May 10, 2022

Consumer Financial Services Practice Digest

4 min

Legal and Regulatory Developments

The CFPB Targets FinTechs and Other Nonbanks for Supervision and Examination

The Consumer Finance Protection Bureau (CFPB) announced that it will examine nonbank financial companies that pose risks to consumers, using statutory authority that until now had gone unused. Additional examinations would fill a gap in the number and type of entities it currently subjects to periodic structured scrutiny, as many nonbank financial services providers are scrutinized only for compliance with federal financial law in the event of an investigation or as recipient of a market information inquiry. The Bureau also is adding a mechanism to its rules to make final decisions and orders in its nonbank risk-determination proceedings public.

CFPB Lawsuit Sheds Light on Digital Dark Patterns

A recent lawsuit filed by the CFPB against a national credit reporting agency provides some insight into the types of website features and designs that regulators like the Consumer Financial Protection Bureau and Federal Trade Commission will target. As we covered previously, digital dark patterns—or website design, features, and interfaces used to allegedly deceive, steer, and manipulate users—are a priority for both rulemaking and enforcement actions by the FTC. Although the focus has been on website features that "trick or trap" consumers into subscriptions, the potential for broad and arbitrary application of this concept is worrisome. What is the line between a website that is acceptably optimized for conversion and one that is illegally steering users to make purchases?

New Certification Requirements on the Horizon for CCOs: Certifying the Efficacy of Compliance Programs at the Conclusion of Criminal Settlements

On Tuesday, March 22, 2022, Assistant Attorney General Kenneth Polite of the Department of Justice (DOJ) told an audience of compliance professionals that DOJ will direct prosecutors to "consider requiring" chief compliance officers (CCOs) and CEOs to certify at the end of a settlement term that "the company's compliance program is reasonably designed and implemented to detect and prevent violations of the law and is functioning effectively." This announcement, made at the ACAMS AML and Financial Crime Conference, is the latest in a years-long trend of increasing expectations of compliance officers and their departments and will be a significant area of focus in corporate resolutions in years to come.

Update: Judge Allows Most of Receiver's Claims Against Wells Fargo for Involvement with Negative Option Marketers to Proceed

A few weeks ago, we published an article discussing two enforcement actions by the Federal Trade Commission in the Central and Southern Districts of California that highlighted the risks to payment processors and financial institutions for their relationships with companies engaged in allegedly unlawful "negative option" marketing.

In both FTC v. Triangle Media Corporation et al. and FTC v. Apex Capital Group, LLC, the FTC accused the defendants of engaging in an alleged scheme to offer fake "free trials" of personal care products and dietary supplements to obtain consumers' credit and debit card information.

Generating Leads Legally: Regulatory and Litigation Quick Hits

Venable hosted another jam-packed session on the regulatory and litigation risks facing the lead generation industry today, and strategies for mitigating them. In the webinar, Daniel Blynn, Alexandra Megaris, and Jonathan Pompan covered federal and state law enforcement priorities; TCPA, legislative, licensing, and regulatory developments; and more.

Defending Consumer Protection Investigations: What to Do When the FTC, CFPB, and State Attorneys General Have Opened Parallel or Joint Investigations

At a recent National Association of Attorneys General conference, Consumer Finance Protection Bureau (CFPB) Director Rohit Chopra recently encouraged state attorneys general to use the CFPB's authority to open investigations and bring enforcement actions. His statement suggested a new level of cooperation between the agency and state attorneys general, but parallel and/or joint investigations in the consumer protection space are not a new phenomenon.

Venable partners Len Gordon (former regional director of the FTC's Northeast Regional Office), Erik Jones (former policy director and senior public interest counsel for the Illinois Attorney General's Office), and Alexandra Megaris hosted a webinar to discuss the dynamics of overlapping authority including, state and federal statutes that provide overlapping jurisdiction to the FTC, CFPB, and state AGs; the dynamics that lead to joint investigations; tips for navigating discovery and document productions in parallel investigations; and issues related to settlement that occur in parallel investigations.