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White House Proposes To Rescind Cuba's Designation as a State Sponsor of Terrorism
On April 14, President Obama submitted to Congress a report and certifications signaling the Administration’s intent to rescind Cuba’s designation as a State Sponsor of Terrorism, according to a statement by the White House Press Secretary. The decision to rescind Cuba’s designation, which has been in effect since 1982, was based on a recommendation from the Secretary of State, resulting from the Department of State undertaking a comprehensive review of Cuba’s record. As statutorily required for a country’s designation to be rescinded, the President must submit a report to Congress at least 45 days before the proposed rescission would be effective and certifying that (i) Cuba has not provided any support for international terrorism during the preceding 6-month period; and (ii) the Cuban government has provided assurances that it will not support acts of international terrorism in the future. The White House’s announcement follows recent policy changes by the Administration aimed at normalizing U.S.-Cuba relations.
FTC Releases 2014 Annual Highlights Report
On April 15, the FTC released its 2014 Annual Highlights Report (Report), summarizing the FTC’s work during the prior year to protect consumers and promote competition in industries such as mobile technology, healthcare, and consumer products and services. The Report notes a range of policy actions, including filing eight amicus briefs on topics such as debt collection and children’s online privacy. It also publicizes the FTC’s work in pursuing over 150 enforcement actions resulting in $640 million in consumer refunds, highlighting the actions against mobile carriers’ “cramming” activities and companies that misrepresented the security features of their mobile applications and failed to disclose hidden in-app charges.
GA Department of Banking and Finance Orders Florida Mortgage Lender to Shut Down for Unlicensed Lending Activities
On April 8, the Georgia Department of Banking and Finance issued an Order to Cease and Desist (Order) to a Florida-based mortgage lender. The lender allegedly engaged in residential mortgage origination, brokering, and/or lending activities without having a valid license or the appropriate exemption from the state’s licensing requirements in violation the Georgia Residential Mortgage Act. The Order is final 30 days from the issuance date, but the Department can rescind the Order if, within that 30 day period, the company provides adequate documentation showing that it is either properly licensed or qualifies for exemption.
Georgia Banking Regulator Revokes License of Pennsylvania Mortgage Lender
On April 13, the Georgia Department of Banking and Finance (Department) entered into a Consent Order (Order) with a Pennsylvania-based mortgage lender and its owners for failing to file a timely application with the state regulator. Specifically, the Order was entered into with the lender to resolve a Notice of Intent to Revoke and proposed Orders to Cease and Desist for allegedly, among other things, allowing the acquisition of 10 percent or more of the ownership of a Georgia licensed entity without first filing an application with the Department, conducting business with an unlicensed person who is not exempt from licensing, employing a felon, and making false statements or misrepresenting material facts in mortgage loan documents. Under terms of the Order: (i) the lender must surrender its mortgage license and pay a $5,000 fine; (ii) one of its owners must surrender his MLO license, must pay two fines of $1,000 each to both the Department and the State Regulatory Registry, and is prohibited from being employed by a licensed Georgia mortgage broker or lender for five years; and (iii) another owner must contribute $1,000 to the State Regulatory Registry and is prohibited for five years from acquiring more than 10% voting shares of a Georgia licensed company. The Order also prohibits both aforementioned owners from: (i) applying for mortgage loan originator, mortgage broker, or mortgage lender licenses; (ii) serving as a director, officer or any other equivalent role for a Georgia licensee; and (iii) acting as a branch manager for a Georgia branch of a Georgia licensed mortgage broker or lender.
Arkansas Amends Penalties for Unlicensed Collection Agency Activities
On April 8, the Arkansas General Assembly approved H.B.1668, which amends its collection agencies law to allow unlicensed collection agencies operating within the state to pay a $10,000 civil penalty to be considered retroactively licensed by its State Board of Collection Agencies. The legislation defines “retroactively licensed” as the date in which the collection agency first became subject to licensure. The legislation removes the criminal penalty for operating without a license but preserves the board’s right to impose a minimum fine of $50 up to a maximum of $500 for each day a collection agency participates in collection activities without a license. The opportunity to opt for retroactive licensure will take effect 90 days after the state legislature has adjourned.
Target and MasterCard Reach $19 Million Agreement Over Data Breach
On April 15, retail company Target agreed to set aside up to $19 million to settle claims brought by MasterCard and its credit card issuers to cover operational costs and fraud-related losses resulting from a data breach incident in 2013. According to a press release issued by Target, the agreement is dependent upon, among other things, 90 percent of eligible Mastercard accounts accepting their alternative recovery offers, either directly or through their sponsoring issuers by May 20, 2015. Eligible issuers, mostly comprising of banks and credit unions, who accept the offer will be required to release any current or future claims towards Target with respect to the data breach. All eligible issuers will receive full details of the Settlement Agreement at a later time.
CFPB Orders Mortgage Lender to Pay $250,000 Penalty for Deceptive Advertising
On April 9, the CFPB announced a consent order with a California-based mortgage lender, requiring the lender to pay a $250,000 civil money penalty for advertising that allegedly led customers to believe the company was affiliated with the U.S. government. According to the consent order, the advertisements used the names and logos of the VA and FHA, described loan products as part of a “distinctive program offered by the U.S. government,” and instructed consumers to call the “VA Interest Rate Reduction Department” at a phone number belonging to the mortgage lender, thus implying that the mailings were sent by government agencies. The CFPB further alleged that the advertisements misrepresented interest rates and estimated monthly payments, including whether the interest rate was fixed or variable, and that consumers who called the company were sometimes told that the lender was endorsed by the VA or FHA. The CFPB determined that the advertisements were deceptive and misleading in violation of the CFPA and the Mortgage Acts and Practices Rule (MAP Rule or Regulation N). The CFPB also alleged violations of TILA and Regulation Z for failing to include certain disclosures in the advertisements. In addition to the civil money penalty, the consent order requires the lender to submit a compliance plan to the CFPB and comply with additional record keeping, reporting, and compliance monitoring requirements.
CFPB Files Suit and Obtains Injunction Against Participants of Alleged Illegal Debt Collection Scheme
On April 8, the CFPB announced that it filed a lawsuit in the United States District Court for the Northern District of Georgia on March 26 against participants in an allegedly illegal debt collection operation, involving certain payment processors and a telephone broadcast service provider. The complaint alleges that several individuals and the companies they formed, based in New York and Georgia, attempted to collect debt that consumers did not owe or that the collectors were not authorized to collect. The complaint further alleges uses of harassing and deceptive techniques in violation of the CFPA and FDCPA. Specifically, the collectors allegedly placed robo-calls through a telephone broadcast service provider, also named in the complaint, to millions of consumers stating that the consumers had engaged in check fraud and threatening them with legal action if they did not provide payment information. The CFPB asserts that as a result, the debt collectors received millions of dollars in profits from the targeted consumers. The complaint also names certain payment processors used by the collectors to process payments from consumers. The CFPB obtained a preliminary injunction to halt the debt collection activities and freeze the assets of all defendants named in the lawsuit. Consistent with prior enforcement actions and guidance, the CFPB’s complaint in this matter underscores the importance of exercising thorough due diligence and ongoing oversight of third parties engaged to provide material services in connection with the offering or provision of a consumer financial product or service. For an in-depth analysis of the CFPB’s expanding scrutiny in this area, please see the recently published article Regulatory Blue Pencil: CFPB Guidance, Enforcement Actions Signal Expanding Focus on Vendor Management, authored by BuckleySandler Partner Elizabeth McGinn and Counsel Moorari Shah.
FCC Enters Into $25 Million Settlement Following Cell Phone Carrier Data Breach
On April 8, the Federal Communications Commission (FCC) announced a $25 million settlement with an international telecommunications carrier concerning the unauthorized release of the personal information of nearly 280,000 customers by certain employees. The alleged data breach took place over a 168-day period at carrier call centers in Mexico, Columbia, and the Philippines where employees of the carrier allegedly were paid by unauthorized third parties to disclose confidential customer information. The third parties appear to have sought the information to unlock and traffic stolen cell phones. The FCC Enforcement Bureau found that the data breach violated a carrier’s duty under Section 222 of the Communications Act and also constituted “an unjust and unreasonable practice” under Section 201. In addition to paying the $25 million civil money penalty, terms of the settlement require the carrier to (i) notify all affected customers and reimburse them for any subsequent credit monitoring services; and (ii) implement new internal policies to improve the carrier’s privacy and data security practices. For more information on the latest regulatory guidance on data security and evolving best practices, please visit the Privacy, Cyber Risk, and Data Security Resource Center.
FTC Settles with Technology Company for Allegedly Misleading Consumers about Refunds
On April 7, the FTC announced a proposed settlement of an administrative complaint alleging that a web hosting provider violated the Federal Trade Commission Act. According to the press release, the company offered web hosting packages to consumers with the guarantee of receiving their money back if they canceled within 30 days. The company allegedly did not adequately disclose that customers who had purchased a new annual or multi-year web hosting package and registered an included domain name would receive only a partial refund if they canceled within 30 days. The proposed settlement prohibits the company from misleading consumers about its cancellation and refund policies.