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Top Story Compliance Related

02/26/2020

Debt collection scheme operator banned

The Federal Trade Commission has announced that the operator of a debt collection scheme has settled claims by the Commission and the New York Attorney General that he and the companies he controlled lied to consumers about how much debt they owed and used illegal scare tactics to collect it.

Under the settlement, Robert Heidenreich, who ran the scheme from the Buffalo, N.Y. area, is permanently banned from the debt collection business and prohibited from misleading consumers about any financial products. The settlement also includes a monetary judgment of $1.7 million, which is partially suspended due to Heidenreich’s inability to pay. He will be required to surrender $30,000 to the FTC, and if he were later found to have misrepresented his financial condition, the full judgment would be due.

02/26/2020

FTC 2019 privacy and data security update

The Federal Trade Commission has released its 2019 annual privacy and data security update, which highlights a record year for enforcement actions aimed at protecting consumer privacy and data security. The Commission levied a $5 billion penalty -- the largest consumer privacy penalty ever -- against Facebook for violating its 2012 FTC privacy order and imposed new restrictions on the social network’s business operations. The FTC also obtained a record $170 million penalty against YouTube and Google for alleged violations of the Children’s Online Privacy Protection Act (COPPA).

02/25/2020

HUD settles San Diego disability parking discrimination

The U.S. Department of Housing and Urban Development announced yesterday it has reached a Conciliation/Voluntary Compliance Agreement with Wakeland Atmosphere, L.P., and FPI Management, Inc., the owner and management company for a HUD-subsidized apartment complex in San Diego, California, to settle allegations that they violated the Fair Housing Act when they refused to allow a tenant with disabilities to have a designated parking space.

02/25/2020

Bureau announces Council and Advisory Board meetings

The CFPB has posted Federal Register notices of March 11–12 meetings of its Academic Research Council, Community Bank Advisory Council, Consumer Advisory Board, and Credit Union Advisory Council. Each of the meetings will be held at the Bureau's offices in Washington, and each group will discuss board policy matters related to the Bureau's Unified Regulatory Agenda and general scope of authority.

02/24/2020

Proposed rule on collection of time-barred debt

The CFPB has issued a supplemental notice of proposed rulemaking on the collection of time-barred debt. The Bureau proposes to prohibit collectors from using non-litigation means (such as calls) to collect on time-barred debt unless collectors disclose to consumers during the initial contact and on any required validation notice that the debt is time-barred. Consumer research conducted by the Bureau found that a time-barred debt disclosure helps consumers understand that they cannot be sued if they do not pay. That can help consumers make better informed decisions whether to pay the debt or not.

The new NPRM supplements the Bureau's May 2019 proposal to implement the Fair Debt Collection Practices Act.

UPDATE: Published at 85 FR 12672 on 3/3/2020, with a 62-day comment period ending 5/4/2020.

02/24/2020

FTC issues ECOA report

The Federal Trade Commission has announced it has provided the Consumer Financial Protection Bureau (CFPB) with its annual summary of its efforts in enforcing the Equal Credit Opportunity Act (ECOA).

The Commission is responsible for ECOA enforcement and education regarding most non-bank financial service providers. In its summary, FTC staff describes the Commission’s work on ECOA-related issues, including activities addressed in research and policy development.

02/24/2020

Interagency Community Reinvestment Conference [postponed]

The Federal Reserve Board, FDIC, and OCC will host the 2020 National Interagency Community Reinvestment Conference in Denver from March 9 to 12. This biennial conference offers participants from around the country the opportunity to learn about the Community Reinvestment Act and to discuss best practices and emerging challenges in community development. The 2020 program will feature discussions regarding innovations in community development policies and practice, CRA examination training, and community development tours of Denver.

UPDATE: On March 5, 2020, the agencies announced this conference has been postponed due to concerns over the coronavirus (COVID-19) outbreak. No date was announced for the rescheduled conference.

02/24/2020

Treasury reports on FATF Plenary

Treasury has announced that the Financial Action Task Force has released guidance on digital identity for customer identification and verification, and evaluated Treasury’s Customer Due Diligence rule for compliance with the FATF standards. The FATF also called on all jurisdictions to impose effective countermeasures on Iran, such as requiring financial institutions to review, amend, or if necessary terminate correspondent relationships with Iranian banks or limiting business relationships or financial transactions with Iran. The countermeasures should be developed and implemented to protect the international financial system from the ongoing money laundering, terrorist financing, and proliferation financing (ML/TF/PF) risks emanating from Iran.

02/24/2020

Wells Fargo to pay $3 Billion for sales conduct

On February 21, the U.S. Department of Justice announced that Wells Fargo & Company (San Francisco, CA) and its subsidiary, Wells Fargo Bank, N.A. (Sioux Falls, SD) have agreed to pay $3 billion to resolve their potential criminal and civil liability stemming from a practice between 2002 and 2016 of pressuring employees to meet unrealistic sales goals that led thousands of employees to provide millions of accounts or products to customers under false pretenses or without consent, often by creating false records or misusing customers’ identities.

As part of the agreements with the United States Attorney’s Offices for the Central District of California and the Western District of North Carolina, the Commercial Litigation Branch of the Civil Division, and the Securities and Exchange Commission, Wells Fargo admitted that it collected millions of dollars in fees and interest to which the Company was not entitled, harmed the credit ratings of certain customers, and unlawfully misused customers’ sensitive personal information, including customers’ means of identification.

The criminal investigation into false bank records and identity theft is being resolved with a deferred prosecution agreement in which Wells Fargo will not be prosecuted during the three-year term of the agreement if it abides by certain conditions, including continuing to cooperate with further government investigations. Wells Fargo also entered a civil settlement agreement under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) based on Wells Fargo’s creation of false bank records. FIRREA authorizes the federal government to seek civil penalties against financial institutions that violate various predicate criminal offenses, including false bank records. Wells Fargo also agreed to the SEC instituting a cease-and-desist proceeding finding violations of Section 10(b) of the Exchange Act and SEC Rule 10b-5, which make it illegal for anybody to directly or indirectly use any measure to defraud, make false statements, omit relevant information, or otherwise conduct business operations that would deceive another person in the process of conducting transactions involving stock and other securities. The $3 billion payment resolves all three matters, and includes a $500 million civil penalty to be distributed by the SEC to investors.

02/21/2020

OCC releases enforcement actions

The OCC has released a list of new enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with such institutions. The actions listed are dated from late December 2019 to early February 2020.

In addition to actions separately reported previously, the OCC listed removal/prohibition orders against a former teller at CIT Bank, N.A., Pasadena, California (misappropriation of cash from her teller drawer); a former head teller supervisor at Midland Federal Savings and Loan Association, Bridgeview, Illinois (misappropriation of vault cash and making false entries); a former teller at U.S. Bank, N.A., Cincinnati, Ohio (misappropriation of cash from her teller drawer and making false cash total entries); and a former teller at JPMorgan Chase Bank, N.A., Columbus, Ohio (misappropriation of cash from ATMs for which she was the custodian).

Also listed were three notices of charges that may result in orders of prohibition, orders for reimbursement, orders for civil money penalties and/or other actions, one of which notices was directed to five former officials of Wells Fargo Bank, N.A., Sioux Falls, South Dakota, in connection with charges that the former officials participated in or were responsible for "sales practices misconduct" at Wells Fargo Bank. The notice states the Comptroller's intention to assess civil money penalties of between $500,000 and $25,000,000 against the five former officials and to issue orders of prohibition to two of them.

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