FTC Annual Financial Acts Enforcement Report to the CFPB

On June 1, 2017, the staff of the Federal Trade Commission (FTC) provided its 2016 Annual Financial Acts Enforcement Report to the CFPB.  The report covers the FTC’s 2016 enforcement, policy development, and consumer and business education efforts as they relate to Regulation Z, which implements the Truth in Lending Act (TILA); Regulation M, which implements the Consumer Leasing Act (CLA); and Regulation E, which implements the Electronic Fund Transfer Act (EFTA).

The report highlights the FTC’s enforcement actions, under Regulation Z, to combat deceptive practices in automobile financing, payday lending, and financing of consumer electronics.  Further, the FTC continued litigation in cases involving forensic audit scams in mortgage assistance relief services.

Though the FTC does not have rule making authority under TILA, the FTC still addressed policy development issues relating to this act.  Most notably, the FTC launched the first Fintech Workshop to explore emerging financial technology and its implications to consumers, and it hosted a workshop to examine the testing and evaluation of the disclosures companies make to consumers about advertising, privacy practices, and other information.  The latter workshop included a discussion on the CFPB’s creation of TILA’s Loan Estimate and Loan Closing disclosures, as replacements for the Good Faith Estimate, and TILA and HUD-1 forms.

Lastly, under the actions regarding Regulation Z, the report indicates that the FTC undertook efforts to educate consumers and businesses on issues such as military lending, auto sales and financing, payday lending, marketplace lending, and consumer disclosures and testing.

Regarding Regulation M, the report states that the FTC issued one final administrative consent order against a company charged with deceptive advertising practices and failure to disclose key terms on automobile lease payments and down payments.  Furthermore, the FTC filed two federal court actions against automobile dealers who were charged with violation of a 2014 FTC administrative order.

Within its policy development activities for Regulation M, the FTC reports having hosted a workshop to examine competition and consumer protection issues raised by consumers’ growing use of rooftop solar panels.  The FTC also offered blog posts on consumer leases to educate consumers and businesses on the requirements and protections of the CLA.

Finally, the report highlights several ongoing cases involving the EFTA and Regulation E issues.  Most of the cases involve “negative option” plans where a consumer agrees to receive various goods or services for a trial period at no charge or at a reduced price but are later charged recurring charges without proper written authorization for preauthorized electronic fund transfers, which is a violation of the EFTA.  The FTC also provided blog posts for consumers and businesses giving guidance on negative option plans and recent cases on these issues, explaining certain EFTA violations, and offering tips to consumers on how to avoid unauthorized charges.

The full text of the report can be found here.