Wiley Consumer Protection Download (November 23, 2020) | Wiley Rein LLP

Welcome to Wiley’s replace on current developments and what’s subsequent in shopper safety on the Client Monetary Safety Bureau (CFPB) and Federal Commerce Fee (FTC). On this e-newsletter, we analyze current regulatory bulletins, recap key enforcement actions, and preview upcoming deadlines and occasions. We additionally embrace hyperlinks to our articles, blogs, and webinars with extra evaluation in these areas. We perceive that holding on high of the quickly evolving regulatory panorama is extra necessary than ever for companies in search of to supply new and ground-breaking applied sciences. 

Regulatory Bulletins

CFPB Publicizes Compliance Assets for FDCPA Remaining Rule (Regulation F). On November 13, the Client Monetary Safety Bureau (CFPB) introduced the discharge of a resource guide that gives an summary of the CFPB Regulatory Implementation and Steering crew, and supplies directions to business on easy methods to discover compliance aids associated to the Truthful Debt Assortment Practices Act (FDCPA) Remaining Rule, which was released on October 30. The useful resource information additionally supplies a hyperlink to the CFPB’s debt collection compliance aid resource webpage. events can signal as much as obtain e-mail updates in regards to the Remaining Rule here. Moreover, we wrote a recap on the FDCPA Remaining Rule, which is obtainable here.

Companies Finalize Greenback Thresholds in Rules Z and M for Client Credit score and Lease Transactions. On November 18, the Federal Reserve Board (Federal Reserve) and CFPB finalized the greenback thresholds beneath Regulation Z (Reality in Lending Act) and Regulation M (Client Leasing Act) that may decide exempt shopper credit score and lease transactions. The thresholds are set in accordance with the Dodd-Frank Wall Road Reform and Client Safety Act of 2010 (Dodd-Frank Act). The Federal Reserve and CFPB decided that protections beneath the Client Leasing Act and Reality in Lending Act will apply to credit score transactions and shopper leases of $58,300 or much less in 2021. The notices explaining these choices can be revealed within the Federal Register.

Companies Announce Threshold for Smaller Mortgage Exemption from Larger-Priced Mortgage Mortgage Appraisal Necessities. On November 18, the CFPB, Federal Reserve, and the Workplace of the Comptroller of the Forex announced that the brink for exempting loans from particular appraisal necessities for higher-priced mortgages in 2021 will stay at $27,200, because it was in 2020. The Dodd-Frank Act modified the Reality in Lending Act to incorporate particular appraisal necessities for higher-priced mortgage presents.

FTC Points Company Monetary Report for FY 2020. On November 16, the Federal Commerce Fee (FTC) issued its Fiscal Year (FY) 2020 Agency Financial Report. The FY 2020 Company Monetary Report describes the company’s evaluation of its efforts to guard customers and improve competitors. This report is being submitted to Congress and the Director of the Workplace of Administration and Funds, as required by the Chief Monetary Officers Act of 1990, the Authorities Administration Reform Act of 1994, the Accountability of Tax {Dollars} Act of 2002, and the Annual Administration Experiences beneath the Authorities Companies Management Act.

Vital Enforcement Actions

CFPB Points Consent Order In opposition to Florida Auto Mortgage Fee Program Supplier. The CFPB issued a Consent Order in opposition to U.S. Fairness Benefit, Inc. (USEA), a Florida-based auto mortgage fee program supplier, on November 20. The CFPB’s Consent Order concludes that USEA violated the Client Monetary Safety Act (CFPA) by, amongst different issues, not together with a $399 enrollment payment within the calculations offered to customers. The CFPB discovered that over 100,000 customers had been topic to USEA’s misleading practices. The CFPB’s Consent Order imposes a $9,300,000 judgment on USEA.

CFPB Sues Debt Assortment Firm for Alleged TSR and CFPA Violations. On November 20, the CFPB filed a complaint in opposition to FDATR, Inc. (FDATR) within the U.S. District Courtroom for the Northern District of Illinois alleging violations of the Telemarketing Gross sales Rule (TSR) and the CFPA. Particularly, the CFPB alleges that FDATR, an organization promising pupil mortgage debt reduction and credit-repair providers to customers, used misleading practices to draw customers and misrepresented points of its purported debt reduction providers. For instance, the company alleges that FDATR said that its providers would scale back or get rid of pupil mortgage funds whereas bettering shopper credit score scores. The CFPB is in search of financial reduction, together with civil penalties.

FTC Recordsdata Administrative Criticism In opposition to Complement Entrepreneurs. On November 20, the FTC filed an administrative complaint in opposition to complement marketer Well being Analysis Laboratories, LLC (HRL) and Entire Physique Dietary supplements (WBS) for making allegedly unsubstantiated claims that their dietary supplements stop or deal with sure persistent illnesses. The FTC had beforehand filed an unsuccessful contempt movement in opposition to the events for violation of a stipulated order. The allegations can be tried in a proper continuing earlier than an administrative legislation decide.

FTC Publicizes and Seeks Touch upon Proposed Settlement with Zoom. On November 9, the FTC introduced a proposed settlement with Zoom Communications, Inc. (Zoom).  The Proposed Consent Settlement settles alleged violations of Part 5 of the FTC Act. The FTC’s complaint in opposition to Zoom alleged that the corporate, amongst different issues, had misled customers since 2016 by stating that it supplied “end-to-end 256-bit encryption” to guard customers’ communications, and that the corporate the truth is supplied a decrease degree of safety. Feedback are due December 14 on the FTC’s Proposed Consent Agreement.

FTC Sues Cellular Banking App for Deceptive Statements Concerning Shoppers’ Entry to Funds. On November 18, the FTC filed a grievance within the U.S. District Courtroom for the Northern District of California in opposition to Beam Monetary Inc. (Beam), a cellular banking utility, alleging that it falsely promised customers excessive curiosity (financial savings) charges and “24/7” entry to account funds. Particularly, the FTC’s grievance alleges that whereas Beam promised that buyers would obtain requested funds from their accounts inside three to 5 enterprise days, some customers waited months to obtain their cash. The FTC’s grievance argues that these actions had been misleading in violation of Part 5 of the Federal Commerce Fee Act (FTC Act).

FTC Sends Warning Letter to Monetary Support Prep Marketer. The FTC despatched a warning letter to Frank Monetary Support (Frank), stating that the corporate could possibly be deceptive customers about entry to the Coronavirus Support, Reduction, and Financial Safety (CARES) Act on November 16. In response to the FTC, Frank, a monetary support prep marketer, claims that it offers college students “all the pieces you want” to use for emergency funding accessible beneath the CARES Act. Nonetheless, the FTC warned the corporate that the shape letter supplied to college students might lack the data fields {that a} pupil wants to use for CARES Act funding grants from their college. The FTC’s letter additionally warns Frank about its presents of money advances that may be repaid “when your monetary support is available in” with none curiosity or charges, alleging that the corporate’s phrases seem to require advance funds to be repaid in 61 days with a month-to-month payment. The warning letter instructs the corporate to take immediate motion to handle all misleading or illegal claims.

CFPB Points Consent Order In opposition to Telecommunications Debt Collector. On November 12, the CFPB issued a Consent Order in opposition to Afni, Inc. (Afni), a third-party debt collector primarily based in Illinois specializing in telecommunications debt assortment. Afni furnishes credit score reporting data to shopper reporting businesses (CRAs) concerning the customers that it’s making an attempt to gather from. The CFPB alleges that Afni violated the Truthful Credit score Reporting Act (FCRA) by, amongst different issues, furnishing data to CRAs that it knew or had purpose to know was inaccurate; failing to conduct investigations into disputes made by customers; and failing to determine and keep its insurance policies and procedures concerning its furnishing of shopper data to CRAs. The Consent Order imposes a $500,000 civil penalty.

FTC Sends Warning Letters to 20 Entrepreneurs Making Unsupported COVID-19 Claims. The FTC announced on November 12 that it despatched letters to 20 entrepreneurs nationwide, warning them to cease making unsupported claims that their merchandise and therapies can both stop or deal with the coronavirus (COVID-19). That is the ninth spherical of warning efforts that the FTC has transmitted as a part of its efforts to guard customers from unsupported COVID-19 well being advertising and marketing claims. Over the previous 12 months, the FTC has sent comparable letters to greater than 330 entities. A few of the warning letters goal services and products that the FTC has beforehand despatched warnings about (akin to ozone remedy and dietary supplements). Others dispute claims that extra obscure merchandise and therapies, akin to bead bracelets, can stop or deal with COVID-19.

Upcoming Remark Deadlines and Occasions

FTC Seeks Touch upon the Deal with Discrepancy Rule. Feedback are due November 30 on the FTC’s Notice of Proposed Rulemaking (NPRM) detailing technical amendments to the Duties of Customers of Client Experiences Concerning Deal with Discrepancies Rule (Deal with Discrepancy Rule). The Deal with Discrepancy Rule was promulgated after Congress handed the Truthful and Correct Credit score Transactions Act of 2003, which required a nationwide shopper reporting company to inform shopper report requesters of the existence of an handle discrepancy when the reporting company and the requester have completely different addresses for a shopper. The Deal with Discrepancy Rule obligates entities that use shopper reviews to develop and deploy insurance policies and procedures to allow the person of a shopper report back to kind an inexpensive perception that the report pertains to the patron about whom the data was requested. The FTC is proposing to amend the Deal with Discrepancy Rule to accommodate the Dodd-Frank Act.

CFPB Requests Enter on Adjustments to ECOA. Feedback are due December 1 (prolonged from October 2) on the CFPB’s Request for Information (RFI) on potential adjustments to the Equal Credit score Alternative Act (ECOA). Particularly, the CFPB is requesting data “to determine alternatives to stop credit score discrimination, encourage accountable innovation, promote honest, equitable, and nondiscriminatory entry to credit score, handle potential regulatory uncertainty, and develop viable options to regulatory compliance challenges.”

CFPB and Colorado Legal professional Common to Maintain Joint, Digital Workplace Hours. The CFPB and the Workplace of the Colorado Legal professional Common have introduced joint, digital workplace hours as a part of the American Client Monetary Innovation Community (ACFIN). Launched in 2019, ACFIN is a community of federal and state regulators working to facilitate consumer-beneficial innovation by way of coordination with the non-public sector. The workplace hours, which is able to happen on December 2, are geared in the direction of offering innovators with the chance to debate points akin to monetary expertise and new services and products with officers from each the CFPB and Colorado. Events keen on requesting a gathering can accomplish that here. Assembly requests are due November 23.

FTC Seeks Touch upon Prescreen Choose-Out Discover Rule. Feedback are due December 7 on the FTC’s review of the Prescreen Choose-Out Discover Rule as a part of the company’s systematic evaluation of its present pointers and laws. The Prescreen Choose-Out Discover Rule requires that individuals utilizing shopper reviews to make unsolicited agency presents of credit score or insurance coverage should present a conspicuous assertion with any written provide that informs the patron that data from their report was utilized in reference to the transaction. The particular person utilizing the report should additionally notify the patron that they’ve the correct to ban shopper reporting data from being utilized in any transaction, and that they might opt-out by way of notification. The FTC is proposing to restrict the Prescreen Choose-Out Discover Rule to motorcar sellers in accordance with the Dodd-Frank Act.

FTC Requests Enter on the Affiliate Advertising and marketing Rule. Feedback are due December 7 on the FTC’s review of the Affiliate Advertising and marketing Rule as part of the company’s evaluation of all guidelines and guides. Moreover, the FTC is proposing to amend the Affiliate Advertising and marketing Rule to correlate with adjustments made to FCRA by the Dodd-Frank Act. The Affiliate Advertising and marketing Rule of the Truthful and Correct Credit score Transactions Act of 2003 (FACT Act) offers customers the correct to limit an individual from utilizing shopper data obtained by an affiliate to make solicitations to the client. Particularly, if an individual or entity receives shopper eligibility data from a enterprise affiliate, the particular person or entity might not make the most of that data to make solicitations until the patron is given an opt-out proper to using such data. The FTC is proposing to amend the Affiliate Advertising and marketing Rule to restrict its regulatory scope to motorcar sellers in accordance with the Dodd-Frank Act.

FTC Requests Touch upon Furnishers Rule. Feedback are due December 14 on a Proposed Rule associated to the FTC’s Duties of Furnishers of Data to Client Reporting Companies Rule (Furnisher Rule) as a part of its evaluation of all company laws and guides. The FTC is proposing to amend the Furnisher Rule to correlate it with adjustments made to FCRA by the Dodd-Frank Act. The Furnisher Rule requires that furnishers of shopper reviews develop cheap written insurance policies and procedures pertaining to the accuracy of the data regarding customers that they supply to a shopper reporting company. The FTC’s Proposed Rule would cut the scope of the Furnisher Rule to entities set forth within the Dodd-Frank Act which are engaged within the sale and servicing of motor autos.

FTC Solicits Enter on Threat-Based mostly Pricing Rule. Feedback are due December 22 on the FTC’s NPRM concerning the Duties of Collectors Concerning Threat-Based mostly Pricing Rule (Threat-Based mostly Pricing Rule) as a part of its evaluation of all company laws and guides. Threat-based pricing is the follow of modifying the value and different phrases of credit score supplied or prolonged to a selected shopper to display the patron’s nonpayment danger. The Threat-Based mostly Pricing Rule, which represents a provision of FCRA, requires that an individual present a risk-based pricing discover to a shopper when an individual makes use of a shopper report to increase credit score and does so on phrases which are materially much less favorable than essentially the most favorable phrases accessible to a considerable portion of debtors. Moreover, the FTC is proposing to amend the Threat-Based mostly Pricing rule to correlate it to adjustments made to the FCRA by the Dodd-Frank Act.

— to www.jdsupra.com

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