FTC Bans Debt Collector from Debt Collection Business

On June 16, the FTC announced that it obtained a court order against a debt collector and one of its officers for allegedly deceiving consumers with text messages, emails, and phone calls that falsely threatened arrest or lawsuits if they failed to make debt collection payments. In May 2015, the District Court for the Northern District of Georgia issued an ex parte Temporary Restraining Order that “froze a number of Defendants’ assets, provided the FTC with immediate access to Defendants’ business premises, and granted expedited discovery to determine the existence and location of assets and documents pertinent to the allegations of the Complaint.” The recently issued final order prohibits the defendants from, among other things: (i) engaging in debt collection activities; (ii) misrepresenting material facts regarding financial-related products or services; and (iii) disclosing, using, or benefiting from consumers’ personal information, and failing to properly destroy such information when appropriate. Finally, the final order imposes a $980,000 judgment to be used as equitable monetary relief, including, but not limited to, consumer redress.

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FTC Submits Comment to the FCC on Proposal Relating to Debt Collection Robocalls

On June 6, the FTC submitted a comment to the FCC on its Notice of Proposed Rulemaking (NPR) regarding the implementation of recent changes to provisions of the Telephone Consumer Protection Act (TCPA) that permit robocalls “made solely to collect a debt owed or guaranteed by the United States.” Recommending that the FCC proceed cautiously with the expansion of permissible robocalling, the FTC instructed the FCC to establish standards for the collection of government debt that are consistent with the FDCPA, Section 5 of the FTC Act, and the Telemarketing Sales Rule (TSR). Specifically, the FTC’s comment advises the FCC to limit permitted robocalls to only (i) those relating to debts in default status; (ii) persons who actually owe the debts; (iii) those relating to the collection of the government debt; and (iv) collection purposes exclusively. In addition, the FTC’s comment on the NPR suggests that the FCC (i) maintain reasonable security practices over the data collected during covered robocalls; (ii) limit robocalls to the hours of 8:00 am to 9:00 pm; and (iii) require covered callers to “transmit caller ID information that includes a caller number that connects to a live agent representing the debt collector.”

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FTC Submits Annual Report on 2015 Enforcement Actions to CFPB

On June 6, the FTC announced that it submitted its 2015 Annual Financial Acts Enforcement Report to the CFPB. The report covers the FTC’s enforcement activities related to compliance with Regulation Z (TILA), Regulation M (Consumer Leasing Act or CLA), and Regulation E (Electronic Fund Transfer Act or EFTA), as well as the FTC’s related activities in rulemaking, research, policy development, and consumer/business education related to TILA. According to the report, the FTC’s enforcement efforts in 2015 concerning TILA involved mortgage-related credit and non-mortgage credit, including automobile purchases and financing, car title loans, payday lending, and consumer electronics financing. Regarding mortgage-related credit activity, the report highlights continued litigation involving mortgage assistance relief services/forensic audit scams: “[i]n these scams, mortgage assistance relief providers offer, for a substantial fee, to review or audit the mortgage documents of distressed homeowners to identify violations of TILA, Regulation Z, and other federal laws.” The report further noted that under Regulation M and as part of the FTC’s Operation Ruse Control sweep on the auto industry, the FTC issued five final administrative consent orders and one consent agreement for public comment. Finally, regarding the FTC’s enforcement activities related to compliance with the EFTA, the report states that four of the FTC’s seven cases involving the EFTA in 2015 arose in the context of “negative option” plans, where consumers agreed to a trial period in which they received certain goods or services for no additional charge or at a reduced price, but later incurred recurring charges due to failure to cancel before the trial period ended.

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FTC to Host Fourth Start with Security Event

On June 15, the FTC will host its fourth Start with Security event in Chicago, Illinois. Featuring agency representatives Todd Kossow, Maureen Ohlhausen, Cora Han, Jim Trilling, Steve Wernikoff, and Andrea Arias, as well as security experts from various industries, the Start with Security event is intended to provide companies with tips for implementing effective data security. The event will host the following four panels: (i) Building a Security Culture; (ii) Integrating Security into the Development Pipeline; (iii) Considering Security when Working with Third Parties; and (iv) Recognizing and Addressing Network Security Challenges. A full day event, the panels “will address how companies can create and prioritize a culture of security, how to integrate security into the development pipeline, what security issues to consider when a company works with third parties, and how to recognize and address network security challenges.”

As recently noted in its 2015 Annual Highlights report, the FTC’s Start with Security efforts, including its June 2015 Guide for Business, are part of the agency’s education outreach programs designed to promote good data security practices within businesses.

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FTC Chairwoman Ramirez Provides Testimony on Pending Consumer Protection Legislation

On May 24, FTC Chairwoman Edith Ramirez provided testimony before the U.S. House of Representatives on pending legislation pertaining to the agency’s jurisdiction to regulate certain marketplace areas affecting consumers. Consumer protection bills under consideration and discussed by Chairwoman Ramirez include, but are not limited to, (i) H.R. 5111, the Consumer Review Fairness Act, which, according to the FTC, “would help to prevent companies from silencing truthful consumer reviews or products and services”; (ii) H.R. 4526, the Stop Online Booking Scams Act, which would require online travel sites to provide disclosures regarding their affiliation with hotels; and (iii) H.R. 5104, the Better On-line Ticket Sales Act, which is intended to make sure that consumers (“not just scalpers with specialized software”) are able to purchase online tickets to certain events. Chairwoman Ramirez also provided insight regarding H.R. 5239, the Protecting Consumers in Commerce Act, which would remove the telecommunications common carrier exemption from the FTC Act. In support of H.R. 5239, Ramirez commented, “[r]emoving the exception from the FTC Act would enable the FTC to bring its extensive law enforcement experience to bear in protecting consumers of common carriage services against unfair and deceptive practices in the same way that it can protect against unfair and deceptive practices for other services.” Further expressing the FTC’s opposition to certain pending legislation, FTC Ramirez noted that H.R. 5109, the Clarifying Legality and Enforcement Action Reasoning Act, would require that the FTC submit to Congress an annual report regarding its consumer protection investigations, “describing both those that result in agency action as well as those that are closed.” Chairwoman Ramirez contends that submitting such a report would not only be time consuming and costly, but would risk harming the reputation of companies against whom the FTC did not take formal action.

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