The past seven days have been quite active at the Federal Trade Commission. The regulator made moves involving credit reporting and active military personnel, took action in connection with an alleged credit repair scheme and worked with and its law enforcement partners for a major crackdown on illegal robocalls.
What might be most pressing for auto finance companies is the FTC finalized the rule implementing a 2018 law that requires the nationwide consumer reporting agencies (CRAs) to provide free electronic credit monitoring services for active duty military consumers.
FTC officials explained the Free Electronic Credit Monitoring for Active Duty Military Rule, which will be published in the Federal Register shortly, implements legislation included in the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act, which amended the Fair Credit Reporting Act (FCRA) by requiring CRAs to notify active duty military consumers about any “material” additions or modifications to their credit files.
The FTC said it received 19 comments on its proposed rule, released in November, which defined key terms such as “electronic credit monitoring service” and “material additions or modifications” to the file of a consumer. It also included proposed requirements for how CRAs can verify that an individual is an active duty military consumer, as well as restrictions on the use of personal information and on communications surrounding enrollment in the free service.
Officials indicated the final rule defines “active duty military consumer” as a consumer in military service who meets the FCRA’s definition of “active duty military consumer,” which requires that the consumer be assigned to service away from their usual duty station, or be a member of the National Guard.
“While commenters recommended eliminating the requirement that a military consumer be assigned to service away from their usual duty station, the statute limits the commission’s discretion on this topic,” the FTC said.
“To the extent that Congress intended to provide free credit monitoring more broadly, the commission calls on Congress to address this issue through additional legislation,” the regulator added.
Officials went on to mention the final Rule also clarifies that National Guard members do not need to be deployed away from their usual duty stations to be eligible for the free credit monitoring.
“Because the statute does not expressly apply the duty station requirement to National Guard members, the commission has interpreted the act as providing the benefit of free credit monitoring to members of the National Guard regardless of whether they are assigned away from their usual duty station,” the FTC said.
The regulator also pointed out the final rule addressed concerns that active duty military consumers might have to pay to access their credit files after being alerted to an addition or change. The final rule requires that when a CRA notifies an active duty military consumer about a material change to their credit file, the CRA must also provide that consumer with free access to that file.
The final rule extends the amount of time the CRAs have to notify an active duty military consumer of a material change from 24 hours to 48 hours. In addition, the final rule makes certain changes to the definition of “material additions or modifications,” according to officials.
“The final rule retains restrictions on secondary uses and disclosures of information collected from an active duty military consumer requesting the credit monitoring service,” the FTC said. “It also bans marketing during the enrollment process until after an active duty military consumer has been enrolled in the free credit monitoring service.
“The final rule also prohibits the CRAs from requiring active duty military consumers to agree to terms or conditions, unless such terms or conditions are necessary to comply with applicable legal requirements,” the regulator went on to say.
The FTC noted the Rule will go into effect three months after publication in the Federal Register. The regulator, however, will allow the CRAs to comply with certain portions of the rule by offering their existing commercial credit monitoring services for free to active duty military consumers, for a period of up to one year from the effective date.
The FTC vote to publish the final rule in the Federal Register was 5-0.
Alleged scammers charged upfront fees and falsely promised to improve credit scores
At the request of the FTC, a federal court has temporarily halted and frozen the assets of Grand Teton Professionals, an alleged credit repair scheme that charged illegal upfront fees and falsely claimed to repair consumers’ credit.
A news release stated the company and other defendants are charged with violating the FTC Act and several provisions of the Credit Repair Organizations Act, the Telemarketing Sales Rule, the Consumer Review Fairness Act, the Truth in Lending Act, and the Electronic Funds Transfer Act.
According to the FTC’s complaint, since at least 2014, two of the defendants — Douglas Filter and Marcio Andrade — have operated an unlawful credit repair scam that bilked consumers out of at least $6.2 million.
“A good credit score can help you buy a home, get a business loan, or finance an education,” said Andrew Smith, director of the FTC’s Bureau of Consumer Protection. “These companies preyed on consumers who wanted to clean up their credit by making false promises and taking illegal upfront fees.”
The FTC charged that the defendants, using such trade names as Deletion Experts, Inquiry Busters, and Top Tradelines, used deceptive websites, unsolicited emails, and text messages to target consumers with false promises of substantially improving consumers’ credit scores by claiming to remove all negative items and hard inquiries from consumers’ credit reports.
Officials said the defendants also falsely claimed to substantially improve consumers’ credit scores by promising to add consumers as “authorized users” to other individuals’ credit accounts, a practice known as adding “tradelines” or “piggybacking” credit. In most instances, however, the defendants were not able to substantially improve consumers’ credit scores.
The complaint also alleged that the defendants charged illegal upfront fees and failed to provide consumers with required disclosures about their credit repair services. The defendants also advised consumers to mislead credit bureaus by filing false identity theft affidavits and to mislead lenders by claiming to be authorized users on other individuals’ credit accounts, according to the FTC.
In its complaint, the FTC charges that if a consumer complained about the lack of results or attempted to exercise their statutory rights to dispute the defendants’ illegal advance fees, the defendants would threaten them with legal action for violating purported anti-disparagement and anti-chargeback contract clauses. The defendants offered consumers the option of financing these substantial fees, but failed to make critical required disclosures.
When the defendants processed fees, they routinely engaged in electronic fund transfers from consumers’ bank accounts without obtaining proper authorization. The defendants often used illegal remotely created checks to pay for the credit repair services they offered through telemarketing, according the FTC’s complaint.
Under the terms of the temporary restraining order granted by the court, the company has temporarily ceased operations and the defendants’ assets are frozen.
The corporate defendants are:
— Grand Teton Professionals
— 99th Floor, LLC
— Mait Management
— Demand Dynamics
— Atomium Corps. (a Wyoming company)
— Atomium Corps. (a Colorado company)
— Startup Masters NJ (a Wyoming company)
— Startup Masters NJ Inc. (a New Jersey company)
— First Incorporation Services (a Wyoming company)
— First Incorporation Services (a Florida company)
The FTC vote authorizing the staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the District of Connecticut.
Stopping 1 billion robocalls
Finally, the Federal Trade Commission and its law enforcement partners announced a major crackdown on illegal robocalls, including 94 actions targeting operations around the country that are responsible for more than 1 billion calls pitching a variety of products and services including credit card interest rate reduction services, money-making opportunities, and medical alert systems.
Officials highlighted the joint crackdown, “Operation Call it Quits,” is part of the FTC ongoing effort to help stem the tide of universally loathed pre-recorded telemarketing calls. It also includes new information to help educate consumers about illegal robocalls.
In addition, the FTC emphasized that it continues to promote the development of technology-based solutions to block robocalls and combat caller ID spoofing.
“Operation Call it Quits” includes four new cases and three new settlements from the FTC alone. The U.S. Department of Justice (DOJ) filed two of the new cases on the FTC’s behalf. Collectively, the defendants in these cases were responsible for making more than a billion illegal robocalls to consumers nationwide. Today’s announcement brings the number of cases the FTC has brought against illegal robocallers and Do Not Call (DNC) violators to 145.
“We’re all fed up with the tens of billions of illegal robocalls we get every year,” Smith. “Today’s joint effort shows that combatting this scourge remains a top priority for law enforcement agencies around the nation.”
In addition to the actions by the FTC, 25 federal, state, and local agencies have brought 87 enforcement actions as part of the initiative.
State partners announcing enforcement actions include the attorneys general offices for:
— North Carolina
— North Dakota
The action also involved the Consumer Protection Divisions of the district attorneys for the counties of Los Angeles, San Diego, Riverside, and Santa Clara in California; the Florida Department of Agriculture and Consumer Services; and the Los Angeles City Attorney.
In addition, the United States Attorneys’ Offices for the Northern District of Georgia, Middle District of Florida, and Southern District of Texas, with support from the Treasury Inspector General for Tax Administration, have contributed five criminal actions.
“Every year, our office gets more consumer complaints about unwanted robocalls than just about any other issue,” Indiana attorney general Curtis Hill said.
“At best, these calls represent a nuisance for families just wanting to enjoy peace and privacy without needless disturbances interrupting their routines,” Hill continued. “At worst, they represent scams that successfully steal people’s identities or hard-earned money.
“In Indiana, we are quite serious about stopping illegal robocalls, and our alliances with such partners as the FTC will prove a valuable asset in this mission,” he went on to say.