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

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

FTC 101

Mortgages

Debt and Debt Collection

Fair Credit Reporting Act

Privacy & Security/Identity Theft

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

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

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

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)

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

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

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

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

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

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