Top Story Compliance Related

The Federal Trade Commission has published [89 FR 99069] in this morning's Federal Register a final rule amending the Telemarketing Sales Rule to extend the Rule's applicability to inbound telemarketing calls in response to an advertisement through any medium or direct mail solicitation in which technical support products or services are offered for sale.

The amendments will be effective January 9, 2025.

The CFPB has announced an advance notice of proposed rulemaking (ANPR) to gather additional public input on potential amendments to Regulation V, which implements the Fair Credit Reporting Act (FCRA). After gathering public comment, the CFPB intends to issue a proposed rule concerning "coerced debt."

The ANPR asks consumer advocates, credit reporting companies, and the public to comment on:

• The prevalence and extent of harms to people with coerced debt, including through the credit reporting system.
• Evidence regarding the relevance of coerced debt to a survivor’s credit risk.
• Barriers to accessing existing protections under federal or state law for survivors of economic abuse.
• Challenges resulting from coerced debt facing specific populations including survivors of intimate partner violence and gender-based violence, older Americans, and children in foster care.
• Potential documentation or self-attestation requirements for showing that a person’s debt was coerced.

The proposed rulemaking is in response to a petition for rulemaking submitted by the National Consumer Law Center and the Center for Survivor Agency and Justice. Comments will be accepted through March 7, 2025.

• Publication update: Published at 89 FR 100922 on 12/13/2024.

The CFPB has announced it has issued a consent order against Performant Recovery, Inc., a California corporation headquartered in Plantation, Florida, that collected on student loan debt, including from borrowers who had defaulted on Federal Family Education Loan Program (FFELP) loans.

FFELP borrowers who have defaulted have a one-time right to rehabilitate their loans and bring them back into good standing by entering into an agreement and making a series of reasonable and affordable payments. If borrowers entered into loan rehabilitation agreements within 65 days of default, the loan holders did not charge the borrowers collection costs for the rehabilitations and also did not typically pay debt collection agencies any fees for these rehabilitations. However, the Bureau found that, between 2015-2020, Performant used its control over the rehabilitation process to delay borrowers’ loan rehabilitations beyond 65 days so that these borrowers would incur collection costs and Performant would generate fees for itself.

The Bureau found that, when borrowers called Performant with 65 days of default, the company routed these borrowers to specialized agents, who were told by managers that “the objective is to delay as much as possible without getting Performant in trouble.” Instead of filling out rehabilitation forms over the phone as they did with other borrowers, agents told these borrowers that they would need to receive blank forms by postal mail, and typically did not use email, fax, or other methods. Performant agents held up these borrowers’ rehabilitations at every stage. As a manager explained to agents, “[W]e want them to mail all documents. Remember the whole objective is to DELAY, DELAY, DELAY.”

The CFPB's order requires Performant to:

• Stop servicing and collecting on student loans
• Pay a $700,000 penalty to the CFPB’s victims relief fund. The payment will make it possible for the CFPB to potentially use the fund to fully redress borrowers harmed by Performant’s illegal conduct.
  

The Treasury Department has reported that OFAC has sanctioned one individual and one entity involved in abuses against prisoners held in Houthi-run prisons in Yemen and one individual providing support to Bashar al-Assad, and that the State Department has announced steps to impose visa restrictions on dozens of individuals pursuant to Section 212(a)(3)(C) of the Immigration and Nationality Act, and designated one official under Section 7031(c) of the annual Appropriations Act for involvement in a gross violation of human rights.

Treasury also reported that OFAC has sanctioned 28 individuals and businesses involved in a global gold smuggling and money laundering network based in Zimbabwe, under the authority of Executive Order 13818, which targets perpetrators of serious human rights abuse and corruption around the world.

For the names and identification information of the designated parties, see yesterday's BankersOnline OFAC Update.

Records in the Federal Reserve Board's Community Reinvestment Act evaluations archives show that the Reserve Banks made public 18 evaluations in November. A bank in Harrogate, Tennessee, received a rating of Needs to improve. Thirteen banks received Satisfactory ratings. We congratulate four banks whose evaluations were rated Outstanding:

• 1st Source Bank, South Bend, Indiana
• Commercial and Savings Bank of Millersburg, Ohio, Millersburg, Ohio
• Fall River Five Cents Savings Bank, Fall River, Massachusetts
• Tristate Capital Bank, Pittsburgh, Pennsylvania

The CFPB on Friday announced it has published an order establishing supervisory authority over Google Payment Corp. While Google Payment Corp. is already subject to CFPB’s enforcement jurisdiction, the CFPB has determined that Google Payment Corp. has met the legal requirements for supervision. The CFPB is making this order public to provide transparency about how it assesses risks using consumer complaints and other factors.

The CFPB's order does not constitute a finding that the entity has engaged in wrongdoing and does not require the CFPB to conduct a supervisory examination.

CNN reported on Friday that Google has filed suit against the CFPB, challenging the Bureau's decision to place Google Payment Corp. under federal supervision. A Google spokesman was quoted as saying "This is a clear case of government overreach involving Google Pay peer-to-peer payments, which never raised risks and is no longer provided in the U.S., and we are challenging it in court.”

The CFPB has announced it has sued Comerica Bank for "systematically failing its 3.4 million Direct Express cardholders — primarily unbanked Americans receiving federal benefits" on Direct Express prepaid debit cards. The CFPB alleges that Comerica deliberately disconnected 24 million customer service calls, impeding cardholders from exercising their rights under the law, charged illegal ATM fees to over 1 million cardholders, and mishandled fraud complaints while providing federal benefits through the Direct Express prepaid debit card program. The CFPB is asking the court to order Comerica to halt these practices, provide refunds to affected customers, and pay civil penalties that would go to the CFPB's victim relief fund.

The Bureau's complaint against Comerica seeks to stop Comerica’s unlawful conduct, to provide redress for harmed borrowers, and the imposition of a civil money penalty, which would be paid into the CFPB’s victims relief fund.

[Editor's Note:The Treasury Department's Bureau of the Fiscal Service recently announced it has selected Bank of New York Mellon Corporation to be the Financial Agent of the Direct Express program for five years starting January 3, 2025.]

The ABA Banking Journal reports a judge at the U.S. District Court for the Eastern District of Texas has issued a preliminary injunction blocking enforcement of the Beneficial Ownership Reporting Rule. The order says the covered companies nationwide do not need to comply with the January 1, 2025, reporting deadline unless the judge or a higher court reverses the order before then.

The lawsuit in question was brought by the National Federation of Independent Business and several of its members. It challenges the constitutionality of the Corporate Transparency Act.

The CFPB yesterday announced it is distributing $1.8 billion to 4.3 million consumers charged illegal advance fees or subjected to allegedly deceptive bait-and-switch advertising by a group of credit repair companies including Lexington Law and CreditRepair.com. Together, the payments constitute the largest-ever distribution from the CFPB’s victims relief fund, which is funded by civil penalties paid by companies that violate consumer protection laws.

In August 2023, the CFPB secured a legal judgment against the credit repair conglomerate, after a district court ruled that the companies had violated the Telemarketing Sales Rule’s advance fee prohibition. Under federal law, credit repair companies that engage in telemarketing cannot collect fees until they provide documentation showing they have achieved the promised results for consumers, at least six months after the results were achieved.

Following the district court’s ruling, the companies filed for Chapter 11 bankruptcy protection, shuttering approximately 80 percent of their business operations, including their telemarketing call centers. The CFPB’s $1.8 billion distribution to consumers harmed by the credit repair companies is a result of the agency’s enforcement action.

• CFPB 12/5/2024 Blog article for affected consumers: "CreditRepair.com and Lexington Law refund checks: What you need to know"

The CFPB has reported it has taken action against student lender Climb Credit and its investors, including 1/0 (“One Zero”), filing a proposed final judgment and order that, if entered by the court, will require the companies to stop making representations in their advertising about the quality of the training programs at their partner schools and graduates’ hiring rates and salaries.

The CFPB sued Climb Credit in October 2024 [see earlier Top Story] for offering loans for educational programs that often were not vetted for quality and job placement success or that failed the vetting, despite Climb Credit making representations to the contrary. The CFPB's complaint also names wholly owned subsidiaries Climb Investco and Climb GS Loan Fund. If entered, the final judgment and order will require the defendants to stop making certain representations about their educational offerings in their advertising and pay a $950,000 civil money penalty into the CFPB’s victims relief fund. A judgment for redress of $6.618 million will be suspended based on a demonstrated inability to pay.