”  15 U.S.C. § 6822(a).  In 2010, the Dodd-Frank Act amended the FDCPA stating that violations may be enforced “in the same manner as if the violation had been a violation of a Federal Trade Commission trade regulation rule.”  15 U.S.C. § 1692l(a).
Continue Reading FTC Takes Novel Approach to Seek Civil Money Penalties in the Wake of AMG Capital Ruling