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Consumer Financial Services

Insights into the FTC's Bureau of Consumer Protection

The FTC plays a significant role in regulating consumer financial services providers and vendors, including advertisers and marketers. A recent webinar from the Consumer Financial Services Committee of the American Bar Association featured an interview with Andrew Smith, director of the FTC's Bureau of Consumer Protection. Mr. Smith, who was confirmed in May 2018, shared his personal views of his role at the FTC, the FTC's development, and enforcement trends and focus in the consumer financial services sector. In this article, we highlight the main areas of focus that Mr. Smith touched upon that in our view are relevant to the consumer financial services sector.

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Court Sets Important Limits on Ability of FTC to Challenge Past Conduct

Believe it or not, the FTC's power is not limitless. We wrote previously on an antitrust decision (FTC v. Shire ViroPharma) limiting the FTC's ability to proceed in federal court to challenge past violations of the FTC Act. This week a judge extended that reasoning to the FTC's consumer protection enforcement authority. In FTC v. Hornbeam Special Services, Judge Timothy C. Batten, Sr. held that when the FTC proceeds in federal court pursuant to Section 13(b) of the FTC Act, the FTC must plead facts indicating that each defendant is violating or about to violate a law enforced by the FTC. Having found the FTC had thus far failed to do so, Judge Batten will allow the FTC the opportunity to amend its complaint to add such facts.

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Financial Institutions Get a Deserved CIP Pass on Premium Loans for Property and Casualty Insurance Policies

By a September 28, 2018 Order, the Federal Banking Agencies, with FinCEN's concurrence, exempted accounts used only to finance commercial insurance premiums for property and casualty policies from the Bank Secrecy Act's Customer Identification Program rules. This decision followed one over two years ago where FinCEN exempted these same accounts from the beneficial ownership requirements of FinCEN's May 11, 2016 Customer Due Diligence rule.

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Upcoming Event

November 8, 2018: "Credit Reporting: Navigating the Turbulent Waters" at the 2018 ACA International Fall Forum and Expo.