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FTC to review potential updates to federal privacy rules
On October 17, as part of its fall 2018 rulemaking agenda, the FTC announced that it plans to review potential updates to federal privacy rules on how banks protect consumer data. The planned recommendation—scheduled to be presented to FTC commissioners at the end of November—will incorporate recommendations by staff and the public on changing the Gramm-Leach-Bliley Act Safeguard Rules (the Rule) given the potential conflict between the Rule and state, local, or other federal laws or regulations. As previously covered by InfoBytes, the FTC requested comments on the Rule in 2016, seeking feedback on several specific questions relating to the Rule’s economic impact and benefits, potential conflicts, and how technological, economic, or other industry changes will affect the Rule.
Among other things, the FTC’s regulatory agenda will also address (i) 2016 amendments to the Telemarking Sales Rule; (ii) the periodic review of identity theft rules; (iii) issues related to the privacy of consumer financial information concerning vehicle disclosures; and (iv) credit monitoring for active duty military as required by the Economic Growth, Regulatory Relief, and Consumer Protection Act.
FTC report outlines efforts to protect older consumers from fraud
On October 18, the FTC released a report to Congress outlining the agency’s comprehensive efforts to protect older consumers in the marketplace from fraud, identity theft, imposter scams, deceptive credit schemes, and other unlawful practices. The report, Protecting Older Consumers 2017-2018: A Report of the Federal Trade Commission, discusses (i) scams that target older consumers, including technical support scams; business imposter scams; prizes, sweepstakes, and lottery scams; and family or friend imposter scams; (ii) key FTC enforcement actions taken against companies that allegedly engaged in deceptive schemes that targeted or affected older consumers; and (iii) outreach and education efforts, including fraud prevention campaigns and resources for older consumers. Specifically, the report contains analysis of consumer complaint data from 2017, which revealed that older consumers (especially those over 80) were more likely to report fraud than younger people, and that when they reported losing money to fraud, they lost significantly more money than consumers in their twenties. (See previously InfoBytes coverage here on the FTC’s annual summary of consumer complaints received in 2017).
FTC to release quarterly consumer complaint data; agency highlights rise in gift card scams
On October 16, the FTC announced the launch of a new interactive online format that will release aggregated consumer complaint data on a quarterly basis. The interactive dashboards explore aggregated statistics about fraud, identity theft, and other consumer protection problems, and also provide a state-by-state breakdown of issues. As part of the new initiative, the FTC’s Consumer Protection Data Spotlight focuses on the rise in consumer complaints concerning gift card scams, which are now the most reported method of payment for imposter scams. According to the FTC, fraud report payments using gift and reload cards experienced a 270 percent increase (from 7 percent up to 26 percent), which can be attributed to quick access to cash, largely irreversible transactions, and anonymity. As of September 2018, the FTC reports that reported losses involving the use of gift and reload cards has already reached $53 million.
FTC reaches settlements with student debt relief operators
On September 28, as part of Operation Game of Loans, a coordinated effort between the FTC and state law enforcement, the FTC announced settlements with several individuals and their associated companies (defendants), accused of violating the FTC Act and the Telemarketing Sales Rule when marketing and selling student debt relief services. According to the FTC, the defendants, among other claims: allegedly (i) misrepresented to consumers that they were affiliated with the Department of Education or a borrower’s loan servicer; (ii) claimed that consumers who paid an up-front fee—as much as $1,000 according to the FTC’s complaint—would qualify for or be approved to receive permanently reduced monthly payments or have their student loans forgiven or discharged; and (iii) engaged in deceptive advertising practices through social media, falsely claiming they could qualify, establish eligibility for, approve, or enroll consumers in loan forgiveness programs.
Under the terms of the settlements, the defendants are permanently banned from advertising, marketing, promoting, offering for sale, or selling any type of debt relief products or services—or from assisting others to do the same. The defendants also are prohibited from making misrepresentations related to financial products and services. Combined, the settlements total more than $19 million in monetary judgments, all of which have been partially suspended due to the defendants’ inability to pay the entire amount of their respective judgments. The more than $5 million in unsuspended amounts may be used for equitable relief, including consumer redress.
Department of Commerce requests comments on new federal approach to consumer privacy rules
On September 26, the National Telecommunications and Information Administration (NTIA) published a notice and request for comments on behalf of the Department of Commerce seeking input from stakeholders on ways to address consumer privacy concerns while protecting prosperity and innovation. The NTIA’s notice seeks comments on a proposed set of “user-centric privacy outcomes” to be addressed by future federal action on consumer privacy policy, along with a set of high-level goals that would establish the outlines for the direction these protections should take. Among other things, the NTIA also seeks feedback on ways to (i) increase harmonization across the regulatory landscape; (ii) ensure a balance between legal clarity, flexibility for innovation, and consumer privacy; (iii) prevent a fragmented regulatory approach by ensuring that any law is applied equally to all businesses not covered by sectoral laws; (iv) develop a regulatory framework “consistent with the international norms and frameworks”; and (v) provide the FTC with the necessary tools and resources to effectively enforce such rules.
The NTIA’s proposal follows the European Union’s General Data Protection Regulation (GDPR), which was implemented this past summer, and the recently enacted and amended California Consumer Privacy Act of 2018 (see previous InfoBytes coverage here). Comments on the notice must be received by October 26.
FTC announces settlements with website operators over the sale of fake documents allegedly used for fraud and identity theft
On September 18, the FTC announced three proposed settlements with the operators of websites who allegedly violated the FTC Act’s prohibition against unfair practices by selling fake financial documents used to facilitate identity theft and other frauds, including loan and tax fraud. As previously covered in InfoBytes, identity theft was the second largest category of consumer complaints reported in 2017 according to the FTC. The FTC brought charges against the first defendant, alleging the defendant engaged in the sale of fake pay stubs, bank statements, and profit-and-loss statements, as well as providing a product that allowed customers to edit existing (and authentic) bank statements. The second defendant’s charges include the alleged sale of fake pay stubs, auto insurance cards, and utility and cable bills, while the allegations against the third defendant also include the sale of fake tax forms, bank statements, and verifications of employment. While the defendants’ websites claimed that the fake documents were sold for “‘novelty’ and ‘entertainment’ purposes,” the FTC asserts that the defendants “failed to clearly and prominently mark such documents as being for such purposes and did not state on the documents themselves that they were fake.”
Under the terms of the proposed settlement agreements (see here, here, and here), monetary judgments are imposed against the defendants, who also are permanently prohibited from advertising, marketing, or selling similar fake documents.
FTC and NYAG settle with debt collectors who falsely threatened consumers
On September 21, the FTC announced settlements with multiple New York debt collection operations and their principals (defendants) for unlawful debt collection practices. The settlements are a result of 2015 joint lawsuits by the FTC and the New York Attorney General, alleging the defendants unlawfully used threats and abusive language, including false threats that consumers would be arrested, to collect more than $45 million in supposed debts (previously covered by InfoBytes here). The settlement orders ban the defendants from the business of debt collection and prohibit the defendants from (i) misrepresenting information related to financial products and services; (ii) disclosing, using, or benefitting from the consumer information obtained through the course of the debt collection activities; and (iii) failing to disclose of such personal information properly. The two orders (located here and here) impose a $22.5 million judgment against one set of defendants, and a judgment of $4.4 million against other defendants. The judgments are suspended as to some of the defendants due to inability to pay.
Free security freezes available nationwide
On September 21, the FTC announced the nationwide availability of free security freezes and one-year fraud alerts, which were authorized under the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA). Specifically, Section 301 of EGRRCPA prohibits a national credit reporting agency from charging a fee to place, remove, or temporarily lift a security freeze. The law also allows parents to obtain a free credit freeze for any of their children who are under 16, and guardians, conservators, and those with a valid power of attorney can obtain a free freeze for the person for whom they have legal authority to act. Additionally, Section 301 extends the duration of the free fraud alert from 90 days to one year. Consumers are required to contact all three nationwide credit reporting agencies to place the security freeze, but only are required to contact one of the three for the fraud alert, as each bureau is obligated to notify the others of a fraud alert.
FTC settles with debt collection operators for alleged fraudulent collections
On September 7, the FTC announced a series of settlements with the operators of a Georgia-based debt collection business for allegedly violating the FTC Act by making false, or misleading claims and threats during debt collection. As previously covered by InfoBytes, in November 2017, the FTC filed a complaint alleging that the defendants threatened legal action, garnishment, and imprisonment if purported debts were not paid, and in other instances, attempted to collect debts after consumers provided proof that the debt was paid off. Each settlement order (available here, here, and here) imposes a $3.4 million penalty against the defendants, which, after surrendering certain assets, will be partially suspended due to the inability to pay. The settlement orders ban the defendants from the business of debt collection, and prohibit the defendants from (i) misrepresenting information related to financial products and services, and (ii) disclosing, using, or benefitting from the consumer information obtained through the course of the debt collection activities.
29 bipartisan state Attorneys General respond to FTC's consumer protection hearing announcement
On August 20, a bipartisan coalition of 29 state Attorneys General, led by Oregon Attorney General Ellen Rosenblum, submitted a comment letter to the FTC regarding the agency’s June announcement of public hearings on “Competition and Consumer Protection in the 21st Century.” The letter requests that the state Attorneys General be included in the discussions regarding consumer protection during the agency’s hearing process, which intends to address “whether broad-based changes in the economy, evolving business practices, new technologies, or international developments might require adjustments to competition and consumer protection enforcement law, enforcement priorities, and policy.” The letter emphasizes the states’ “long history of protecting consumers from unfair and deceptive practices” under each state’s consumer protection authority and offers specific comment on three areas of the FTC request: (i) privacy and big data; (ii) communication and media technology; and (iii) algorithmic decision tools and other artificial intelligence. Specifically, the Attorneys General note consumers’ concerns over personal information and data security, stating the “[i]ndustry must place privacy and security front and center in its research and development of products and services.” The letter concludes with a request that the agency take into account the “important role” the Attorneys General have in consumer protection and include their offices in the hearing process.