FTC After FCRA

From the perspective of banks and thrifts, the primary role of the Federal Trade commission has been as the interpretive authority for the Fair Credit Reporting Act. The new banking law moves the lead authority to the banking agencies. Long a statute that did not authorize regulations, the Federal Reserve will now have the authority to issue them.

So what does that leave the FTC with? Does it simply become an agency that enforces the credit laws against non-banks such as finance companies and retailers? Far from it.

FTC is the government's lead agency for consumer protection of many types including credit-related activities. While the agency's FCRA interpretive role has been displaced, the agency has another long-standing role that is growing in significance: the role of protecting consumers from unfair and deceptive trade practices.

FTC is the agency charged with identifying and preventing trade practices that harm consumers. Over the years, this has included credit-related rules that include the preservation of consumer claims and defenses, prohibition of unfair credit contract clauses, and banning interest pyramiding techniques.

There is a great deal of opportunity for similar rulemaking in the near future. The FTC already has rules relating to marketing. These range from restricting marketing statements to the provable truth to the telemarketing rule which gives consumers rights and reliefs from specified telemarketing practices. The FTC will have some jurisdiction over future bank holding companies as they market products through non-bank subsidiaries.

Another area in which we can expect FTC involvement is customer privacy. This is not a new topic to the FTC - it's an old favorite. The FCRA was first and foremost an exercise in protecting the use and availability of certain customer information. The FTC is presently the primary source of information, expertise, and consumer help on privacy.

Finally, FTC will always find plenty of opportunity in credit scams and credit repair. Both the scams and any rules could affect financial institutions. It is an agency worth watching.

Copyright © 2000 Compliance Action. Originally appeared in Compliance Action, Vol. 4, No. 17 & 18, 1/00