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FCC changes TCPA enforcement under TRACED Act
On May 1, the FCC issued an order announcing the Commission will no longer send entities outside its jurisdiction warnings prior to commencing an enforcement action related to TCPA robocall violations. Specifically, the order, as mandated under Section 3 of the TRACED Act (covered by InfoBytes here), (i) removes provisions that previously required the FCC to issue a warning prior to imposing penalties for making robocalls; (ii) increases the maximum fine that the FCC can assess for robocall violations to $10,000 per intentional unlawful call, in addition to a forfeiture penalty amount; and (iii) extends the statute of limitations to four years for the FCC to investigate and take enforcement action against an entity that violates the TCPA. The order takes effect 30 days after publication in the Federal Register.
CFPB issues 2019 fair lending report to Congress
On April 30, the CFPB issued its annual fair lending report to Congress, which outlines the Bureau’s efforts in 2019 to fulfill its fair lending mandate. According to the report, in 2019 the Bureau continued to focus on promoting fair, equitable, and nondiscriminatory access to credit, highlighting several fair lending priorities that continued from years past such as mortgage lending, student loans, and small business lending. The Bureau also highlighted three policies released over the last year to promote innovation and to facilitate compliance: the No-Action Letter Policy, the Trial Disclosure Program Policy, and the Compliance Assistance Sandbox Policy (covered by InfoBytes here). Additionally, the report discussed the Bureau’s efforts in encouraging consumer-friendly innovation to expand access to unbanked and underbanked consumers and communities. These include: (i) using alternative data in credit underwriting to expand credit access responsibly; (ii) issuing a request for information on the use of “Tech Sprints” (covered by InfoBytes here) to encourage regulatory innovation and stakeholder collaboration; (iii) continuing to enforce fair lending laws such as ECOA and HMDA, including reaching a settlement with one of the largest HDMA reporters nationwide to resolve HMDA reporting allegations; and (iv) engaging with stakeholders to discuss fair lending compliance, issues related to credit access, and policy decisions. The report also provides information related to supervision, enforcement, rulemaking, and education efforts.
SEC issues $2 million whistleblower award
On May 4, the SEC announced a nearly $2 million award to a whistleblower in an enforcement action. According to the SEC’s press release, the whistleblower’s “information and assistance helped the agency bring a successful enforcement action and allowed investors to recover much of their money.” The formal order also states that the whistleblower, among other things, provided new information regarding an investigation into ongoing fraud, which informed the SEC’s need to “expeditiously seek a temporary restraining order and asset freeze to prevent further investor loss.” The whistleblower also suffered hardships.
As of May 4, the SEC has awarded 82 individuals a total of approximately $450 million in whistleblower awards since its first award in 2012.
State AGs urge industry group develop better tools to fight illegal robocalls
On May 4, the National Association of Attorneys General published a letter to US Telecom, an industry group of telecommunications providers, and the Industry Traceback Group, an industry group dedicated to assist with the tracing of illegal robocalls. The letter noted that state attorneys general intend to intensify enforcement efforts against illegal robocallers, and urged US Telecom and the Industry Traceback Group to expand capabilities related to tracebacks in anticipation of growth in the need for data analysis and the number of civil investigative demands and subpoenas that will be issued directly to the Industry Traceback Group. The need for action has been tied to an increase in Covid-19 related robocalls.
Maryland provides guidance on garnishment of CARES Act recovery rebates
On May 4, the Maryland governor’s Office of Legal Counsel provided interpretive guidance for financial institutions regarding a previous executive order prohibiting garnishment of CARES Act recovery rebates. The office recommended enforcement action not be taken against a financial institution in a number of situations, including if it subjected a customer’s CARES Act rebate to garnishment and sent the proceeds to a judgment creditor prior to receiving notice of the order or being reasonably able to act on it. The office also clarified that application of a CARES Act recovery rebate to the negative balance in an overdrawn account is not considered to be the exercise of a lien or right of setoff for purposes of the executive order.
Louisiana Office of Financial Institutions, Securities Division, issues update on operations
On May 1, the Louisiana Office of Financial Institutions, Securities Division, issued an update regarding its current operations during the statewide “stay at home” order. In particular, (i) paper copies of registration documents and payment of related fees can be mailed to the LOFI, and certain filings can be submitted electronically; (ii) examinations are being conducted remotely using phone and email correspondence in lieu of traditional on-site examinations; (iii) licensing staff continue to process licensing and registration applications through the CRD/IARD systems; and (iv) enforcement staff are limiting in-person contacts with witnesses and regulatory partners, and are using telecommunications technology to complete tasks remotely.
SEC issues $18 million whistleblower award
On April 28, the SEC announced an award of more than $18 million to a whistleblower in an enforcement action. According to the SEC’s press release, the whistleblower’s “significant information prompted an examination that resulted in an important enforcement action.” The formal order also states that the whistleblower, among other things, relayed information that alerted SEC staff to potential securities violations, and repeatedly raised concerns internally “in an attempt to immediately correct the problem,” which led to the whistleblower suffering hardships as a result. The SEC further emphasizes that the enforcement action resulted in millions of dollars being returned to retail investors.
As of April 28, the SEC has awarded 81 individuals a total of approximately $448 million in whistleblower awards since its first award in 2012.
Court approves $5 billion FTC settlement with social media company
On April 23, the U.S. District Court for the District of Columbia approved a $5 billion settlement between the FTC and a global social media company, resolving allegations that the company violated consumer protection laws by using deceptive disclosures and settings to undermine users’ privacy preferences in violation of a 2012 privacy settlement with the FTC. The settlement, first announced last July (covered by InfoBytes here), requires the company to take a series of remedial steps, including (i) ceasing misrepresentations concerning its collection and disclosure of users’ personal information, as well as its privacy and security measures; (ii) clearly disclosing when it will share data with third parties and obtaining user express consent if the sharing goes beyond a user’s privacy setting restrictions; (iii) deleting or de-identifying a user’s personal information within a reasonable time frame if an account is closed; (iv) creating a more robust privacy program with safeguards applicable to third parties with access to a user’s personal information; (v) creating a new privacy committee and designating a dedicated corporate officer in charge of monitoring the effectiveness of the privacy program; (vi) alerting the FTC when more than 500 users’ personal information has been compromised; and (vii) undertaking reporting and recordkeeping obligations, and commissioning regular, independent privacy assessments. The order “resolves all consumer-protection claims known by the FTC prior to June 12, 2019, that [the company], its officers, and directors violated Section 5 of the FTC Act.” While the court acknowledged concerns raised by several amici opposing the settlement, the court concluded that the settlement and the proposed remedies were reasonable and in the public interest. On April 28, the FTC announced the formal approval of amendments to its 2012 privacy order to incorporate updated provisions included in the 2019 settlement.
SEC charges company and CEO for misleading statements concerning N95 masks
On April 28, the SEC announced that it filed suit in the U.S. District Court for the Southern District of Florida against a company and its CEO (defendants) for violating the Securities Exchange Act of 1934 by making false and misleading statements concerning their ability to source and supply N95 masks for the Covid-19 virus. The SEC alleges that the defendants’ actions sought to mislead investors because they “never had either a single order from any buyer to purchase masks, or a single contract with any manufacturer or supplier to obtain masks, let alone any masks actually in its possession.” Following regulatory inquiries (and an SEC March 26 order that temporarily suspended trading in the securities of the company), the SEC alleges in the complaint that the CEO issued a press release stating that the company never had masks available to sell. The SEC seeks injunctive relief and civil penalties against the defendant, as well as an officer-and-director bar against the CEO.
FTC releases 2019 Annual Highlights
On April 23, the FTC released its 2019 Annual Highlights, which outlines the Commission’s efforts over the past year to protect consumers and promote competition. The report discusses various enforcement actions, policy and advocacy initiatives, and education and outreach programs, and notes that FTC actions in 2019 have led to more than $232 million in refunds to consumers. The report covers a range of consumer protection enforcement actions related to, among other things, unfair and deceptive marketing as well as privacy and data security issues. The report also discusses joint consumer protection enforcement-related efforts with foreign agencies and multilateral organizations, as well as information-sharing and enforcement cooperation measures intended to streamline and facilitate joint law enforcement investigations. In addition, the report highlights recent policy actions, such as advocacy comments, amicus briefs, and Congressional testimony, and discusses education efforts undertaken in 2019 including: (i) a series of public hearings on Competition and Consumer Protection in the 21st Century; (ii) workshops with state regulators and law enforcers; (iii) workshops on consumer protection issues such as small business financing, consumer reporting accuracy, and privacy matters; and (iv) education outreach programs. According to the stats and data section of the report, the FTC received more than 3.2 million consumer reports in 2019, in which identity theft and imposter scam complaints represented over 40 percent of the total reports received.