The Federal Trade Commission has provided its annual report to the CFPB on its enforcement and related activities in 2022 regarding the Truth in Lending Act (TILA), Consumer Leasing Act (CLA), and Electronic Fund Transfer Act (EFTA) (collectively, the “Financial Acts”).  It also released its 2022 annual report on refunds

Under Dodd-Frank, the FTC retained its authority to enforce the Financial Acts and their implementing regulations with respect to entities subject to its jurisdiction.  The letter notes that, consistent with the Dodd-Frank Act, the FTC continues to coordinate certain enforcement, rulemaking, and other activities with the CFPB pursuant to a memorandum of understanding with the Bureau.

2022 Annual Report to CFPB.

TILA/Regulations Z and M.  The report highlights the following enforcement activity:

Automobile Purchase and Financing.  The report discusses the FTC’s settlement of an enforcement action brought jointly with the Illinois Attorney General against a group of auto dealerships that alleged the dealerships violated the FTC Act and state law by engaging in deceptive practices in connection with add-on charges to consumers and violated TILA by advertising low downpayments on mailers without disclosing or clearly and conspicuously disclosing the terms of repayment or APR.  (The FTC also alleged that the dealerships’ discretionary pricing policy violated the ECOA and Regulation B by discriminating against Black consumers.  This aspect of the enforcement action was discussed in the FTC’s most recent annual ECOA letter.)  The report also discusses other ongoing FTC litigation alleging FTC Act violations and refund payments sent to consumers in 2022 in two settled cases, including the Liberty Chevrolet case.

Payday Lending.  The report discusses $970,000 in refunds to consumers resulting from the FTC’s enforcement action against a payday lender alleging violations of the FTC Act and TILA based on the lender’s alleged use of deceptive marketing tactics and failure to make required disclosures.  

Credit Repair and Debt Relief.  The report discusses $822,000 in refunds to consumers resulting from the FTC’s enforcement action against a student loan debt relief company alleging violations of the FTC Act and TILA based on alleged false promises to consumers that the company could lower or eliminate student loan balances, alleged illegal upfront fees, and the alleged failure to make required disclosures in connection with loans made to consumers to pay such fees.

Other Credit.  The report discusses the settlement of the enforcement action against brought by the FTC and 18 state attorneys general against Harris Jewelry, a national jewelry retailer that markets and sells military-themed gifts, alleging that Harris Jewelry violated the FTC Act and TILA by engaging in unlawful sales and credit practices targeting servicemembers and failing to make required disclosures.  The FTC notes that the action represents the first action brought by the FTC under the Military Lending Act (“MLA”).  The FTC alleged that the retailer’s alleged TILA violation constituted an MLA violation.

In addition to enforcement activity, the report includes a discussion of the FTC’s advance notice of proposed rulemaking to address “junk fees” and its proposed rule that would impose new substantive and disclosure obligations on auto dealers in the auto finance process.

EFTA/ Regulation E.  The report discusses two enforcement cases involving alleged violations of the EFTA and Regulation E in connection with “negative option” plans, one involving auto-ship continuity plans for smoking cessation and other aids and the other involving continuity plans for cosmetics and weight loss supplements.  The report also notes that in its enforcement against Harris Jewelry, the FTC also alleged that the company violated the EFTA and Regulation E by using forms for preauthorized electronic fund transfers that were not clear or readily understandable.  Two other settled enforcement cases involving alleged EFTA/Regulation E violations in connection with preauthorized electronic fund transfers are also discussed in the report.

Unrelated to the EFTA and Regulation E (for which the FTC does not have rulemaking authority), we note that in March 2023, the FTC issued a Notice of Proposed Rulemaking seeking comment on proposed amendments to its Negative Option Rule.  The proposed amendments, which would expand the scope of the rule’s coverage to all forms of negative option marketing and consolidate various requirements dispersed across various statutes and regulations, include a “click to cancel” provision which would require a simple cancellation mechanism for consumers to easily cancel subscriptions by using the same method they used to initially enroll.

The report also includes a discussion of the FTC’s research, policy development, and consumer and business education work in connection with the Financial Acts, including the FTC’s 2022 report on “dark patterns.”

2022 Annual Report on Refunds.  The FTC reports that its enforcement actions resulted in more than $392 million in refunds to more than 1.9 million consumers in 2022.  The report includes a breakdown of the amount of refunds mailed to consumers in each state.  The report also includes a list of cases in which the FTC sent first distribution payments in 2022 and information about how the FTC provides refunds and determines who is eligible for a refund in cases where there is money to return to consumers.

In April 2021, the U.S. Supreme Court ruled in AMG Capital Management LLC v. FTC that Section 13(b) of the FTC Act does not authorize the FTC to seek, and a court to award, monetary relief such as restitution or disgorgement.  In its press release about the report, the FTC notes that more than 90% of the $392 million that the FTC returned to consumers in 2022 came from cases resolved before the AMG decision.  The FTC further notes that by comparison, in the four years preceding AMG, the FTC returned more than $11 billion to consumers using its Section 13(b) authority.  The FTC also states that refunds to consumers will likely continue to decrease in future years as the FTC completes distributing money obtained from pre-AMG enforcement actions.