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CONSUMER PROTECTIONAND LITIGATION:
CONSUMER PROTECTIONAND LITIGATION: Ryan MehmAttorneyBureau of Consumer ProtectionFederal Trade Commission
The views expressed are those of the speaker and not necessarily those of the FTC.
What financial educators need to know What financial educators need to know
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FTC 101
Independent law enforcement agency
Five Commissioners appointed by the President
Consumer protection and competition mandate
Section 5 of the FTC Act: Broad authority to prohibit unfair or deceptive acts or practices
Law enforcement and policy
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FTC 101
Mortgages
Debt and Debt Collection
Fair Credit Reporting Act
Privacy & Security/Identity Theft
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MORTGAGES FTC enforces laws that protect consumers
from deceptive practices – like foreclosure rescue or loan mod scams – by certain kinds of lenders
In addition to the FTC Act, the FTC enforces:
• Mortgage Assistance Relief Services (MARS) Rule
• Mortgage Acts and Practices (MAP) Rule
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MORTGAGESMARS Rule
Issue: Bogus operations claim that, for a fee, they will negotiate
with the consumer’s mortgage lender or servicer, to obtain a loan
modification, short sale, or other foreclosure relief.
Key Features:
Advance Fee Ban
Disclosures
Prohibited Claims
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MORTGAGESMAP Rule
Bans deceptive claims about consumer mortgages in advertising or other types of commercial communications
Broad Scope and enforcement authority
Allows FTC to seek appropriate relief, including civil penalties
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DEBT FTC enforces laws and rules against
businesses that provide products or services meant to help consumers with their debt, including:
• Fair Debt Collection Practices Act (FDCPA)
• Debt Relief Amendments to the Telemarketing Sales Rules (TSR)
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DEBTFDCPA
Prohibits debt collectors from using abusive, unfair, or deceptive practices to collect from consumers
Recent Litigation: United States v. West Asset Management, Inc.
$2.8 million civil penalty
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DEBTDebt Relief Amendments to the Telemarketing Sales Rule (TSR)
Purpose: Curb deceptive and abusive practices associated with debt relief service companies
Under the Rule, it is illegal to:
(1) Charge Upfront Fees
(2) Fail to Disclose Certain Information
(3) Misrepresent Services
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CREDITFair Credit Reporting Act (FCRA)
Recent Development: Risk Based Pricing Rule
Applies to creditors who, based on a consumer’s credit score or information in a consumer’s credit report, offer that consumer credit on less favorable terms than to other consumers
When this occurs, a consumer is entitled to a risk-based pricing notice
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PRIVACY & SECURITY/ID THEFT
What is ID Theft?
Occurs when someone steals your personal information (e.g.,
credit card info or SSN) and fraudulently uses it
How does ID theft happen?
Go through your trash or “dumpster dive”
Steal your wallet or purse
Use fake emails to get you to provide personal information
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PRIVACY & SECURITY/ID THEFT
ID Theft – Advising consumers on how to stop ID thieves
Shred financial documents
Limit info in wallet or purse
Don’t click on links sent in unsolicited emails
Monitor accounts and review financial statements regularly
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PRIVACY & SECURITY/ID THEFT
ID Theft – Advising consumers on how to stop ID thieves
Keep anti-virus software up to date
Be careful using social networking sites and peer-to-peer (P2P)
file sharing software
Use difficult passwords for online accounts
Use secure internet connections
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