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 groundbreaking
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
CFPB Publishes Issue Spotlight on the Role of Large
Technology Companies in the Mobile Payments Space. On
September 7, the CFPB published an issue spotlight
titled, “Big Tech’s Role in Contactless Payments:
Analysis of Mobile Device Operating Systems and Tap-to-Pay
Practices.” The issue spotlight focuses on the impact of
large technology companies’ policies and practices governing
tap-to-pay mobile devices, such as smartphones and smartwatches.
The spotlight also examines how access policies by mobile operating
systems related to bank and payment apps can impact innovation,
consumer choice, and open and decentralized banking and payments in
the U.S.
FTC to Hold September Open Commission Meeting.
On September 7, the FTC announced that the agency will hold a virtual
Open Commission Meeting on Thursday, September 14. During the
meeting, the FTC will: (1) consider whether to issue a policy
statement concerning improper patent listings in the Food and Drug
Administration’s publication of Approved Drug Products With
Therapeutic Equivalence Evaluations, also known as the “Orange
Book”; and (2) vote on whether to release a staff perspective
and recommendations on the impact of digital media advertising on
kids and teens. The digital media staff perspective builds on the
FTC’s May 19, 2022 Virtual Event on Protecting Kids from Stealth
Advertising in Digital Media.
Recent Enforcement Actions
FTC Chief ALJ Issues Initial Decision Finding That Tax
Filing Software Company Engaged in Deceptive Advertising.
On September 8, FTC Chief Administrative Law Judge
(ALJ) D. Michael Chappell ruled that Intuit Inc. (Intuit), the
maker of the TurboTax tax filing software, “engaged in
deceptive advertising in violation of Section 5 of the FTC
Act” and deceived consumers when it ran ads for
“free” tax products and services for which many consumers
were ineligible. The ALJ also found that there is a “cognizant
danger of a recurring violation,” and required Intuit to cease
and desist from engaging in the allegedly deceptive practices
specified in the FTC’s March 29, 2022 complaint. That complaint alleged that the
company engaged in a high-profile marketing campaign for its
“free” tax filing services, but the service is free only
for some users, and for others, the company tells consumers they
will need to upgrade to a paid service to complete and file their
taxes after they have completed entering their personal and
financial information. Intuit may appeal the ALJ’s order to the
full Commission.
FTC Files Stipulated Final Order Against Online
Financial Investment Company Representative for Making Allegedly
False Earnings Claims. On September 8,
the FTC filed a stipulated order for permanent injunction in
the U.S. District Court for the District of Maryland against Raging
Bull representative Kyle Dennis for making allegedly false claims
in online videos and seminars, including assertions that consumers
who receive tips or use his stock trading methods could make 100
percent profits in “just one to three days,” in alleged
violation of the FTC Act and the Restore Online Shoppers’
Confidence Act. The FTC’s March 2022 amended complaint charged that Dennis earned
more than $13.6 million from these practices. As part of the
settlement detailed in the stipulated order, Dennis would be barred
from making any representations about potential earnings without
having written evidence that those earnings claims are typical for
consumers, along with any generally false or misleading claims.
CFPB Settles Telemarking Sales Rule Allegations with
Several Corporate Repair Companies. On August
28, the CFPB filed a stipulated final judgment against PGX
Holdings, Inc. and its subsidiaries in the U.S. District Court for
the District of Utah, for alleged violations of Telemarketing Sales
Rule (TSR). In its amended complaint, filed August 17, 2022, the
CFPB alleged that PGX Holdings requested upfront services fees for
its credit repair services and used deceptive advertising. On March
10, 2023, the district court partially granted the CFPB’s motion for
summary judgment, holding that PGX Holdings violated the TSR by
charging upfront fees. PGX Holdings agreed to $2.7 billion in
redress and $64 million in civil penalties in addition to
injunctive relief. Due to the companies’ financial insolvency,
however, the CFPB will determine whether the agency’s victims
relief fund can be used to make payments to impacted consumers.
CFPB Sues Installment Lender for Allegedly Engaging in
Deceptive Marketing Related to Refinancing. On
August 22, the CFPB filed a complaint against Heights Finance Holdings, an
installment lender, and its state-licensed subsidiaries in the U.S.
District Court for the District of South Carolina. The CFPB alleges
that Heights Finance violated the Consumer Financial Protection Act
by engaging in deceptive advertising regarding loan refinancing.
Specifically, the complaint alleges that the companies market
refinancing as a fresh start and the best option for customers
struggling to repay their debts. However, the CFPB argues that for
many consumers, refinancing will only prolong indebtedness and
increase borrowing costs. The CFPB is seeking injunctive relief in
addition to redress and civil money penalties.
FTC Finalizes Order with Clothing Manufacturer for
Alleged Misuse of “Made in the USA” Label. On
August 29, the FTC voted 3-0 to finalize its settlement with a group of retail stores in
New England which includes Chaucer Accessories, Bates Accessories,
and Bates Retail Group, and their owners. In its June 27 complaint, the FTC alleged that these stores
deceived consumers by advertising their products as “Made in
USA,” although they sold certain belts that were made in
Taiwan. The stores agreed to a monetary penalty of $191,481 and to
injunctive relief.
FTC Finalizes Settlement with Genetic Testing Firm Over
Alleged Privacy Misrepresentations. On September
7, the FTC voted 3-0 to finalize its settlement with 1Health.io, formerly Vitagene,
Inc. for allegedly violating the FTC Act. In its complaint on June 16, the FTC alleged that
1Health.io engaged in deceptive practices by not securely storing
or deleting consumers’ health and personal data as stated in
its privacy policy, and engaged in unfair practices by materially
and retroactively changing its policy for sharing health and
genetic information with third parties. The company agreed to pay
$75,000 in addition to implementing an information security
program.
FTC and Six State Attorneys General Settle with Internet
Platform for Allegedly False Advertising. On
August 28, the FTC and Attorneys General of New
York, California, Colorado, Florida, Illinois and Massachusetts
filed a stipulated order in the U.S. District Court
for the Southern District of New York against Roomster Corp., an
internet-based room and roommate finder platform, and its owners,
John Shriber and Roman Zaks. In the complaint filed August 30,
2022, the FTC and state attorneys general alleged that the
defendants posted fake positive reviews to promote the platform,
used fake listings to drive consumers to the platform, and falsely
claiming to verify listings. Roomster and its owners agreed to a
monetary judgment of $36.2 million and civil penalties totaling
$10.9 million payable to the states, in addition to injunctive
relief.
Upcoming Comment Deadlines and Events
CFPB, HHS, and Treasury Seek Comment on Medical Payment
Products. Comments are due September 11 on the
RFI issued by the CFPB, HHS, and U.S. Department of Treasury
seeking information about the prevalence of medical credit cards
and installment loans that are offered to patients as a way to pay
for medical care. The agencies specifically request information
about the specialty medical payment market and associated data on
interest fees and costs for medical credit products, patient
experiences with medical credit cards and installment loans, issues
with patient billing and collections, and any incentives that
health care providers have to offer medical credit cards and
installment loans.
Comptroller of the Currency, CFPB, Federal Housing
Finance Agency, and HUD Host Roundtable Discussion About the
Availability of Special Purpose Credit Programs. On
September 12, the CFPB, the Comptroller of the
Currency, the Federal Housing Finance Agency, and U.S. Department
of Housing and Urban Development (HUD) will host a roundtable
discussion regarding special purpose credit programs. Special
purpose credit programs are a tool permitted under the Equal Credit
Opportunity Act and Regulation B. CFPB Director Rohit Chopra,
Acting Comptroller of the Currency Michael J. Hsu, Federal Housing
Finance Agency Director Sandra L. Thompson, and HUD Secretary
Marcia L. Fudge will offer remarks at the roundtable. Information
about how to participate virtually are available here.
FTC and DOJ Seek Comment on Draft Merger
Guidelines. Comments are due September 18
on the FTC and the U.S. Department of Justice (DOJ) (collectively,
the Agencies) draft update of the merger guidelines (Draft
Guidelines). If finalized, the Draft Guidelines will inform the
Agencies’ review of mergers and acquisitions to determine
compliance with the federal antitrust laws, including the Sherman
Act, the Clayton Act, and the FTC Act. The Draft Guidelines are
broken down as follows: (1) frameworks for assessing the risk that
a merger’s effect may be substantially to lessen competition or
to tend to create a monopoly; (2) issues that often arise when the
Agencies apply those frameworks in several common settings; and (3)
a framework for considering mergers and acquisitions that raise
competitive concerns not addressed by the other Guidelines.
FTC Seeks Comment on Amendments to Premerger
Notification Rules and Premerger Notification and Report Form and
Instructions. Comments are due September
27 (extended from August 28) on the FTC’s NPRM
proposing to amend the premerger notification rules that implement
the Hart-Scott-Rodino Antitrust Improvements Act, and the Premerger
Notification and Report Form and Instructions. If adopted, the
FTC’s NPRM proposals would substantially expand the amount of
information that covered entities must submit to the agency about
potential transactions.
FTC Solicits Comment on NPRM Proposing to Classify
Certain Consumer Review and Testimonial Practices as Unfair or
Deceptive. Comments are due September 29 on an NPRM that, if adopted, would classify certain
consumer review and testimonial practices as unfair or deceptive
practices under Section 5 of the FTC Act. Advertising practices
that the NPRM proposes to classify as “unfair” or
“deceptive” include (1) selling or obtaining
“fake” consumer reviews; (2) repurposing consumer reviews
or “review hijacking;” (3) purchasing positive or
negative reviews; (4) permitting insider reviews and testimonials
without adequate disclosure; (5) representing that
company-controlled review websites or entities are independent; (6)
review suppression; and (7) misuse of fake social media influence
indicators.
FTC Issues Supplemental Proposed Amendments to Testing
Methods Under the Amplifier Rule. Comments are due October 20 on the
FTC’s Supplemental Notice of Proposed Rulemaking
(SNPRM) proposing amendments to the agency’s Amplifier Rule.
The Amplifier Rule, formally known as the Rule Relating to Power
Output Claims for Amplifiers Utilized in Home Entertainment
Products, regulates power output claims for home entertainment
amplifiers. The SNPRM proposes to amend the Amplifier Rule to,
among other things, set standard test conditions for measuring
amplifier power output; clarify which power output disclosures
comply with the Amplifier Rule and which do not; and to revise
language in the rule related to these proposed modifications.
More Analysis from Wiley
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.