This week, the Federal Trade Commission (FTC) announced the release of the 2015 edition of their Annual Financial Acts Enforcement Report to the Consumer Financial Protection Bureau (CFPB). The report details the various enforcement activities the FTC has engaged in regarding Regulation Z (Truth in Lending Act), Regulation M (Consumer Leasing Act), and Regulation E (Electronic Fund Transfer Act).
Under the Dodd-Frank Act, the FTC has the authority to enforce the Truth in Lending Act, Consumer Leasing Act, and the Electronic Fund Transfer Act. The CFPB has rulemaking authority regarding these laws.
The report details a range of FTC actions related to the extension of credit – including mentions of violations in automobile financing, payday lending, car title loans, consumer electronics financing, and forensic audit scams. There are also details about various other regulatory and educational actions undertaken by the FTC.
Actions related to several violations of Regulation E are mentioned in the report. Four cases deal with violations related to so-called “negative option” plans, where consumers incur recurring charges following the expiration of a product’s trial period. In those cases, companies were transferring funds electronically from consumer accounts without obtaining proper written authorization from the consumers in question. Two other cases involve payday lending violations – in one case, the FTC said a series of lenders couldn’t condition the extension of credit on consenting to preauthorized debits, and in the other, CWB Services was banned from the consumer lending business due to debiting accounts without the prior express consent of consumers.
The other major Regulation E point mentioned by the FTC is last year’s amendment of the Telemarketing Sales Rule. The new version of the rule bans the use of four payment methods – remotely created checks, remotely created payment orders, cash reload mechanisms, and cash-to-cash money transfers – which the FTC says “are favored by con artists and scammers and that provide little or no systematic monitoring to detect fraud.”
The FTC describes this report on their activity as being designed “for use in preparing the Consumer Financial Protection Bureau’s 2015 Annual Report to Congress.” A copy of the report has been sent to officials at the CFPB and the Federal Reserve Board.