Consumer Financial Protection

Ad Law Access PodcastOften when people think about the Consumer Financial Protection Bureau (CFPB) they say to themselves, “well, I’m not a bank so that doesn’t really apply to me.” But consumer financial protection laws are actually much broader and cover all aspects of consumer financial products, any way that consumers bank, pay, or finance transactions and the

The FTC recently examined peer-to-peer (P2P) payment systems and crowdfunding in the second forum of its FinTech series.  P2P payment systems are online services that allow consumers to share money electronically.  These platforms enable the immediate transfer of money between consumers, typically for free or for a small fee.  In the panel discussion of P2P

The FTC has released a guidance document that clarifies the scope of its Red Flags for Identity Theft Prevention Rule (“the Red Flags Rule”) and provides a practical four step guide for covered entities to assess compliance.

The Red Flags Rule requires certain businesses and organizations to have in place a written identity theft program designed to detect “red flags” indicative of identity theft and take appropriate steps to prevent it. While the Red Flags Rule has always applied to “financial institutions” and “creditors,” the scope of the term “creditors” has generated some confusion. The initial Red Flags Rule defined “creditor” broadly by reference to the definition in the Equal Credit Opportunity Act and arguably covered any company that extended credit by allowing a customer to defer payment. This would include most businesses and service providers, including retailers, doctors, and lawyers.

After allegations that such a broad definition exceeded the FTC’s authority under the Fair and Accurate Credit Transactions Act (“the FACT Act”), Congress reacted by passing the Red Flag Program Clarification Act of 2010. The Act clarifies that for the purposes of the FACT Act, creditor means only those creditors that regularly and in the ordinary course of business either: (1) obtain or use consumer reports in connection with a credit transaction, (2) furnish information to consumer reporting agencies in connection with a credit transaction, or (3) advance funds to or on behalf of a person, based on an obligation of the person to repay. The Act further clarifies that creditor does not include an entity that “advances funds on behalf of a person for expenses incidental to a service provided by the creditor to that person."

Continue Reading FTC Issues Guidance to Clarify Scope and Requirements of Red Flags for Identity Theft Prevention Rule

As initially reported, the CFPB and FTC held a public roundtable last week that brought together industry stakeholders, government officials and consumer advocates to discuss the use of consumer data throughout the debt collection process. Participants acknowledged that the transfer and sale of debt presents unique obstacles for the use of consumer data across the life of a debt, but that certain steps could be taken to move towards a more efficient system for all parties.

Providing welcoming remarks along with FTC Commissioner Julie Brill, Acting Deputy Director of the CFPB Steve Antonakes noted that the discussion could be broken down into three “areas of focus.” First, one must consider the initial accuracy of information that debt collectors use to pursue consumers. Second, one should consider the accuracy of the information over time, meaning whether the information “deteriorates as it ages or gets passed down the line to secondary or tertiary buyers.” Third, even accepting the accuracy of the information relied upon, safeguards should be taken to ensure that the consumer can dispute debts believed to be incorrect.

The daylong roundtable generally echoed these themes as various presenters and panels provided their thoughts on the present system and prospective channels for improvement. Most notably, participants from industry and consumer protection groups agreed that moving towards a more uniform system for data standards would facilitate a more efficient market, thus benefitting industry and consumers. While some details concerning potential data standards remained unclear, widespread agreement emerged that certain basic information should be included as part of any debt file, including the identity of the original creditor and the amount owed.

Continue Reading Industry Stakeholders, Government Officials and Consumer Advocates Discuss Data Use in Debt Collection at CFPB-FTC Roundtable

The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) will co-host a roundtable on June 6, 2013 to examine how consumer data is used and maintained in the debt collection process, according to an FTC news release issued yesterday. The roundtable will include a discussion of such topics as:

• the amount of documentation and other information currently available to different types of collectors and at different points in the debt collection process;
• the information needed to verify and substantiate debts;
• the costs and benefits of providing consumers with additional disclosures about their debts and debt-related rights; and
• information issues relating to pleading and judgment in debt collection litigation.

Continue Reading FTC and CFPB Announce Public Roundtable on Data Integrity in Debt Collection

The Consumer Financial Protection Bureau (CFPB) plans to begin accepting consumer complaints regarding the debt collection industry in the second quarter of this year, according to a report issued yesterday by Bloomberg News. The CFPB presently accepts complaints regarding a limited number of CFPB-regulated products and services, including bank accounts, credit cards, credit reporting, money

On Monday, the Federal Trade Commission (“FTC”) announced that it had, in partnership with the Consumer Financial Protection Bureau (“CFPB”), sent warning letters to 20 real estate agents, home builders, and lead generators, advising them to review their advertisements to ensure compliance with the Mortgage Acts and Practices-Advertising Rule, Regulation N (“MAP-AD Rule”) and the

On August 2, 2012, the Consumer Financial Protection Bureau (CFPB) issued its second Semi-Annual Report to Congress. The report provides an update on the CFPB’s activities since its first report in January 2012 as required under the Dodd-Frank Wall Street Reform and Consumer Protection Act. Many of the agency’s initiatives have been previously discussed, such