The FTC’s Safeguards Rule compliance deadline is right around the corner – June 9. The Safeguards Rule requires non-banking financial institutions to develop, implement, and maintain a comprehensive security program to keep their customers’ information safe (we discussed the Safeguards Rule in a previous blog post here).
Continue Reading Reminder: The FTC “Safeguards Rule” Compliance Date is June 9
On May 5, the CFPB announced that it has sent payments totaling more than $22 million to approximately 6,500 individuals who were harmed by a Maryland-based debt-relief and credit-repair company that marketed and sold debt-relief and credit-repair services nationwide from 2016 to 2020. In 2021, a federal court entered a stipulated final judgement and order against the company and its executives for allegedly deceiving consumers into hiring the company with false promises to lower or eliminate their credit-card debts and to improve their credit scores in violation of consumer financial protection laws.
Continue Reading CFPB, FTC Continue Crack Down on Debt Relief Schemes
On April 25, the CFPB, FTC, EEOC, and Civil Rights Division of the DOJ issued a joint statement outlining the agencies’ collective commitment to monitor the development and use of automated systems and artificial intelligence and enforce their respective authorities where such systems produce outcomes that result in unlawful discrimination. The joint statement explains that potential discrimination in automated systems can come from different sources, including:
Continue Reading Federal Regulators Remain Focused on AI-based Discrimination
On March 17, the FTC announced its inquiry into the small business credit reporting industry. In particular, it is ordering five firms to provide detailed information about their products and processes.
Continue Reading FTC Examining Small Business Credit Reporting System
On February 28, 2023, the FTC and the CFPB issued a joint request for information (“RFI”) seeking public comment on background checks used to screen potential tenants for rental housing. As part of the RFI, the FTC and the CFPB are asking current tenants, prospective tenants, advocacy groups, commercial and individual landlords, property managers, background screening companies, other consumer reporting agencies, and others to weigh in on a wide array of issues that affect tenant screening, such as:
Continue Reading CFPB, FTC Seek Public Comment on Tenant Background Checks
On March 9, the FTC unanimously voted to block the proposed merger between the nation’s largest provider of home mortgage loan origination systems (LOS) and other key lender software tools, and its top competitor that offers the same services. In its complaint, the FTC alleged that one company owns the country’s dominant LOS platform, while the other company owns and operates the second-largest platform. In a press release announcing the administrative complaint, the FTC stated that the deal “would drive up costs, reduce innovation, and reduce lenders’ choices for tools necessary to generate and service mortgages.”
Continue Reading FTC Seeks to Block Deal Between Top Mortgage Loan Technology Providers
The rapid rise of AI used with advertising, marketing and other consumer facing applications has caused the FTC to continue to take notice and issues guidance. For example, the FTC is concerned about false or unsubstantiated claims about an AI product’s efficacy. It has issued AI-related guidance in the past. The following is some recent FTC guidance to consider when referencing AI in your advertising. This guidance is not necessarily new, but the fact that it is being reiterated should be a signal that the FTC continues to focus on this area and that actions may be forthcoming. In fact, the recent guidance states: “AI is important, and so are the claims you make about it. You don’t need a machine to predict what the FTC might do when those claims are unsupported.”
On February 9, the FTC provided the CFPB and the Federal Reserve Board with its annual letter that summarizes its activities enforcing the ECOA and its implementing regulation, Regulation B, in the prior year. The FTC is in charge of ECOA enforcement for financial service providers that are not banks, thrifts, or federal credit unions. In accordance with the Dodd-Frank Act, the CFPB has rulemaking and enforcement authority over ECOA, and the FTC retains its authority to enforce ECOA, as well as authority to enforce any CFPB rules applicable to entities within the FTC’s jurisdiction. As set forth in full in the letter, the FTC describes its work in areas such as enforcement, research, and policy development, including:
On January 19, the CFPB issued Circular 2023-01 to affirm that companies offering “negative option” subscription services are required to comply with federal consumer financial protection laws. According to the Circular, “negative option” refers to a term or condition under which a seller may interpret a consumer’s silence, failure to take an affirmative action to reject a product or service, or failure to cancel an agreement as acceptance or continued acceptance of the offer (see our previous blog posts on negative option marketing here and here). The CFPB warns that negative option marketing practices may violate the prohibition on unfair, deceptive, or abusive acts or practices in the CFPA where a seller:
Continue Reading CFPB: Negative Option Marketing Practices May Violate CFPA
On November 15, the FTC announced a six month extension to the deadline for companies to comply with the Safeguards Rule. The Safeguards Rule requires non-banking financial institutions, such as mortgage brokers, motor vehicle dealers, and payday lenders, to develop, implement, and maintain a comprehensive security program to keep their customers’ information safe (we discussed the Safeguards Rule in a previous blog post here). The deadline for complying with some of the updated requirements of the Safeguards Rule is now June 9, 2023.
Continue Reading FTC Extends Deadline for Safeguards Rule Compliance to June 9, 2023
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