Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: FTC offers testimony on fraud against the military community, (Nov 21, 2013)

By Linda O’Brien, J.D., LL.M.

The FTC participated in a November 20 hearing by the Senate Committee on Commerce, Science, and Transportation regarding aggressive business practices that target service members and veterans and ways to protect service members from abusive behavior.

Charles Harwood, Deputy Director of the Bureau of Consumer Protection, delivered testimony on the FTC’s law enforcement and educational efforts to combat deceptive and unfair practices that impact military service members and their families. Harwood began his prepared remarks at the hearing on “Soldiers as Consumers: Predatory and Unfair Business Practices Harming the Military Community” by stating that, although all consumers are potential targets of fraud, certain scams are more likely to affect the military community. This occurs because military families frequently relocate and many service members are living on their own for the first time.

Harwood described the efforts of the FTC to identify illegal conduct that impacts service members and to eliminate such scams through aggressive enforcement and consumer education. Recently, the FTC brought a case against one of the nation’s largest refinancers of home loans for allegedly making false representations about the availability of low-cost mortgages that were directed to current and former service members. The action led to a settlement in which the refinancer agreed to pay a substantial civil penalty and to an order imposing injunctive relief.

The testimony highlighted the role of the Military Sentinel, part of the FTC’s Consumer Sentinel Complaint Network, that the agency uses to collect complaints from consumers, non-governmental agencies such as the Better Business Bureau, and other federal agencies. Data from the Consumer Sentinel showed that the FTC received more than 42,200 fraud complaints from the military community out of 1 million fraud complaints received in 2012. The top complaint categories were debt collection; imposter scams; fraud involving offers of prizes, sweepstakes, or gifts; unlawful banking or lending practices; and scams that offer mortgage foreclosure relief or debt management services. Harwood noted that the complaint categories overlap with some of the FTC’s highest consumer protection priorities, particularly its efforts to eliminate fraud relating to consumer financial products and services.

The FTC is coordinating with the Veterans Administration, Consumer Financial Protection Bureau and the Departments of Defense, Education, and Justice to collect feedback through an online complaint system on issues experienced by the military community with educational institutions. The FTC is also coordinating with the Defense Department on possible amendments to its military lending rule.

In addition to its law enforcement efforts and coordinating with its partners on policy initiatives, Harwood testified that the FTC uses a variety of resources to educate military families about their rights when dealing with certain consumer protection issues. The FTC’s military specific resources include information on limiting the harm from identity theft, placing an active duty alert on a credit report, and understanding military protections with respect to payday loans.

To better reach out to military families, the FTC maintains a military families webpage on its consumer education website to gather the FTC’s resources for service members in one place. Recently, the FTC published “Eight Questions to Ask When Choosing a College After Military Service.” The FTC also coordinates with the Defense Department to disseminate articles, podcasts, and blog posts using MilitaryOneSource.mil, a counseling hotline and website. Last year, the agency launched its first Military Consumer Protection Day, an annual partnership campaign and new website to inform military service members and veterans about a variety of consumer issues from dealing with debt to avoiding fraud.

News: ConsumerProtection FederalTradeCommissionNews