Federal Trade Commission
Practice Overview
The Federal Trade Commission has for decades pursued cases involving allegations of deceptive, misleading, and illegal marketing, lending, servicing, and collection practices, relying on its independent investigative power and ability to bring enforcement actions and litigate cases. Following changes in leadership and priorities, the FTC has strengthened the scope and intensity of it enforcement activity targeting the offering and sale of consumer financial products and services. This has significant implications for financial services companies within its jurisdiction — and for banks, thrifts, and credit unions that have third-party relationships with these companies.
Our attorneys have extensive experience responding to civil investigative demands, defending clients in enforcement actions, and litigating against the FTC. We defend companies in FTC investigations involving allegations of unfair or deceptive acts or practices (UDAP), unfair debt collection practices, deceptive marketing practices, illegal lending and credit reporting practices, unfair servicing practices, violations of consumer privacy rights, and failure to maintain security for sensitive consumer information — all of which are FTC priorities.
The FTC has also made policing fintech companies a priority. Similar to our firm’s substantive depth in financial services, our firm’s extensive Fintech practice, highly ranked by Chambers, is cross-collaborative with our FTC practice. We are deeply involved in helping companies bring emerging business models and technologies and products to market, and our representations across the fintech spectrum augment our extensive enforcement and litigation capabilities.
The FTC often works closely and conducts parallel investigations with other government entities, including state attorneys general and the Consumer Financial Protection Bureau. We frequently represent companies in these matters and understand how to balance the competing demands of maximizing efficiency and minimizing costs while maintaining strategic goals.
Our representative enforcement and investigation matters before the FTC include:
- Numerous clients in response to CIDs involving advertising, mortgage lending, credit reporting, unsecured consumer lending, payment processing, privacy and security practices, auto financing programs, and consumer demand deposit accounts
- Multiple clients on compliance related to cryptocurrency issues and payment systems, and processing rules and regulations
- A marketplace lender in a settlement of alleged unfair and deceptive trade practices with respect to marketing and servicing, as well as violations of the Telemarketing Sales Rule and Electronic Fund Transfers Act
- Nonbank lenders in extensive litigation with the FTC and parallel class actions alleging deceptive lending practices, resulting in a $240 million global settlement
- A payday loan/check-cashing management company in an enforcement action alleging violations of the Fair Credit Reporting Act Disposal Rule and the Gramm–Leach–Bliley Act Safeguards Rule
- The defendant in a settlement in which the FTC alleged unfair and deceptive trade practices, as well as violations of the Fair Debt Collection Practices Act, FCRA, and Truth in Lending Act in connection with the servicing of residential mortgages
- The defendant in a settlement in which the FTC alleged unfair and deceptive trade practices regarding mortgage loan servicing and collections
- A clean energy administrator involving regulatory due diligence for a potential transaction with a competitor
- A client in litigation concerning the sale of a U.S. subsidiary
- A client in a settlement alleging violations of its “Made in the USA” advertising standards
Our FTC enforcement acumen is enhanced by our extensive regulatory and compliance experience and federal and state enforcement practices. These allow us to provide practical, forward-thinking advice to companies seeking to develop internal controls that monitor compliance with laws, regulations, and guidance issued or enforced by the FTC. This advice covers a wide range of regulatory issues that fall under the FTC’s jurisdiction, including: the Consumer Leasing Act, Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN-SPAM), Electronic Fund Transfer Act, debt collection, credit reporting, privacy and cybersecurity requirements, telemarketing, TILA, and U.S. origin claims and “Made in the USA” standards.
Some of our representative compliance matters include:
- Review, revision, and development of comprehensive privacy and information security programs for both U.S.-based and international companies
- Development of multiple complaint-management programs to detect, address, and prevent consumer complaints, which are often the starting point for FTC investigations
- Reviews and redesigns of multiple advertising campaigns, including through print, electronic, and social-media channels, and addressing the nuances of mobile-device disclosures
- Provided guidance concerning the engagement of influencers in brand marketing, a growing area of concern
- Compliance and disclosure protocols involving in-app game and mobile-phone purchases
Articles
"Scrutiny over dark patterns presents further challenges in online contracting" by Sherry-Maria Safchuk, Edward W. Somers, and Melina W. Montellanos (CSLR)
The Electronic Signatures in Global and National Commerce (ESIGN) Act and its state analogue, the Uniform Electronic Transactions Act (UETA), have played a transformative role advancing e-com- merce in the United States for more than two decades. Provisions of the ESIGN Act contain safe- guards...
Articles"FTC updates data security expectations for nonbanks" by Elizabeth E. McGinn, Amanda R. Lawrence, Sherry-Maria Safchuk, Lauren Bomberger (Bloomberg Law)
Persistent cyberbreaches are compelling government responses to protect consumer data, particularly consumer financial information. Laws passed in California, Colorado, and Virginia are among the most influential at the state level, but federal regulators are also moving to implement additional...
Articles"Incorporating safeguards for CFPB info request targets" by John R. Coleman (Law360)
The U.S. Consumer Financial Protection Bureau announced recently that it ordered several large technology companies to submit detailed information concerning their payment products, including how they collect, use and share data about consumers who use their products. The information demand is...
Articles"Data security best practices for licensed lenders' telework" by Sherry-Maria Safchuk and James C. Chou (Law360)
State-licensed/registered brokers, lenders and servicers have increased their focus on data security as the spread of COVID-19 has extended work-from-home orders, and what now seems to be a lasting acceptance of remote work means that the tools used to secure data will remain relevant when the...
Articles"Educational tools may bring regulatory risk for fintech cos." (Law360)
Financial services providers are increasingly combining delivery of products and services with advice designed to help consumers make better-informed financial decisions. Fintech companies, which typically rely upon data and analytics as fundamental components of their business proposition, should...
Articles"Ruling on anti-hacking law may guide fair lending tests" by Jeffrey P. Naimon (Law360)
Regulators, consumer groups, academics and private litigants are grappling with the fair lending implications of the credit models powering the explosive growth in online lending by banks and financial technology firms. The U.S. District Court for the District of Columbia in late March concluded...
Articles"Op-ed: Prepare for the coronavirus scams: Learning from post-9/11 fraud" by Daniel R. Alonso (Daily News)
On the morning of Sept. 11, 2001, Beatrice Kaufman sat in her Hamptons house watching the Twin Towers collapse. Although she lived and worked in Manhattan, her 6,000-square-foot apartment was being renovated, so she stayed at her country home instead. But that did not stop her from filing papers...
Articles"Don’t let your shield down—FTC gets tough on EU-U.S. privacy shield framework" by Elizabeth E. McGinn and Magda Gathani (Bloomberg Law)
The Federal Trade Commission took more enforcement actions related to the EU-U.S. Privacy Shield Framework in 2019 and the beginning of 2020 than it did in the prior three years combined. The FTC also has alleged deception in many cases where there was no indication that any misrepresentations...
Articles"Managing legal risks to U.S. companies from foreign cyberattacks" by Amanda R. Lawrence, Sasha Leonhardt, and James C. Chou (Cybersecurity Law Report)
Protecting online systems against individual hackers has been a top priority for companies for several years, but as we begin a new decade, a new threat has risen to the forefront: well-funded and sophisticated foreign governments seeking to wage a new kind of warfare on the United States. In...
Articles"A new era of FCRA scrutiny for consumer data furnishers" by Jessica L. Pollet (Law360)
Furnishers provide information to consumer reporting agencies on over 1.3 billion consumer credit accounts or other tradelines each month, with the three largest national consumer reporting agencies holding the personal information of over 200 million consumers. Given the extent of the consumer...
Articles"Alternative data and fair lending face off: The relationship is complicated" by Caroline M. Stapleton (Mortgage Compliance Magazine)
Thinking of getting into a relationship with alternative data? You're not alone. Use of "alternate data," a term broadly used to describe consumer information gathered from non-conventional sources, is becoming increasingly attractive to mortgage lenders, their service providers, and even consumers...
Articles"Proceed with caution: Expanded role for the FTC on the road ahead" by Amanda R. Lawrence (American Bar Association Business Law Today)
Recent changes in agendas and leadership at the federal level are prompting companies offering financial products and services to question what consumer protection enforcement will look like on the road ahead. There has been significant discussion about the increasing role of state regulators,...
ArticlesC-Suite Review: Expanded role for the FTC on the road ahead?
Recent changes in agendas and leadership at the federal level are prompting companies offering financial products and services to question what consumer protection enforcement will look like on the road ahead. There has been significant discussion about the increasing role of state regulators,...
C-Suite Review"How FTC is stepping up its consumer protection efforts" by Amanda Lawrence (Law360)
Recent changes in agendas and leadership at the federal level are prompting companies offering financial products and services to question what consumer protection enforcement will look like on the road ahead. There has been significant discussion about the increasing role of state regulators,...
Articles"FTC v. D-Link Systems and the internet of things" by Elizabeth E. McGinn, and John B. Williams (Westlaw)
As businesses expand the availability of internet-connected devices, Buckley Sandler LLP attorneys Elizabeth McGinn, John Williams and Christopher Walczyszyn address the Federal Trade Commission’s role in regulating and enforcing “internet of things” device security to protect consumers’ data...
ArticlesCaveat Emptor or Caveat Vendor? The Evolution of Unfairness in Federal Consumer Protection Law
Under the Federal Trade Commission’s original interpretation of unfair or deceptive acts or practices law, financial institutions could feel some sense of security that, if they provided a consumer with a clear understanding of a proposed transaction, the burden was on the consumer to determine...
Articles
News & Blogs
FTC finalizes gaming company order on dark patterns
On March 14, the FTC finalized an administrative order requiring a video game developer to pay $245 million in refunds to consumers allegedly tricked into making unwanted in-game purchases. As previously covered by InfoBytes , the FTC filed an administrative complaint claiming players were able to...
InfoBytesFTC examines small business credit reporting
On March 16, the FTC launched an inquiry into the small business credit reporting industry, seeking information from firms on how information is collected and processed for business credit reports, how these reports are marketed, and firms’ approaches for addressing factual errors contained in the...
InfoBytesFTC asks how cloud computing affects competition and data security
On March 22, the FTC announced it is seeking information on cloud computing providers’ business practices with respect to the potential impact on competition and data security. FTC staff noted that the agency is also interested in how cloud computing is impacting specific industries, including...
InfoBytesFTC proposes changes to Negative Option Rule
On March 23, the FTC announced a notice of proposed rulemaking (NPRM) seeking feedback on proposed amendments to the agency’s Negative Option Rule, which is used to combat unfair or deceptive practices related to subscriptions, memberships, and other recurring-payment programs. (See also FTC fact...
InfoBytesFTC orders refunds over compromised health data
On March 2, the FTC filed a complaint against an online counseling service alleging the respondent violated the FTC Act by monetizing consumers’ sensitive health data for targeted advertising purposes. As part of the process to sign up for the respondent’s counseling services, consumers are...
InfoBytesFTC, CFPB examine discriminatory background screenings
On February 28, the FTC and CFPB issued a request for information (RFI) on background screening issues affecting consumers seeking rental housing in the U.S., including ways criminal and eviction records and algorithms may lead to discriminatory screening outcomes. (See also CFPB blog post here .)...
InfoBytesFTC says fraud cost consumers $8.8 billion in 2022
On February 23, the FTC released data showing 2.4 million consumers reported losing a total of nearly $8.8 billion to fraud in 2022—a more than 30 percent increase from the prior year. Investment scam losses totaled more than $3.8 billion (the most of any category in 2022 and double the amount of...
InfoBytesFTC, DOJ sue telemarketers of fake debt relief services
On February 16, the DOJ filed a complaint on behalf of the FTC against several corporate and individual defendants for alleged violations of the FTC Act and the Telemarketing Sales Rule (TSR) in connection with debt relief telemarketing campaigns that delivered millions of unwanted robocalls to...
InfoBytesDistrict Court allows FTC suit against owners of credit repair operation to proceed
On February 13, the U.S. District Court for the Eastern District of Michigan denied a motion to dismiss filed by certain defendants in a credit repair scheme. As previously covered by InfoBytes , last May the FTC sued a credit repair operation that allegedly targeted consumers with low credit...
InfoBytesFTC launches Office of Technology
On February 17, the FTC launched a new Office of Technology to strengthen the agency’s ability to keep pace with technological challenges in the digital marketplace. The Office of Technology will support the FTC’s enforcement and policy work, and will be headed by Chief Technology Officer Stephanie...
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FYI
"FTC updates data security expectations for nonbanks" by Elizabeth E. McGinn, Amanda R. Lawrence, Sherry-Maria Safchuk, Lauren Bomberger (Bloomberg Law)
"Incorporating safeguards for CFPB info request targets" by John R. Coleman (Law360)
Recent Blog Posts
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March 24, 2023
FTC finalizes gaming company order on dark patterns
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March 24, 2023
FTC examines small business credit reporting
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March 24, 2023
FTC asks how cloud computing affects competition and data security
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March 24, 2023
FTC proposes changes to Negative Option Rule
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March 8, 2023
FTC orders refunds over compromised health data