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    Explanation of CFPB prepaid card rule

    Tuesday, October 11th, 2016

    October 5, 2016

    CONTACT:
    Office of Communications
    Tel: (202) 435-7170

    Prepared Remarks of Richard Cordray
    Director of the Consumer Financial Protection Bureau

    Prepaid Accounts Rule Press Call

    Washington, D.C.

    Thank you for joining us on this call. The Consumer Financial Protection Bureau today has finalized a new rule providing strong federal consumer protections for prepaid account users.

    Prepaid accounts are among the fastest growing consumer financial products in the United States. One common form is the “general purpose reloadable” card, easily available at any number of stores or online. Consumers can load money onto these cards and use them for everyday purchases, just as they do with a bank account and a debit card. Prepaid accounts may also be loaded with funds by a third party, such as an employer.

    The amount consumers put on general purpose reloadable cards grew from less than $1 billion in 2003 to nearly $65 billion in 2012. And the total value loaded onto them is expected to nearly double to $112 billion by 2018. These accounts can be used to make payments, store funds, withdraw cash at ATMs, receive direct deposits, or send money to others. This market also includes a growing number of mobile or electronic prepaid accounts, such as PayPal or Google Wallet, which can also be used for a wide range of transactions.

    Before today, however, many of these products lacked strong consumer protections under federal law. Our new rule closes loopholes and protects prepaid consumers when they swipe their card, shop online, or scan their smartphone. Among the key new requirements that financial institutions must meet are these: (1) they must limit consumer losses when funds are stolen or cards are lost; (2) they must investigate and resolve errors that occur; and (3) they must give consumers free and easy access to their account information. The Bureau also has finalized new “Know Before You Owe” disclosures for prepaid accounts that give consumers the clear information they need, up front, about the fees they can be charged and other key details.

    In addition to these requirements governing prepaid accounts, financial institutions must offer protections similar to those for credit cards if they allow a prepaid account to be used to access certain credit extended by the institution, its affiliates, or its business partners. These protections would apply when a prepaid card can be used to cover a transaction even though the account lacks sufficient funds, with certain exceptions.

    The new rule applies to traditional prepaid cards, as well as mobile wallets, person-to-person payment products, and other electronic accounts that can store funds. The rule also covers: payroll cards; student financial aid disbursement cards; tax refund cards; and certain federal, state, and local government benefit cards, such as those used to distribute social security benefits and unemployment insurance.

    Many of these important protections stem from the Electronic Fund Transfer Act, and they are intended to be similar to those for checking account consumers. For instance, error resolution rights will now be similar for both types of accounts. If consumers are hit with what they believe are unauthorized or fraudulent charges, their financial institution must investigate and resolve these incidents in a timely way. Where it turns out to be appropriate, they must restore the missing funds. Consumers will also now generally have limited liability for any withdrawals, purchases, or other transactions made on a lost or stolen prepaid card.

    The new disclosures specified in the rule will give consumers easy-to-understand information about prepaid accounts right up front. Currently, some information is hard to find online or is not revealed until you open the packaging, which makes it hard to comparison shop. So the new rule sets an industry-wide standard on fee disclosures for prepaid accounts. This will simplify, organize, and present key information consistently so people can easily understand and act on it. This is much like the approach we have taken with “Know Before You Owe” disclosure forms for mortgages.

    A separate part of the rule provides strong credit-related protections that stem from the Truth in Lending Act. These protections are for consumers who want the option to access credit in the course of conducting transactions with their prepaid cards so that they can spend more money than they have in the prepaid account. In situations where prepaid users are accessing credit within a transaction that is offered by the issuer, its affiliate, or its business partner, they must receive protections similar to those afforded to credit card users under federal law. These protections include underwriting requirements, detailed periodic statements, limitations on late fees and charges, and restrictions on the amount of fees that can be imposed in the first year that the credit is extended. To further separate prepaid accounts and any credit feature that is offered, companies must observe a 30-day waiting period before offering such credit to newly registered prepaid consumers.

    The new prepaid rule will generally apply to prepaid accounts starting in October 2017. To make it easier to comparison shop among different products, prepaid account issuers must publicly post agreements for accounts they offer to the general public on their websites. They must also generally submit all their agreements to the Bureau, for posting on our website, starting in October 2018.

    These important new protections fill gaps in the law for consumers. The rapidly growing ranks of prepaid users deserve a safe place to store their money and a practical way to carry out their financial transactions. And though many prepaid companies already offer some of these same protections to their customers, it is vital for all consumers to have the settled assurance that these protections are now the law of the land. Thank you.

    #

    CONSUMER FINANCIAL PROTECTION BUREAU FINALIZES STRONG FEDERAL PROTECTIONS FOR PREPAID ACCOUNT CONSUMERS

    Wednesday, October 5th, 2016

    October 4, 2016

    CONTACT:
    Office of Communications
    Tel: (202) 435-7170

    CONSUMER FINANCIAL PROTECTION BUREAU FINALIZES STRONG FEDERAL PROTECTIONS FOR PREPAID ACCOUNT CONSUMERS
    New Rule Includes ‘Know Before You Owe’ Prepaid Disclosures

    WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) today finalized strong federal consumer protections for prepaid account users. The new rule requires financial institutions to limit consumers’ losses when funds are stolen or cards are lost, investigate and resolve errors, and give consumers free and easy access to account information. The Bureau also finalized new “Know Before You Owe” disclosures for prepaid accounts to give consumers clear, upfront information about fees and other key details. Finally, prepaid companies must now generally offer protections similar to those for credit cards if consumers are allowed to use credit on their accounts to pay for transactions that they lack the money to cover.

    “Many consumers rely on prepaid cards to make purchases and access funds, but until now they were not guaranteed strong consumer protections under federal law,” said CFPB Director Richard Cordray. “This rule closes loopholes and protects prepaid consumers when they swipe their card, shop online, or scan their smartphone. And it backs up those protections with important new disclosures to let consumers know before they owe.”

    Prepaid accounts are among the fastest growing consumer financial products in the United States, usually purchased at retail outlets or online. The amount consumers put on “general purpose reloadable” prepaid cards grew from less than $1 billion in 2003 to nearly $65 billion in 2012. The total dollar value loaded onto these prepaid cards is expected to nearly double to $121 billion by 2018. Prepaid accounts may be loaded with funds by a consumer or by a third party, such as an employer. Consumers generally can use these accounts to make payments, store funds, withdraw cash at ATMs, receive direct deposits, or send money to others.

    The new rule applies specific federal consumer protections to broad swaths of the prepaid market for the first time. It covers traditional prepaid cards, including general purpose reloadable cards. It also applies to mobile wallets, person-to-person payment products, and other electronic prepaid accounts that can store funds. Other prepaid accounts covered by the new rule include: payroll cards; student financial aid disbursement cards; tax refund cards; and certain federal, state, and local government benefit cards such as those used to distribute unemployment insurance and child support.

    Prepaid Protections
    For many consumers, prepaid accounts are an alternative to traditional checking accounts, but until now they had only limited federal protections. The new rule gives prepaid account consumers important protections under the Electronic Fund Transfer Act, which are similar to those for checking account consumers. They include:

    • Free and easy access to account information: Financial institutions must make certain account information available for free by telephone, online, and in writing upon request, unless they provide periodic statements. Unlike checking account customers, prepaid consumers typically do not receive periodic statements by mail. The rule ensures that consumers have access to their account balances, their transaction history, and the fees they’ve been charged.
    • Error resolution rights: Financial institutions must cooperate with consumers who find unauthorized or fraudulent charges, or other errors, on their accounts to investigate and resolve these incidents in a timely way, and where appropriate, restore missing funds. If the financial institution cannot do so within a certain period of time, it will generally be required to provisionally credit the disputed amount to the consumer while it finishes its investigation.
    • Protections for lost cards and unauthorized transactions: The new rule protects consumers against withdrawals, purchases, or other unauthorized transactions if their prepaid cards are lost or stolen. The rule limits consumers’ liability for unauthorized charges and creates a timely way for them to get their money back. As long as the consumer promptly notifies their financial institution, the consumer’s responsibility for unauthorized charges will be limited to $50.

    Know Before You Owe: Prepaid Disclosures
    The Bureau’s new rule includes new “Know Before You Owe” prepaid disclosures which provide consumers with standard, easy-to-understand, upfront information about prepaid accounts. Consumers cannot always tell what fees apply to prepaid accounts before purchasing or signing up for them because the disclosures may be inside the packaging or hard to find online. This can make it difficult to comparison shop and make well-informed decisions. The new rule sets an industry-wide standard on fee disclosures for prepaid accounts. This follows the tradition of the Bureau’s “Know Before You Owe” disclosure forms for mortgages and student financial aid offers. These disclosures simplify, organize, and present information in a way the consumer can easily understand and act upon. Under the new rule, prepaid consumers will have access to:

    • Standard, easy-to-understand, upfront information: The CFPB rule requires two forms, one short and one long, with easy-to-understand disclosures. The short form concisely and clearly highlights key prepaid account information, including the fees the CFPB believes are most important to consumers shopping for a prepaid account. These include a periodic fee, per purchase fee, ATM withdrawal and balance inquiry fees, cash reload fee, customer service fees, and inactivity fee. The short form also must disclose certain information about additional types of fees that the consumer may be charged. Consumers will also get or be able to access the comprehensive long form disclosure containing a complete list of fees and certain other key information before acquiring the account.
    • Publicly available card agreements: To make comparison shopping easier, the rule requires prepaid account issuers to post on their websites the prepaid account agreements they offer to the general public. Additionally, with a few exceptions, issuers must submit all agreements to the CFPB, which intends to post them on a public, Bureau-maintained website at a future date. Also, issuers must make any agreement not required to be posted on their website available to applicable consumers.

    Examples of the disclosures can be found here: http://files.consumerfinance.gov/f/documents/102016_cfpb_KBYO_PrepaidDisclosures.pdf

    Credit Protections
    The new rule includes strong protections for consumers using credit products that allow them the option of spending more money than they have deposited into the prepaid account. Under the rule, prepaid issuers must give consumers protections similar to those on credit cards if consumers are allowed to use certain linked credit products to pay transactions that their prepaid funds would not fully cover. These protections stem mainly from the Truth in Lending Act and the Credit Card Accountability Responsibility and Disclosure Act (CARD Act). Protections that apply to such prepaid credit products include:

    • Ability to pay: Prepaid companies, like credit card issuers, must make sure consumers have the ability to repay the debt before offering credit. The new rule states that companies cannot open a credit card account or increase a credit line related to a prepaid card unless they consider the consumer’s ability to make required payments. For consumers under 21, the companies will be required to assess these consumers’ independent ability to repay.
    • Monthly credit billing statement: Prepaid companies have to give consumers regular statements like those credit card consumers receive. This statement will detail fees, and if applicable, the interest rate, what they have borrowed, how much they owe, and other key information about repaying the debt.
    • Reasonable time to pay and limits on late fees: Prepaid companies, like credit card issuers, will be required to give consumers at least 21 days to repay their debt before they are charged a late fee. Late fees must also be “reasonable and proportional” to the violation of the account terms in question.
    • Limited fee and interest charges: During the first year a credit account is open, total fees for credit features cannot exceed 25 percent of the credit limit. Generally, card issuers cannot hike the interest rate on an existing balance unless the cardholder has missed back-to-back payments. Card issuers may raise the interest rate in advance of new purchases, but generally must give the consumer 45 days advance notice, during which time the consumer may cancel the credit account.

    The CFPB rule includes other protections to ensure that the prepaid account and the credit feature described above are distinct, such as a:

    • Thirty-day waiting period: The CFPB rule requires companies to wait 30 days after a consumer registers the prepaid account before offering the credit feature to the consumer. This gives consumers time to gain experience with the basic prepaid account before deciding if they want to apply for the credit feature.
    • Wall between prepaid funds and credit repayment: Prepaid companies cannot automatically seize a credit repayment the next time a prepaid account is loaded with funds. Further, prepaid companies cannot automatically take funds from the prepaid account to repay the credit when the bill is due unless the consumer consents. And even so, companies cannot automatically take funds more than once per month. Payment also cannot be required until 21 days after the statement is mailed.

    The new rule will generally apply to prepaid accounts starting Oct. 1, 2017, though the requirement for submitting agreements to the Bureau takes effect in October 2018. The final rule includes other accommodations in certain situations.

    For a copy of the rule: http://files.consumerfinance.gov/f/documents/20161005_cfpb_Final_Rule_Prepaid_Accounts.pdf

    For prepaid rule-related documents: http://www.consumerfinance.gov/prepaid-rule

    To view a CFPB video with highlights of the rule: https://youtu.be/JPTg8ZB3j5c

     

    U.S. Court Finds in FTC’s Favor and Imposes Record $1.3 Billion Judgment Against Defendants Behind AMG Payday Lending Schem

    Tuesday, October 4th, 2016

    U.S. Court Finds in FTC’s Favor and Imposes Record $1.3 Billion Judgment Against Defendants Behind AMG Payday Lending Scheme

    FOR RELEASE

    At the request of the Federal Trade Commission, a federal court has found that racecar driver Scott A. Tucker and several corporate defendants in a Kansas City-based payday lending scheme violated Section 5 of the FTC Act and has ordered them to pay $1.3 billion for deceiving consumers across the country and illegally charging them undisclosed and inflated fees.

    “This significant court judgment demonstrates the FTC’s determination to crack down on deceptive payday lenders and the people who run them,” FTC Chairwoman Edith Ramirez said. “No consumer should be victimized by an unlawful scheme like this one, and it is especially detestable when those who can least afford to be charged undisclosed and inflated fees are the ones being targeted.”

    The $1.3 billion order handed down by the U.S. District Court for the District of Nevada represents the largest litigated judgment ever obtained by the FTC. It stems from a complaint filed in 2012 by the agency, which alleged that the operators of AMG Services Inc. falsely claimed they would charge borrowers the loan amount plus a one-time finance fee. Instead, the defendants made multiple withdrawals from consumers’ bank accounts and assessed a new finance fee each time, without disclosing the true costs of the loan. The judgment represents the difference between what consumers actually paid on the loans and what they were told they would have to pay.

    In her latest ruling granting the FTC’s request for summary judgment against the defendants, Chief Judge Gloria M. Navarro found that Scott Tucker ran the operation and was individually responsible for the unlawful conduct. The order announced today bans Tucker and his companies, including AMG Capital Management LLC, Level 5 Motorsports LLC, Black Creek Capital Corporation, and Broadmoor Capital Partners, from any aspect of consumer lending, and prohibits them from conditioning the extension of credit on preauthorized electronic fund transfers, misrepresenting material facts about any good or service, and engaging in illegal debt collection practices.

    The operation had claimed in state legal proceedings that it was affiliated with Native American tribes, and therefore immune from legal action, but, in an earlier decision, the district judge found otherwise.

    The FTC reached a partial settlement with some of the other defendants in July 2013. In January 2015, AMG Services and MNE Services Inc. agreed to pay $21 million to resolve the charges against them; and in January 2016, Red Cedar Services Inc. and SFS Inc. paid a total of $4.4 million to resolve the case against them.

    For information about FTC’s AMG Services refund program, sign up here to get updates by email.

    The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about consumer topics and file a consumer complaint online or by calling 1-877-FTC-HELP (382-4357).  Like the FTC on Facebook(link is external), follow us on Twitter(link is external), read our blogs and subscribe to press releases for the latest FTC news and resources.

    FDA warns against the use of homeopathic teething tablets and gels

    Sunday, October 2nd, 2016

    FDA warns against the use of homeopathic teething tablets and gels

    SILVER SPRING, Md., Sept. 30, 2016 /PRNewswire-USNewswire/ — The U.S. Food and Drug Administration is warning consumers that homeopathic teething tablets and gels may pose a risk to infants and children. The FDA recommends that consumers stop using these products and dispose of any in their possession.

    Homeopathic teething tablets and gels are distributed by CVS, Hyland’s, and possibly others, and are sold in retail stores and online.

    Consumers should seek medical care immediately if their child experiences seizures, difficulty breathing, lethargy, excessive sleepiness, muscle weakness, skin flushing, constipation, difficulty urinating, or agitation after using homeopathic teething tablets or gels.

    “Teething can be managed without prescription or over-the-counter remedies,” said Janet Woodcock, M.D., director of the FDA’s Center for Drug Evaluation and Research. “We recommend parents and caregivers not give homeopathic teething tablets and gels to children and seek advice from their health care professional for safe alternatives.”

    The FDA is analyzing adverse events reported to the agency regarding homeopathic teething tablets and gels, including seizures in infants and children who were given these products, since a 2010 safety alert about homeopathic teething tablets. The FDA is currently investigating this issue, including testing product samples. The agency will continue to communicate with the public as more information is available.

    Homeopathic teething tablets and gels have not been evaluated or approved by the FDA for safety or efficacy. The agency is also not aware of any proven health benefit of the products, which are labeled to relieve teething symptoms in children.

    The FDA encourages health care professionals and consumers to report adverse events or quality problems experienced with the use of homeopathic teething tablets or gels to the FDA’s MedWatch Adverse Event Reporting program:

    The FDA, an agency within the U.S. Department of Health and Human Services, protects the public health by assuring the safety, effectiveness, security of human and veterinary drugs, vaccines and other biological products for human use, and medical devices. The agency is also responsible for the safety and security of our nation’s food supply, cosmetics, dietary supplements, products that give off electronic radiation, and for regulating tobacco products.

    Media Inquiries: Lyndsay Meyer, lyndsay.meyer@fda.hhs.gov, 240-402-5345
    Consumer Inquiries: 888-INFO-FD

    Bank Regulator Assesses Penalty Against Wells Fargo; Orders Restitution for Violations of the Servicemembers Civil Relief Act

    Thursday, September 29th, 2016

    FOR IMMEDIATE RELEASE
    September 29, 2016
    Contact: Bryan Hubbard
    (202) 649-6870

     

     

    OCC Assesses Penalty Against Wells Fargo; Orders Restitution for Violations of the Servicemembers Civil Relief Act

    WASHINGTON—The Office of the Comptroller of the Currency (OCC) today assessed a $20 million civil money penalty against Wells Fargo Bank, N.A., and ordered the bank to make restitution to servicemembers who were harmed by the bank’s violations of the Servicemembers Civil Relief Act (SCRA).

    The OCC found that between approximately 2006 and 2016, the bank violated three separate provisions of the SCRA. The bank failed to: (i) provide the 6-percent interest rate limit to servicemember obligations or liabilities incurred before military service; (ii) accurately disclose servicemembers’ active duty status to the court via affidavits prior to evicting those servicemembers; and (iii) obtain court orders prior to repossessing servicemembers’ automobiles. The $20 million penalty reflects a number of factors, including the duration and frequency of violations, the financial harm to the servicemembers, deficiencies and weaknesses in the bank’s SCRA compliance program and ineffective compliance risk management. The penalty will be paid to the U.S. Treasury.

    Servicemembers eligible for restitution include those who were financially harmed as a result of the violations. The OCC’s order also requires the bank to take corrective action to establish an enterprise-wide SCRA compliance program to detect and prevent future SCRA violations.

    The OCC is taking this action in coordination with the Department of Justice’s Civil Rights Division, which issued a separate order today related to the bank’s repossession-related SCRA violations.

    Related Links

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    Office of the Comptroller of the Currency
    400 7th Street, SW
    Washington, D.C. 20219

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    FTC to auto dealers: don’t toy with yo-yo financing

    Thursday, September 29th, 2016

    FTC to auto dealers: don’t toy with yo-yo financing

    Buying a car can be exciting, but what if there are strings attached? Some buyers told us that they financed a car through a dealership, signed a contract, and drove the car home, only to be told that the financing didn’t go through and they had to sign a new deal or lose their down payment. There’s a name for that: it’s called a “yo-yo” financing tactic. It’s just one of a trunk-load of charges the FTC is bringing against Sage Auto Group, a group of nine Los Angeles-based auto dealerships, and the three brothers who control them.

    The FTC alleges that Sage Auto engaged in a host of yo-yo financing tactics. For example, Sage Auto allegedly told customers the contract was cancelled, but the dealer would keep their down payments or trade-ins if the customers refused to sign a new deal. The dealerships even threatened some customers with arrest, criminal prosecution, or vehicle repossession if they didn’t take the second deal – even when the original deal was still valid.

    As if yo-yo financing isn’t egregious enough, the FTC also alleges the defendants packed on extra charges for aftermarket products and services, like extended warranties, guaranteed auto protection, and service plans, without customer consent. Sometimes, Sage Auto falsely claimed the products were required as part of the sale or financing or were being thrown in for free. In reality, Sage Auto was adding those charges into the amount financed by consumers.

    The FTC’s complaint also says Sage Auto used phony online reviews to tout their dealerships and to try to discredit negative reviews about the company’s bad advertising, sales, and financing practices. Potential customers rely on online reviews to decide where to shop, and Sage Auto undermined that ability with phony reviews written by its employees and other people tied to the dealerships. The FTC’s lawsuit seeks a court order to require Sage Auto to stop these bad practices and give refunds to some customers.

    Today’s action is part of the FTC’s continuing efforts to protect buyers from deceptive advertising in the auto marketplace. If you think you’ve been misled when buying a car, report it to the FTC.

    If you’re in the market for a car, don’t let deceptive sales, financing, or leasing practices leave you spinning your wheels. To find your best deal, shop around and compare offers from different dealers and financing sources like banks or credit unions. And check out our free publications about buying and owning a car before you start shopping.

    FTC Charges Los Angeles-Based Sage Auto Group With Using Deceptive and Unfair Sales and Financing Tactics

    Thursday, September 29th, 2016

    The Federal Trade Commission has charged nine Los Angeles-area auto dealerships and their owners with using a wide range of deceptive and unfair sales and financing practices. The FTC’s action filed in the U.S. District Court for the Central District of California seeks to end these practices and return money to consumers.

    This is the FTC’s first action against an auto dealer for “yo-yo” financing tactics: using deception or other unlawful pressure tactics to coerce consumers who have signed contracts and driven off the dealership lots into accepting a different deal. The FTC also alleges that the defendants packed extra, unauthorized charges for “add-ons,” or aftermarket products and services, into car deals financed by consumers.

    “The car-buying process is a two-way street,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “The FTC expects dealers to honor their contractual obligations, and will pursue those who use yo-yo financing tactics and pack unwanted costly add-ons onto consumers’ contracts.”

    According to the FTC’s complaint, the defendants entice consumers, particularly financially distressed and non-English speaking consumers, into their dealerships with print, internet, radio and television ads that make an array of misleading claims, including that vehicles are generally available for the advertised terms and that consumers can buy vehicles for low prices, finance with low monthly payments, or make low down payments.  Other allegedly misleading claims include that consumers can finance the purchase of vehicles – when in fact they are lease offers – and that the defendants will pay off consumers’ trade-in vehicles, despite the fact that consumers ultimately are responsible for paying off any amount owed on the trade-in.

    The FTC also alleges that the defendants use phony online reviews to tout their dealerships and discredit negative reviews that highlighted their unlawful practices. They and their employees or agents allegedly post positive, five-star online reviews that purport to be from objective or independent reviewers without disclosing their relationship to the dealerships.

    In addition to the deceptive advertising and marketing allegations, the FTC has charged that several financing tactics of the defendants are deceptive and unfair.  As part of the sales and financing process, the defendants offer add-ons such as extended warranties, guaranteed auto protection (GAP), and maintenance or service plans. The FTC alleges the defendants have violated the FTC Act by charging some consumers for add-ons without their consent or falsely claiming the products were required or were free.

    And according to the complaint, in some instances after the consumers have signed contracts, the defendants falsely represent that consumers are required to sign a new contract with different terms.  In other instances, the defendants tell consumers who have completed finance contracts that the contracts are cancelled and falsely represent that the defendants are permitted to keep consumers’ down payments or trade-ins.  When consumers request compliance with the terms of the contract or refuse the defendants’ demands, the defendants, in some instances, have falsely represented that consumers will be liable for legal action, including lawsuits, repossession, or criminal arrest for a stolen vehicle.

    The FTC’s complaint also charges the defendants with violating the Truth In Lending Act and Regulation Z, and the Consumer Leasing Act and Regulation M, for failing to clearly disclose required credit information and lease information in their advertising.

    The defendants are Universal City Nissan, Inc., also d/b/a Universal Nissan; Sage Downtown, Inc., also d/b/a Kia of Downtown Los Angeles; Glendale Nissan/Infiniti, Inc., also d/b/a Glendale Infiniti and Glendale Nissan; Valencia Holding Co., LLC, also d/b/a Mercedes-Benz of  Valencia; West Covina Auto Group, LLC, also d/b/a West Covina Toyota and West Covina Toyota/Scion; West Covina Nissan, LLC; Covina MJL, LLC, also d/b/a Sage Covina Chevrolet; Sage North Hollywood, LLC, also d/b/a Sage Pre-Owned; and Sage Vermont, LLC, also d/b/a Sage Hyundai.

    Also charged are Joseph Schrage, a/k/a Joseph Sage; Leonard Schrage, a/k/a Leonard Sage; and Michael Schrage, a/k/a Michael Sage; Sage Holding Company Inc.; and Sage Management Company Inc..

    The Commission vote authorizing the filing of the complaint against the Sage Auto Group defendants was 2-1, with Commissioner Ohlhausen dissenting.

    NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.

    To learn more, read Are Car Ads Taking You For a Ride?, Buying A New Car, and Buying A Used Car.

    Springleaf / One Main Financial/ American General Finance debts

    Thursday, September 29th, 2016

    Please contact us if someone other than Springleaf / OneMain Financial  is attempting to collect from you a debt originated by Springleaf or OneMain Financial or American General Finance.

    FTC to Return Almost $20 Million to Consumers Lured by Credit Monitoring Scheme

    Tuesday, September 27th, 2016

    Online Scheme Charged Consumers $29.95 for Credit Monitoring They Never Ordered, Generating More Than 200,000 Complaints

    The Federal Trade Commission will return almost $20 million to more than 145,000 consumers across the country who were victimized by One Technologies LP and its two partner companies, in an online scheme that lured consumers with “free” access to their credit scores and then billed them a recurring $29.95 monthly fee for credit monitoring they never ordered.

    “It’s our goal whenever possible to put money back in the hands of hard-working American consumers who have been victimized,” said Jessica Rich, Director of the Bureau of Consumer Protection. “We are pleased to announce that $20 million in refunds are going to back to consumers this week.”

    The FTC and the states of Illinois and Ohio secured the consumer redress as part of a settlement of charges against One Technologies in January 2014. The defendants marketed their credit monitoring programs, MyCreditHealth and ScoreSense, through at least 50 websites, including FreeScore360.com, FreeScoreOnline.com, and ScoreSense.com. According to the FTC’s complaint, the defendants bought advertising on search engines such as Google and Bing so that ads for their websites neared the top of search results when consumers looked for terms such as “free credit report.” The most prominent ad stated, “View your latest Credit Scores from All 3 Bureaus in 60 seconds for $0!”

    The FTC alleged that the defendants violated the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA), which prohibits charging consumers for goods or services sold online via a negative option unless the seller clearly discloses all material terms before obtaining the consumer’s billing information, obtains the consumer’s express informed consent before making the charge, and provides a simple way to stop recurring charges. They were also charged with violating the Illinois Consumer Fraud Act and the Ohio Consumer Sales Practices Act.

    The amount of each check that will be mailed to affected consumers will vary based on how much each person lost. People who receive checks should deposit or cash them within 60 days. The FTC never requires consumers to pay money or to provide account information to cash refund checks.
    For consumers considering a credit report or credit score service, here are a few things to consider:

    Learn more about the refund program at ftc.gov/refunds or by calling the FTC’s refund administrator, Analytics, at 844-828-4441.

    CONSUMER FINANCIAL PROTECTION BUREAU ORDERS LENDUP TO PAY $3.63 MILLION FOR FAILING TO DELIVER PROMISED BENEFITS

    Tuesday, September 27th, 2016

    FOR IMMEDIATE RELEASE:
    September 27, 2016

    CONTACT:
    Office of Communications
    Tel: (202) 435-7170

    CONSUMER FINANCIAL PROTECTION BUREAU ORDERS LENDUP TO PAY $3.63 MILLION FOR FAILING TO DELIVER PROMISED BENEFITS
    Online Lender Did Not Help Consumers Build Credit or Access Cheaper Loans, As It Claimed

    WASHINGTON, D.C. – Today the Consumer Financial Protection Bureau (CFPB) took action against online lender Flurish, Inc., doing business as LendUp, for failing to deliver the promised benefits of its products. The CFPB found that the company did not give consumers the opportunity to build credit and provide access to cheaper loans, as it claimed to consumers it would. The Bureau has ordered the company to provide more than 50,000 consumers with approximately $1.83 million in refunds. The company will also pay a civil penalty of $1.8 million.

    “LendUp pitched itself as a consumer-friendly, tech-savvy alternative to traditional payday loans, but it did not pay enough attention to the consumer financial laws,” said CFPB Director Richard Cordray. “The CFPB supports innovation in the fintech space, but start-ups are just like established companies in that they must treat consumers fairly and comply with the law.”

    Flurish, Inc., doing business as LendUp, is an online lending company based in San Francisco, Calif. that offers single-payment loans and installment loans in 24 states. The company began marketing its loans in 2012 as a way for consumers to build credit and improve credit scores, and it offered consumers who participated in the program the ability to progress to loans with more favorable terms, including lower rates and longer repayment periods, over time. The company advertised this opportunity as the ability to move up the “LendUp Ladder.”

    According to today’s enforcement action, LendUp did not deliver on its promises. Some of its product offerings weren’t available to consumers where they were advertised. In addition, for a time, the company did not properly furnish information to the credit reporting companies, denying consumers the promised opportunity to improve their creditworthiness. LendUp’s conduct violated multiple federal consumer financial protection laws, including the Truth in Lending Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act. Specifically, the CFPB found that the company:

    • Misled consumers about graduating to lower-priced loans: Many of the benefits the company advertised as available to consumers who moved up the LendUp Ladder were not actually available. Despite the fact that LendUp advertised all of its loans nationwide, loans at the higher levels were not available outside of California for most of the company’s existence. Therefore, borrowers outside of California were not eligible to move up the “LendUp Ladder” and obtain lower-priced loans and other benefits.
    • Hid the true cost of credit: LendUp gave some consumers inaccurate information about the true cost of the loans offered. The company used banner ads on Facebook and other Internet search results that included “slider bars” allowing consumers to view various loan amounts and repayment terms, but it did not disclose the annual percentage rate as required by law.
    • Reversed pricing without consumer knowledge: With one particular loan product, borrowers had the option to select an earlier repayment date. Borrowers who selected an earlier repayment date received a discount on the origination fee. But if a borrower later extended the repayment date, the company would reverse the discount given at origination. The company did not disclose this and, in three states, the company’s loan agreement specifically stated that it would not charge any fees to extend the repayment period. In addition, if a borrower defaulted, any discount received at origination was reversed and added to the amount sent to collections.
    • Understated the annual percentage rate: LendUp offered services that allowed consumers, for a fee, to obtain their loan proceeds more quickly. The company passed along the fee to a third party, but LendUp also retained a portion of the fee from loans made between May 2013 and March 2016. In many instances, these retained fees should have been included in the annual percentage rate calculation; because they were not, the company inaccurately disclosed the finance charges.
    • Failed to report credit information: Although the company began making loans in 2012 and advertised its loans as credit building opportunities, the company did not furnish any information about any loans to credit reporting companies until at least February 2014. Before April 2015, LendUp also failed to have any written policies and procedures about the accuracy and integrity of information furnished to consumer reporting agencies.

    Enforcement Action
    Under the Dodd-Frank Act, the CFPB has authority to take action against institutions or individuals engaging in unfair, deceptive, or abusive acts or practices or that otherwise violate federal consumer financial laws. Under the terms of the CFPB order released today, LendUp is required to:

    • Provide approximately $1.83 million in redress to victims: The company is ordered to pay about $1.83 million to over 50,000 consumers. Consumers are not required to take any action. The company will contact consumers in the coming months about their refunds.
    • End deceptive loan practices: LendUp must stop misrepresenting the benefits of borrowing from the company, including what loan products are available to consumers and whether the loans will be reported to credit reporting companies. The company must also stop mispresenting what fees are charged, and it must include the correct finance charge and annual percentage rate in its disclosures.
    • End unlawful advertisements: The company must regularly review all of its marketing material to ensure it is not misleading consumers.
    • Ensure accuracy of pricing: The company must regularly test annual percentage rate calculations and disclosures to ensure it complies with the Truth in Lending Act.
    • Pay a $1.8 million civil penalty: LendUp will pay $1.8 million to the CFPB’s Civil Penalty Fund.

    The full text of the CFPB’s consent order is available at: http://files.consumerfinance.gov/f/documents/092016_cfpb_LendUpConsentOrder.pdf

    The CFPB investigation was conducted in coordination with the California Department of Business Oversight, which today announced a separate settlement with LendUp: http://www.dbo.ca.gov/Press/press_releases/2016/LendUp Settlement Release 09-26-16.pdf