The Federal Trade Commission recently provided its annual letter to the CFPB concerning its enforcement activities relating to compliance with Regulation Z (Truth in Lending Act), Regulation M (Consumer Leasing Act), and Regulation E (Electronic Fund Transfer Act).  Under Dodd-Frank, the FTC retained its authority to enforce these regulations with respect to entities subject to its jurisdiction.  The FTC and CFPB coordinate their enforcement and related activities pursuant to a MOU entered into in 2012 that was reauthorized in 2019.  The new letter, which covers the FTC’s activities in 2019, responds to the CFPB’s request for information and focuses on three areas: enforcement actions; research and policy work; and consumer and business education.

Last month, we held a webinar, “Consumer Protection: What’s Happening at the FTC,” in which leaders of Ballard Spahr’s Consumer Financial Services Group were joined by special guest speakers Andrew Smith, Director of the FTC’s Bureau of Consumer Protection, and Malini Mithal, Associate Director of the FTC’s Division of Financial Practices.  (Ms. Mithal authored the FTC’s annual letter.)  We recently released Part I of a two-part podcast based on the webinar.

Below are highlights from the FTC’s letter.

Regulation Z/TILA; Regulation M/Consumer Leasing Act. The FTC’s TILA and CLA enforcement activities included:

• With respect to auto credit and leasing, the FTC continued an action in federal district court in which the FTC alleged that four auto dealers falsified consumers’ income and down payment information on vehicle financing applications and misrepresented financing terms or failed to disclose required terms in advertisements.
• With respect to payday lending, the Ninth Circuit denied a petition for rehearing en banc after a panel affirmed a “record-setting” $1.3 billion dollar district court judgment and order against an individual and several corporate defendants for alleged TILA and FTC Act violations in connection with payday loans.
• With respect to credit repair and debt relief, the FTC’s enforcement actions included claims that a financing company that assisted student debt relief providers did not provide required TILA disclosures for closed-end credit.
• With respect to consumer electronics financing, the FTC continued litigation against a consumer electronics retailer for violating a consent order that settled allegations that the retailer had violated TILA by failing to provide written disclosures and account statements to consumers.

The FTC reported that its TILA and CLA research and policy efforts included (1) continuing work on a study of consumers’ experiences related to buying and financing automobiles at dealerships, (2) hosting a forum on small business financing, (3) continuing work on military consumer protection issues through its Military Task Force, (3) holding conferences with state attorneys general and state regulators on auto sales and financing and other consumer protection issues, and (4) issuing blog posts providing information to consumers and businesses about FTC enforcement cases.

Regulation E/EFTA. The FTC’s Regulation E enforcement actions included 12 new or ongoing cases.  Nine cases involved negative options and included allegations that the companies involved had not obtained proper written authorization under Regulation E for preauthorized transfers or provided copies of written authorizations to consumers.  Two cases, one involving an online lender and the other involving a consumer electronics retailer, included claims that the companies unlawfully required consumers to consent to automatic payments from their bank accounts as a condition of credit in violation of the EFTA and Regulation E.

With respect to EFTA research and policy work, the FTC continued to work with a Department of Defense interagency group and the ABA on electronic fund transfer issues, including issues relating to preauthorized electronic fund transfers in the military lending rule. It also issued blog posts providing information to consumers about FTC enforcement cases.