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Wiley Consumer Protection Download (August 8, 2022) – Dodd-Frank, Consumer Protection Act

Welcome to Wiley’s update on recent developments and
what’s next in consumer protection at 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 keeping on top of
the rapidly evolving regulatory landscape is more important than
ever for businesses seeking to offer new and ground-breaking
technologies. Please reach out if there are other topics you’d
like to see us cover or for any additional information.

To subscribe to this newsletter, click here.

Regulatory Announcements

FTC Commissioner Phillips Plans to Leave the Agency in
the Fall, Per Media Reports.
On August 8,
several media outlets reported that FTC Commissioner Noah Phillips
informed his staff through a memo that he plans to resign from his
position at the agency this Fall. Commissioner Phillips was
originally confirmed as FTC Commissioner on April 26, 2018 after
being nominated by President Donald Trump. Before joining the
agency, Commissioner Phillips served as Chief Counsel to Senator
John Cornyn (R-TX) on the Senate Judiciary Committee. Commissioner
Phillips’ departure will leave a 3-1 Democratic to Republican
split at the agency pending confirmation of a replacement. No more
than three FTC Commissioners may be from the same political

CFPB and DOJ Issue Joint Letter Highlighting SCRA
Obligations to Auto Finance Companies.
On July
, the U.S. Department of Justice (DOJ) and the CFPB
issued a Joint Letter reminding auto finance companies
of their obligations to military servicemembers under the
Servicemembers Civil Relief Act (SCRA). Specifically, the Joint
Letter notes that the SCRA: (1) prohibits an auto finance company
from repossessing a vehicle without a court order during the
borrower’s military service; (2) allows servicemembers to
terminate vehicle leases early and without penalty after either
entering military service or receiving military orders for a
permanent change in station or assignment; and (3) limits interest
rates on vehicle loans incurred prior to military service to no
more than six percent per year, including the majority of fees.

CFPB Issues Analysis of How Medical Debt Reporting
Changes Will Impact Consumer Credit Reports.
July 27, the CFPB released a Report finding that credit reporting changes
by the three largest national consumer reporting companies -
Experian, Equifax, and TransUnion – will eliminate a significant
amount of medical debt credit reporting. Experian, Equifax, and
TransUnion have announced that beginning in 2023, they will no
longer list medical collections tradelines less than $500 on
consumer credit reports. The Report notes that although lower
income residents and residents in certain majority-minority census
tracts are more likely to have medical collections tradelines on
their credit reports than residents of high income and
majority-white census tracts, they are slightly less likely to
benefit from the changes.

Significant Enforcement Actions

FTC Obtains Summary Judgment in Litigation Against
Company That Failed to Deliver COVID-19 PPE.
August 1, the FTC announced that the U.S. District Court for the
Eastern District of Missouri ruled in favor of its motion for
summary judgement against American Screening, LLC (American Screening)
for allegedly failing to fulfill orders for personal protective
equipment (PPE) during the onset of the COVID-19 pandemic. The FTC
originally filed suit against American Screening in
August 2020 under the Federal Trade Commission Act (FTC Act) and
the Mail, Internet and Telephone Order Rule (Mail Order Rule),
alleging that the company deceived consumers about the availability
of PPE during the onset of the COVID-19 pandemic. In granting the
FTC’s summary judgment motion, the court found that, although
its website stated that items were in stock and would be shipped
within 24-48 hours, American Screening had no reasonable basis for
its claims and failed to ship many of its orders. The court also
concluded that American Screening did not follow the Mail Order
Rule’s requirements for delayed shipments. Ultimately, the
court held that both injunctive relief and $14 million in monetary
relief were appropriate. The FTC will submit a proposed order to
finalize relief in the American Screening case in the coming

FTC Obtains Monetary Settlement with Home Buying Firm
for Making Allegedly Misleading Claims About Its Service.

On August 1, the FTC announced that Opendoor Labs Inc. (Opendoor),
a company that operates an online real estate business that buys
homes directly from consumers, agreed to a proposed administrative
consent order requiring the company to pay $62
million for allegedly making false claims about proceeds consumers
could receive from using their services. According to the FTC’s
complaint allegations, Opendoor promised that
consumers would make more by selling their homes to Opendoor than
they would on the open market by providing “market-value”
offers and reducing transaction costs. However, the FTC alleged
that Opendoor’s offers were below market value on average and
that its costs were higher than what consumers typically pay,
costing the majority of consumers who sold to Opendoor thousands of
dollars. The FTC voted 5-0 to accept the consent order, which will
be subject to a 30-day public comment period before the FTC votes
on finalizing the settlement.

FTC Settles with Payment Processor for Allegedly Making
False Claims and Concealing Cancellation Terms.
July 29, the FTC announced that it reached a settlement with
payment processing and marketing provider First American Payment
Systems (First American) and two of its sales affiliates for
alleged violations of the FTC Act and the Restore Online
Shoppers’ Confidence Act (ROSCA). The FTC’s complaint alleges that First American, through
its sales affiliates, violated ROSCA by failing to disclose
material contract terms to consumers, charging consumers without
express informed consent, and failing to provide a simple mechanism
for consumers to cancel the agreements. The FTC also alleges that
First American violated the FTC Act by representing that consumers
may cancel at any time without penalty, may cancel within an
introductory trial period without penalty, or are subject to just a
short-term agreement, when First American’s standard service
agreement allegedly “binds consumers to a three-year agreement
with a $495.00 early termination fee.” Under the proposed order, First American must provide
$4.9 million to the FTC for refunds to affected businesses.

CFPB Fines U.S. Bank $37.5 Million for Allegedly Opening
Bank Accounts Without Consumer Consent.
On July
, the CFPB announced that it issued a consent order against U.S. Bank National
Association (U.S. Bank). According to the CFPB, U.S. Bank imposed
sales goals on bank employees as part of their job description and
implemented an incentive-compensation program that financially
rewarded employees for selling U.S. Bank’s consumer financial
products or services. The CFPB alleged that in response to this
incentive structure, U.S. Bank employees used consumer credit
reports and sensitive personal information to issue credit cards
and lines of credit and open deposit accounts for certain
consumers, without their knowledge and consent and without required
applications and disclosures in violation of both the Truth in
Lending Act and Truth in Savings Act, and their implementing
regulations. The CFPB also alleged the account openings to be
abusive in violation of the Consumer Financial Protection Act of
2010, and further found that U.S. Bank violated the Fair Credit
Reporting Act (FCRA) by using or obtaining consumer reports without
a permissible purpose in connection with unauthorized applications
for credit cards. Under the order, U.S. Bank is required to cease
these practices, develop a plan to remediate harmed consumers by
returning unlawfully charged fees, and pay a $37.5 million penalty
to the CFPB.

FTC Fines Apparel Company for Alleged False Made in USA
On July 28, the FTC announced that it finalized an order against apparel company Lions Not Sheep
Products, LLC (LNSP), fining the company $211,335 for falsely
claiming that its imported apparel is made in the U.S. The FTC
first announced its administrative complaint against LNSP in May 2022, alleging
that the company “removed tags disclosing appropriate foreign
country of origin from shirt products and printed ‘Made in
USA’ at the neck of the shirts[.]” In addition to the
monetary penalty, the order requires LNSP to stop representing that
a product is made in the United States unless the company can prove
as much, and to disclose its products’ country of origin on the
products’ labels and in any catalogs or promotional material.
The FTC voted 5-0 to approve this final order.

CFPB and DOJ File Complaint and Proposed Consent Order
Against Mortgage Company Based on Discrimination Claims.

On July 27, the CFPB announced that it, together with the
Department of Justice (DOJ), filed a complaint and proposed consent order in the Eastern District
of Pennsylvania against Trident Mortgage Company, LP (Trident). The
CFPB and DOJ allege that Trident engaged in unlawful discrimination
on the basis of race, color, or national origin against applicants
and prospective applicants, including by redlining specific
majority-minority neighborhoods, when considering applications for
credit, in violation of the Equal Credit Opportunity Act,
Regulation B, and the Consumer Financial Protection Act of 2010
(CFPA). DOJ also alleges that Trident’s conduct violated the
Fair Housing Act (FHA). If approved by the court, the proposed
consent order would require Trident to invest $18.4 million in a
loan subsidy program under which Trident will contract with a
lender to increase the credit extended in majority-minority
neighborhoods in the Philadelphia Metropolitan Statistical Area and
make the loans under the loan subsidy fund. Trident must also fund
targeted advertising to generate applications for credit from
qualified consumers in majority-minority neighborhoods in the
Philadelphia MSA and take other remedial steps to serve the credit
needs of majority-minority neighborhoods in the Philadelphia MSA.
Finally, Trident must pay a civil money penalty of $4 million.

CFPB Fines Hyundai $19 Million for Credit Reporting
On July 26, the CFPB announced that it issued a consent order against Hyundai Capital America
(Hyundai), a nonbank automotive finance company. Hyundai purchases
and services retail installment contracts and vehicle leases
originated by Hyundai, Kia, and Genesis dealerships, and furnishes
credit information on the auto loans it services to consumer
reporting agencies (CRAs). The CFPB alleged that over several
years, Hyundai repeatedly furnished to CRAs information containing
systemic errors and that it knew of many of these inaccuracies for
years before attempting to fix them. The CFPB alleged that Hyundai
violated the FCRA and Regulation V by: (1) failing to promptly
update and correct information it furnished to CRAs that it
determined was not complete or accurate, and continuing to furnish
this inaccurate and incomplete information; (2) failing to provide
the FCRA-required date of first delinquency on certain delinquent
or charged-off accounts; (3) failing to modify or delete
information disputed by consumers that it found to be inaccurate;
(4) failing to establish reasonable identity theft and related
blocking procedures to respond to identity theft notifications from
CRAs; and (5) failing to establish and implement reasonable written
policies and procedures regarding the accuracy and integrity of
information provided to CRAs. The CFPB also alleged that these FCRA
violations also constituted violations of the CFPA, and that
Hyundai used ineffective manual processes and systems to furnish
consumer information that was unfair in violation of the CFPA. The
consent order requires Hyundai to take steps to prevent future
violations and to pay $13,200,000 in redress to affected consumers
and a $6,000,000 civil money penalty.

Upcoming Comment Deadlines and Events

CFPB Extends Comment Period for Input on Relationship
Banking and Customer Service
. Comments are due
August 22 on the CFPB’s Request for Information (RFI) regarding
relationship banking and how consumers can assert the right to
obtain timely responses to requests for information about their
accounts from banks and credit unions with more than $10 billion in
assets, as well as from their affiliates.

CFPB Solicits Comment on Employee Debt
Comments are due September 7 on the
CFPB’s RFI seeking input regarding debt obligations
incurred by consumers in the context of an employee or independent
contractor arrangement. The RFI seeks information in a number of
areas, including the prevalence of such debt obligations, “the
pricing and other terms of the obligations,” disclosures,
dispute resolution, and debt collection and servicing. The RFI
suggests that such debt obligations may take two forms: (1)
training repayment agreements, which require workers to pay
employers or third-party providers for previously undertaken
training if they terminate their employment within a certain time
period; and (2) debt owed to an employer or third party for the
purchase of equipment and supplies essential to their work or
required by their employer. CFPB Director Chopra signaled that the applicability of the CFPA to
training repayment agreements was a regulatory priority for the
agency at the FTC’s Enforcers Summit in April. The agency also
highlighted these kinds of agreements in a March blog post.

FTC Seeks Comment on Proposed Motor Vehicle Dealers
Trade Regulation Rule.
Comments are due September 12 on a NPRM seeking comment on a proposed trade
regulation rule that would: (1) prohibit automotive dealers from
making certain representations while selling, leasing, or arranging
for the financing of motor vehicles; (2) require pricing
disclosures in automotive dealers’ advertising and sale
discussions; (3) obligate automotive dealers to obtain consumer
express informed consent for charges; (4) prohibit the sale of
add-on products or services that confer no benefit to the consumer;
and (5) require automotive dealers to retain records of
advertisements and customer transactions. The Dodd-Frank Wall
Street Reform and Consumer Protection Act of 2010 authorizes the
FTC to promulgate certain rules related to automotive dealers.

FTC Seeks Comment on Revised Endorsement
Comments are due September 26 on the
FTC’s Request for Public Comment on Amendments to the
Guides Concerning the Use of Endorsements and Testimonials in
(Request for Comment) that proposes a number of
revisions to the FTC’s Endorsement Guides. Among other matters, the
Request for Comment seeks input on treating the deletion of
negative reviews or the decision not to publish negative reviews as
a deceptive act or practice under Section 5 of the FTC Act;
addresses endorsements made on social media posts; and solicits
feedback on adding a section to the Endorsement Guides focused on
advertising towards children. A summary of the Request for Comment
is available here.

FTC Holding Virtual Event on ‘Stealth
Advertising’ Toward Children.
On October
, the FTC will host a virtual event “to examine how best to
protect children from a growing array of manipulative marketing
practices that make it difficult or impossible for children to
distinguish ads from entertainment in digital media.” The
event will examine evolving practices, such as the “kid
influencer” marketplace, and the techniques being used to
advertise to children over the internet.

FTC Seeking Research Presentations for PrivacyCon
Research presentations were due July
for PrivacyCon 2022, which will take place
virtually on November 1. As part of the event, the
FTC is seeking empirical research and presentations on topics
including: algorithmic bias; “commercial surveillance”
including workplace monitoring and “biometric
surveillance”; new remedies and approaches to improve privacy
and security practices; and the privacy risks posed by emerging
technologies for children and teens.

More Analysis from Wiley

FTC Seeks Comment on Updating Endorsement Guides
on Digital Advertising

FTC Highlights Scrutiny of Health and Geolocation

West Virginia v. EPA and the Future of
Tech Regulation

FTC Uses Enforcement Proceeding to Send Message on
Account Security Practices

Top Developments to Watch at the FTC on

California Privacy Protection Agency Releases
Draft CPRA Regulations

Webinar: The FTC’s Changing Approach to

EU Institutions Reach Agreement on Landmark
Regulations Targeting Big Tech

National Privacy Law: Bipartisan Proposed
Legislation Regarding Privacy Released

And Then There Were Five: Connecticut Adopts
Comprehensive State Privacy Law

FTC Takes Action Against Company for Collecting
Children’s Personal Information Without Parental

Lawmakers Continue to Scrutinize Algorithm Use
Directed at Youth

U.S. State Privacy Law Guide

Webinar: Transactional Due Diligence Related to
Privacy and Cybersecurity

NIST Seeks Feedback on Draft AI Risk Management
Framework in Connection with Extensive Stakeholder Workshop

Utah to Add Fourth Omnibus Privacy Law to the
Growing State Patchwork

Federal Efforts Introduced to Protect Non-HIPAA
Health Data

Webinar: FTC’s Revised Safeguards Rule: How to
Navigate New Information Security Requirements

Podcast: Why the FTC Matters for Fintech

Legal 500 US Recognizes Wiley’s Telecom, Media &
Technology Practice as Tier 1. Read more here.

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