Consumer Financial Protection

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These days, consumers can obtain everything from newspapers to meal kits to credit monitoring services through subscriptions. The prevalence of these services, and the ease with which consumers can sign up, have gotten the attention of regulators who are concerned that some negative option marketing might confuse or trick consumers. The CFPB, FTC, and state AGs have been particularly vocal about practices they deem “dark patterns,” and continue to focus on the area.     

Today, the CFPB put out guidance warning covered companies and service providers that “dark patterns” surrounding negative option marketing violate the Consumer Financial Protection Act’s prohibition on unfair, deceptive, or abusive acts or practices. As the circular makes clear, the CFPB has already brought enforcement actions alleging deceptive practices around negative options (see this case against a consumer reporting agency, and this case against a company that provided registration and payment services to organizers of events and races). The announcement also notes that the CFPB’s approach to negative option “dark patterns” is generally harmonized with that of the Federal Trade Commission (the FTC put out its own Enforcement Policy Statement Regarding Negative Option Marketing in October 2021). The guidance highlights the need for companies using negative option marketing to ensure that consumers: 1) understand the material terms of the negative option; 2) provide informed consent before being charged; and 3) are able to easily cancel recurring charges.…

Continue Reading Regulators Continue to Focus on “Dark Patterns” in Negative Option Marketing

Downloading an app, buying a product or service, or otherwise interacting with a company frequently requires consumers to consent to multi-page contracts. In a new proposed rule, the CFPB would require nonbank financial companies subject to the CFPB’s supervisory jurisdiction to register any use of such form contracts if they contain terms that seek to waive or limit consumer rights and legal protections.  Here are more details:

Registration requirements would apply to companies using form contracts (contracts drafted prior to the transaction for use in multiple transactions between the company and consumers). In addition, the form contracts must contain certain “covered terms and conditions,” as described below. This information would be made publicly available on the CFPB’s website.…

Continue Reading CFPB Tackles Fine Print in Consumer Financial Contracts

At this week’s National Association of Attorneys General Capital Forum, FTC Chair Lina Khan and CFPB Director Rohit Chopra addressed state AGs and their staff on a number of pressing issues, including antitrust, enforcement authority, privacy and other priorities. And most importantly to the state AG observers, both agency heads expressed the value of state…

In late September, we blogged about a lawsuit that the Chamber of Commerce and other business groups filed against the CFPB, challenging the CFPB’s update to its Supervision and Examinations Manual. As updated, the manual now states that discrimination is an “unfair” practice under the Dodd-Frank Act, and that the agency plans to scrutinize it…

In a decision with potentially far-reaching implications for the CFPB, a three-judge panel of the U.S. Circuit Court of Appeals for the Fifth Circuit yesterday ruled that the Bureau’s funding structure is unconstitutional.  The case involved a longstanding challenge to the Bureau’s 2017 Payday Lending Rule and marks another significant obstacle for the Bureau two…

Most people would generally agree that discriminating on the basis of race, color, religion, disability, or similar factors is a bad thing to do – indeed, that it’s “unfair” within the common meaning of the word.  It’s also illegal in various circumstances – e.g., the Equal Credit Opportunity Act prohibits certain forms of discrimination in…

On August 4, 2022, the Consumer Financial Protection Bureau (“CFPB”) issued a report entitled, “The Convergence of Payments and Commerce: Implications for Consumers,” in which it examines the challenges and risks to consumers inherent in the rapidly evolving payment ecosystem and emergence of product offerings that blur the traditional lines of banking and commerce.

The…

The Senate yesterday confirmed current FTC Commissioner Rohit Chopra as the new Director of the Consumer Financial Protection Bureau (CFPB). The 50-48 vote to confirm was along party lines and followed Vice President Harris’s breaking of a 50-50 tie to invoke cloture and end debate on Chopra’s nomination.

With Chopra’s departure from the FTC…

The FTC yesterday took two actions that on their face seemed part of the regular course, but that could signal notable changes for financial institutions and multi-level marketing companies.  First, the FTC filed an amended complaint against RCG Advances, a merchant cash advance provider, alleging that the company violated the Gramm-Leach-Bliley Act and seeking civil…

The Senate Commerce Committee today voted overwhelmingly to move forward with Lina Khan’s nomination as FTC Commissioner, signaling that Khan is likely to ultimately be confirmed as the youngest Commissioner ever at 32.  As we previously discussed here, Khan is primarily known as an antitrust scholar advocating for more exacting scrutiny of big tech…