On May 20, 2004, the Federal Trade Commission (“FTC”) sent its annual report to the Consumer Financial Protection Bureau (“CFPB”) highlighting its enforcement actions and initiatives in 2023 under the Truth in Lending Act (“TILA”), Consumer Leasing Act (“CLA”), and Electronic Fund Transfer Act (“EFTA”).

While the Dodd-Frank Act (“Dodd-Frank”) provided the CFPB with rulemaking and enforcement authority over the major consumer financial services laws and regulations, the FTC retained authority to enforce TILA and Regulation Z, CLA and Regulation M, EFTA and Regulation E, and CFPB rules applicable to entities within the FTC’s jurisdiction. The FTC exercises this authority over non-bank financial service providers in accordance with Dodd-Frank and coordinates its regulatory efforts pursuant to a memorandum of understanding with the CFPB signed in 2012 and reauthorized in 2015 and 2019. The annual report includes sections for each statute discussing enforcement actions; rulemaking, research, and policy development; and consumer and business education for each regulation.

The most prominent items in the report for 2023 involved the following rulemaking developments:

  • CARS Rule: The FTC announced the Combating Auto Retail Scams Rule (“CARS Rule”) in December 2023, which sets new requirements on the sale, financing, and leasing of new and used vehicles by motor vehicle dealers. It prohibits certain misrepresentations in the financing process, sets disclosure requirements on dealers’ advertising and sales communications, mandates that dealers obtain consumers’ express, informed consent for charges, and prohibits the sale of add-on products or services if there is no benefit to the consumer. (The final rule is not yet effective, as it was stayed by the FTC after a petition was filed seeking review in the U.S. Court of Appeals for the Fifth Circuit.)
  • Junk Fees: In October 2023, the FTC issued a proposed rule, “Rule on Unfair or Deceptive Fees,” to address “junk fees,” fees that the Commission deems to be unfair or deceptive fees because they are for goods or services that have little or no added value to a consumer. The proposed rule sets requirements on the offering, displaying, or advertising of amounts a consumer may pay, requiring the total price to be clearly and conspicuously disclosed. It also prohibits misrepresenting the nature and purpose of any amount a consumer may pay, including the refundability of such fees and the identity of any good or service for which fees are charged.
  • Negative Options: The FTC issued a proposed rule amending the Negative Option Rule in March 2023. 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 mechanism for consumers to easily cancel subscriptions by using the same method they used to initially enroll.

Notable enforcement actions included:

  • Traffic Jam Events: The FTC noted that litigation continued at the appellate level against Traffic Jam Events, LLC over a 2021 administrative opinion and order that banned the company from doing business after concluding that it engaged in deceptive practices under the FTC Act and violated TILA. The alleged violations stem from the company sending mailers to consumers suggesting the company was affiliated with a government COVID-19 stimulus program, advertisements sent to consumers stating that they had won specific valuable prizes that they had not actually won, and quoting monthly payments by mail that failed to provide or hid key financing terms in the fine print. Traffic Jam Events filed a petition for review of the FTC’s order in December 2021, and oral argument took place in May 2023.

Notable reports and task forces included:

  • Report on Consumer Issues Affecting American Indian and Alaska Native Communities: On March 15, 2023, the FTC issued a report to Congress detailing consumer issues that affect American Indian and Alaska Native (“AI/AN”) populations and its enforcement, outreach and education work on issues such as auto finance and predatory lending. The report includes a discussion of scams affecting AI/AN populations, casework related to auto buying and financing issues and predatory lending, among other issues, and recommendations including continued efforts to fight against fraud and scams through enforcement
  • FTC Military Task Force: In 2023, the FTC’s Military Task Force continued its work on military consumer protection issues, including coordination with the American Bar Association’s Standing Committee on Legal Assistance for Military Personnel and the Department of Defense Military Lending Task Force on issues including the Military Lending Act, automobile financing and leasing issues, and EFTA issues.
  • Protecting Older Consumers Report: On October 18, 2023, the FTC released a report, “Protecting Older Consumers 2022-2023: A Report of the Federal Trade Commission,” discussing trends based on fraud reports by older adults and the Commission’s efforts to combat the problem. According to the report, older adults (aged 60 and over) reported losing more than $1.6 billion to fraud in 2022 and were substantially less likely to report fraud incidents than younger consumers.

In addition to the rulemaking, enforcement actions, and reports and task forces discussed above, the FTC also highlighted its consumer and business education efforts. Much of the FTC’s education initiatives involved promotional campaigns around its rulemaking, but also included articles published in 2023 on auto trade-ins and negative equity, mortgage assistance programs, payday and title loans, and risks associated with payment applications and wire transfers.