Download Wiley Consumer Protection (July 6, 2021) | Wiley Rein LLP

Welcome to Wiley’s update on recent developments and next steps in consumer protection in the Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC). In this newsletter, we analyze recent regulatory announcements, recap key enforcement actions, and preview upcoming deadlines and events. We also include links to our articles, blogs and webinars with more analysis in these areas. We understand that staying on top of the rapidly changing regulatory landscape is more important than ever for companies looking to deliver new and breakthrough technologies.

Regulatory announcements

The FTC holds the commission’s first open meeting under the chairmanship of Lina Khan, adopting a number of measures related to rule-making, investigations and enforcement. At 1st of July, the FTC organized a open meeting of the Commission, his first of what was expected to be a series of monthly meetings under Khan’s chairmanship, which included a period of time for members of the public to address the agency. At the meeting, the agency voted, among other things, to finalize the Made in the USA, which, as we have seen here, codifies the agency’s ability to seek financial penalties for violations of Made in the USA rules; modify the agency’s internal procedures for conducting rule making regarding unfair or deceptive practices under the FTC Act Article 18 (known as the “Magnusson-Moss” regulation); and approve a series of resolutions concerning investigation procedures by agency staff in specific lines or sectors, focusing on investigating repeat offenders, tech companies and digital platforms, harm to workers and small businesses, and healthcare companies such as drug companies, drug benefit managers, and hospitals. The FTC also voted to repeal its 2015 Enforcement Policy Regarding Enforcement of “Unfair Competition Practices” under Section 5 of the FTC Act. The vote on each proposal was 3-2.

CFPB publishes consumer complaints bulletin highlighting difficulties during the COVID-19 pandemic. At 1st of July, the CFPB published a consumer complaint bulletin covering several areas of concern related to consumer assistance provided in response to the COVID-19 pandemic, including the moratorium on evictions by the Centers for Disease Control. The bulletin highlighted consumer complaints regarding, among other things, eviction debt collection practices, overdraft fees of financial institutions following disbursements of the economic impact payment, and long delays for borrowers to pay. student loans seeking information on the status of their account.

CFPB cautions property owners and consumer information agencies to report rental information accurately. At 1st of July, the CFPB published a law enforcement bulletin to remind landlords, consumer information agencies and others of their obligations to accurately report rental and eviction information. The agency said it plans to take a close look at whether landlords and property management companies are providing accurate information to consumer information agencies. In addition, the CFPB has stated that it will pay particular attention (1) to the processing of payments made by tenants with disbursements from government programs; and (2) the imposition of fees or penalties prohibited by the Coronavirus Aid, Relief, and Economic Security Act.

FFIEC publishes new guidelines on information technology, infrastructure and operations of financial institutions. At June 30th, the Federal Council for Financial Institutions Reviews (FFIEC) Posted a new guidance booklet entitled “Architecture, Infrastructure and Operations”. The FFIEC booklet may have implications for financial institutions’ cybersecurity compliance, as it provides reviewers of financial institutions, such as the CFPB, with guidance to assess the risk profile of IT infrastructure and operations. a company. Specifically, the brochure recognizes the changing technological landscape and the growing need for security in architectural design, infrastructure implementation and the operation of information technology. Full FFIEC Information Technology Exam Manual Available here.

CFPB finalizes changes to the Federal Mortgage Services Regulations. At June 28, the CFPB finalized modifications the agency’s mortgage loan management regulations. The new CFPB rules establish temporary guarantees designed to ensure that borrowers have more time to explore options before a possible foreclosure, including through new loan options and home sales. The rules also allow service providers to offer simplified loan modifications and require them to communicate certain loan options to borrowers. The rules exclude small loan managers and will come into effect on August 31, 2021.

Important enforcement measures

FTC settles down with a business opportunity company that has reportedly promised big payoffs. At July 2nd, the FTC ad a settlement with Digital Income System, Inc. (DIS) on allegations that the company told consumers they could earn commissions on the sale of memberships to their work at home programs. For example, the DIS website stated that “consumers will earn between $ 500 and $ 12,500 per sale.” DIS allegedly charged consumers between $ 1,000 and $ 25,000 for subscriptions, which gave them access to their subscriptions. own websites where they could earn commissions on selling subscriptions to other consumers. FTC regulations require DIS to pay a judgment of $ 3.6 million, which was partially suspended due to a inability to pay.

The online coloring book app settles allegations with the FTC that it illegally collected information about children. At June 30th, the US Department of Justice (DOJ), on behalf of the FTC, filed a complaint against Kuuhuub Inc. (Kuuhuub) for breaking the rule of the Children’s Online Privacy Protection Act (COPPA rule). COPPA requires websites and apps to notify parents and obtain verifiable parental consent before collecting personal information from children if any component of the website or app is directed to children under the age of 13. . Kuuhuub operates the Recolor coloring book app, which allows users to digitally color on their mobile devices. Although the app is advertised as an adult coloring book, the DOJ, through the FTC, alleges that part of the coloring book was intended for children in a category titled “Children.” Under the regulation, Kuuhuub is obligated to delete all personal information that it has collected from children unless it has obtained parental consent. The regulations also require Kuuhuub to offer paid Recolor app subscribers a refund if they were under 18 when they signed up.

FTC charges PPP Marketer with falsely promising rapid delivery of face masks. At June 30th, the FTC filed a complaint against Frank Romero (d / b / a Trend Deploy) in US District Court for the Middle District of Florida for allegedly announcing the availability and prompt delivery of N-95 face masks, even though he allegedly had no basis to make such promises. Romero allegedly failed to notify consumers of delayed shipments, failed to offer cancellations and refunds as required by the FTC mail-order rule, and failed to honor refund requests so that consumers can buy the products offered elsewhere. The agency is asking for financial compensation and civil penalties.

CFPB issues draft order against debt relief and credit repair services company for allegedly deceptive practices. At June 29, the CFPB filed a proposed order against Burlington Financial Group and its owners and officers, Richard Burnham, Katherine Burnham and Sang Yi (collectively, Burlington) for allegedly deceiving consumers into hiring the company to reduce or eliminate credit card debt. According to common complaint Filed by the CFPB and the Georgia State Attorney General, Burlington used telemarketing to reach out to elderly and low-income consumers promising them the company would eliminate credit card debt and improve credit scores. The joint complaint alleges that Burlington violated both the Consumer Financial Protection Act and the telemarketing rule through deceptive marketing. If made in court, the proposed order would bar Burlington from doing business in Georgia and also require the company to pay a civil fine of $ 150,001.

The FTC is finalizing an order against the women’s fertility tracking app that allegedly misleads users regarding the disclosure of health data. At June 22, the FTC finalized a rule that requires Flo Health Inc. (Flo Health) to obtain affirmative consent from users of the company’s fertility tracking app before sharing their personal health information with third parties and ” Obtain an independent review of privacy practices. As we noted in our January 19 Bulletin, the FTC complaint alleged that Flo Health promised to keep users’ health data private and only use it to provide app services to users. Flo Health, however, reportedly disclosed this health data to third parties providing marketing and analytics services to the app.

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