Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: FTC Details Enforcement Activities in Annual Letter to CFPB, (May 15, 2013)

By Katalina M. Bianco, J.D.

The FTC has announced the release of its second annual letter to the Consumer Financial Protection Bureau describing the commission’s enforcement actions related to a number of consumer compliance regulations.

Specifically, the FTC reported on activities concerning the following regulations:

1. Regulation B—Equal Credit Opportunity (12 CFR 1002);

2. Regulation E—Electronic Fund Transfers (12 CFR 1005);

3. Regulation M—Consumer Leasing (12 CFR 1013); and

4. Regulation Z—Truth in Lending (12 CFR 1026).

The letter also discusses the Dodd-Frank Act, and the memorandum of understanding between the FTC and CFPB that outlined a framework for coordinating certain law enforcement, rulemaking, and other activities.

Authority to enforce regulations. The Dodd-Frank Act authorized the CFPB to "administer, enforce and otherwise implement" the federal consumer financial laws. This includes adopting regulations and issuing orders and guidance. However, under the act, the FTC retained its authority to enforce Regulations B, E, M, and Z. The act also gave the commission the authority to enforce any CFPB rules applicable to entities within the FTC’s jurisdiction, which include most providers of financial services that are not banks, thrifts, and federal credit unions.

The FTC’s primary focus in the financial services area is bringing law enforcement actions against those who violate statutes and regulations. In addition to its law enforcement activities, the FTC engages in research and policy development related to the types of financial services these statutes and regulations cover. The commission also provides the public with business and consumer education materials intended to promote business compliance with laws and help consumers protect themselves from noncompliant businesses.

The FTC does not conduct compliance examinations or collect compliance-related data concerning the non-bank entities within its jurisdiction.

Enforcement activities. The letter details the enforcement activities the FTC has undertaken in 2012 in relation to Regulations B, E, M, and Z. The commission:

1. filed administrative complaints and settled charges with five automobile dealers that allegedly made deceptive claims in advertisements that they would pay off the full amount that the consumer owed on traded-in vehicles;

2. filed a complaint against a payday lender and related entities alleging that the defendants charged consumers undisclosed and inflated fees, and collected on loans illegally by threatening borrowers with arrest and lawsuits;

3. continued litigating an appeal in connection with a 2010 contempt order against a consumer electronics retailer for violating a consent order;

4. filed charges against two auto loan modification operations, and later settled one of those cases;

5. sent letters to 20 companies (real estate agents, home builders, and lead generators), warning them their mortgage advertisements may be deceptive and urging them to review their advertisements for compliance with an FTC rule issued in 2011 that bans deceptive claims about consumer mortgages in advertising or other types of commercial communications;

6. continued its law enforcement activities against defendants engaged in forensic mortgage loan audit scams—a type of mortgage assistance relief service scam;

7. enforced Regulation B with nine new or ongoing cases; and

8. continued working as a member of the Interagency Task Force on Fair Lending, a joint undertaking with the Department of Justice, the Department of Housing and Urban Development, and the federal banking regulatory agencies.

Memorandum of Understanding. In January 2012, the FTC and CFPB entered into a memorandum of understanding that is intended to enhance consumer protections while avoiding burdening businesses with duplicate enforcement authorities. The MOU calls for the two agencies to:

1. create a secure computerized system each agency can use to keep track of the other’s activities;

2. inform each other before beginning an investigation or an enforcement action and refrain from duplicative actions;

3. have meetings at least quarterly to coordinate their activities;

4. consult on guidance and regulatory proposals, such as those addressing unfair, deceptive or abusive acts or practices;

5. cooperate on consumer education initiatives; and

6. share consumer complaints.

News: ConsumerProtection FederalTradeCommissionNews