On April 29, the CFPB filed a proposed order in federal court seeking final judgment against three California-based defendants for engaging in unlawful fee-charging practices and deceptive telemarketing. According to the complaint, the defendants, a student loan debt relief business and a general debt-settlement company, along with their owner and CEO charged illegal upfront fees and deceived customers into paying for debt relief services in violation of the Consumer Financial Protection Act (CFPA) and Telemarking Sales Rule (TSR).  The CFPB alleges that defendants wrongfully charged more than 9,000 consumers with federal student-loan debt a total of approximately $10.5 million in illegal upfront fees, and used deceptive sales tactics to lure consumers into signing up for certain debt-relief services.  If approved by the court, defendants would be banned from performing debt relief and settlement activities.  The CEO would also be require to pay a civil monetary penalty of $30,000.
Continue Reading No Relief in Sight: CFPB and FTC Continue to Take Action Against Debt Settlement Companies

On April 28, the FTC proposed updating the Telemarketing Sales Rule (TSR) to extend protections against telemarketing tricks and traps to small businesses and to strengthen defenses against other telemarketing schemes that negatively impact consumers. The agency is seeking public comments on the proposed changes to the rule.

Continue Reading FTC Proposes Updates to Telemarketing Sales Rule, Business to Business Exemption in Order To Protect Small Businesses

The FTC recently finalized an order against a leading provider of business credit report services, alleged to have deceived business regarding the value of products offered and failing to correct errors on customers’ credit reports.
Continue Reading FTC Finalizes Order Against Leading Provider of Business Credit Reports

On April 15, the CFPB and FTC announced the release of a joint annual report to Congress administering the Fair Debt Collection Practices Act (FDCPA).  The annual report highlights both agencies’ efforts to protect and provide debt collection relief to consumers, particularly in light of the COVID-19 pandemic and resulting economic hardship.
Continue Reading CFPB Signals Foray into Protecting Small Businesses from Abusive Debt Collectors

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 22, the CFPB issued Compliance Bulletin 2022-05 regarding potentially illegal practices related to consumer reviews.  The guidance states that consumer reviews impact company revenue and help consumers choose between financial providers, which can in turn “incentivize dishonest market participants to attempt to manipulate the review process, rather than compete based on the value of their services, which can frustrate a competitive marketplace.”
Continue Reading CFPB Flexes UDAAP Muscle Over Contractual “Gag” Clauses and Fake Consumer Reviews

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

Last month, the FTC issued an advisory opinion clarifying that the Holder Rule does not preempt any state laws that put more liability on banks that are the “holders” of a loan contract, and in particular, the rule does not limit recovery of attorneys’ fees and costs when state law authorizes awards against a holder (we previously discussed the advisory opinion in an earlier Consumer Finance & FinTech Blog post here).
Continue Reading Auto Finance Companies May Face Risk From Holder Rule, Pending California Supreme Court Case