TWO COMPANIES SETTLE CHARGES THEY MADE FALSE CLAIM OF COMPLYING WITH SAFE HARBOR

FROM:  U.S. FEDERAL TRADE COMMISSION
FTC Settles with Two Companies Falsely Claiming to Comply with International Safe Harbor Privacy Framework

Two U.S. businesses have agreed to settle Federal Trade Commission charges they falsely claimed they were abiding by an international privacy framework known as the U.S.-EU Safe Harbor, which enables U.S. companies to transfer consumer data from the European Union to the United States in compliance with EU law.

FTC complaints against TES Franchising, LLC, and American International Mailing, Inc. allege that the companies’ websites indicated they were currently certified under the U.S.-EU Safe Harbor Framework and U.S.-Swiss Safe Harbor Framework, when in fact their certifications had lapsed years earlier.

“We remain strongly committed to enforcing the U.S.-EU and U.S.-Swiss Safe Harbor Frameworks,” said FTC Chairwoman Edith Ramirez. “These cases send an important message that businesses must not deceive consumers about whether they hold these certifications, and by extension, the ways in which they protect consumers.”

The complaint against TES also alleges that TES deceived consumers about the nature of its dispute resolution procedures. On its website, the company stated that Safe Harbor-related disputes would be settled by an arbitration agency, would take place in Connecticut, and costs would be split between the consumer and the company. According to the FTC’s complaint, the company had agreed in its Safe Harbor certification filing that it would resolve disputes through the European data protection authorities, which do not require in-person hearings and resolve disputes at no cost to the consumer. The complaint also alleges that the company deceptively claimed to be a licensee of the TRUSTe Privacy program.

To participate in the U.S.-EU Safe Harbor Framework or U.S.-Swiss Safe Harbor Frameworks, a company must self-certify annually to the Department of Commerce that it complies with the seven privacy principles required to meet the EU’s adequacy standard: notice, choice, onward transfer, security, data integrity, access, and enforcement. A participant may also highlight for consumers its compliance with the Safe Harbor by displaying the Safe Harbor certification mark on its website.

Under the proposed settlement agreements, which are subject to public comment, the companies are prohibited from misrepresenting the extent to which they participate in any privacy or data security program sponsored by the government or any other self-regulatory or standard-setting organization. The settlement with TES further prohibits the company from misrepresenting its participation in or the terms of any alternative dispute resolution process or service.

These cases are being brought with the valuable assistance of the U.S. Department of Commerce.

The Commission votes to issue the administrative complaints and accept the proposed consent agreements were 5-0.

WHITE HOUSE FACT SHEET ON BUILDING A BETTER FINANCIAL SYSTEM AND PROTECTING CONSUMERS

FROM:  THE WHITE HOUSE
March 26, 2015

FACT SHEET: Progress Toward Building a Safer, Stronger Financial System and Protecting Consumers from Unfair and Abusive Practices

Today, the President is in Birmingham, Alabama to speak about the progress we have made to build a safer and stronger financial system and to protect families from the types of abuses that led the economy to near collapse – and his commitment to safeguarding that progress.

Before the financial crisis, the irresponsibility and recklessness that was allowed to prevail on Wall Street may have seemed remote from Main Streets across the country. But we know now that was not the case. One of the most critical components of the Wall Street Reform bill passed by Congress in 2010 and signed by the President was the creation of the Consumer Financial Protection Bureau (CFPB), a dedicated, independent cop on the beat with the single goal of protecting consumers from threats like abusive practices of unscrupulous lenders or the fraudulent practices of debt collectors. Today, in another example of how crucial Wall Street Reform protections are for Main Street families, the CFPB has announced they are taking an important first step toward writing rules to help prevent abuses in payday lending and protect consumers from getting trapped in expensive cycles of debt and fees.

Apart from the work of the CFPB, the Obama Administration has continued its broader fight to protect consumers. In the last year alone, President Obama has announced steps to crack down on conflicts of interest in retirement investment advice that are costing middle class families billions of dollars every year, to put in place a bill of rights for students borrowing for college, and to provide proactive mortgage payment relief for active duty servicemembers and their families.

Yet even as the President and the CFPB continue to take action on behalf of consumers, Congressional Republicans are advancing budget plans and legislation this week designed to limit the ability of the CFPB to do its job and to undermine other crucial reforms. The Republican budgets risk returning us to the days of “too big to fail,” protecting Wall Street firms from important regulatory safeguards and putting ordinary citizens and the economy at risk. These measures are part of a broader effort by Wall Street lobbyists, special interest groups, and their Republican allies in Congress to roll back the progress we have made in creating a safer financial system that supports the middle class.

We cannot let Republicans in Congress undo the progress we’ve made by unraveling Wall Street Reform. These reforms have made our financial system dramatically safer by curbing the reckless practices that helped precipitate the crisis and have delivered substantial benefits to consumers. Wall Street Reform has built a stronger and more stable foundation for economic growth. That’s why the President is reiterating today the message he delivered in the State of the Union: if Congress sends him a bill that unravels the new rules on Wall Street, he will veto it.

Progress from the Consumer Financial Protection Bureau

Prior to the creation of the CFPB as an independent agency, there was no single agency that had all the tools and the mandate to oversee consumer financial products and services that Americans rely on every day. Even though many payday and similar lenders trap consumers in cycles of debt, too often these lenders have escaped regulation. But today, the CFPB is stepping up to help address this problem and better protect affected consumers, yet another example of how Wall Street Reform is delivering real results for working families.

Taking Action on Payday Lending

Problems Continue in Payday Lending: While marketed as a tool to meet consumers’ short-term credit needs, payday loans—and loans with similar structures like title loans or other installment loans—often trap families in an abusive and expensive cycle of debt and fees. Eighty percent of payday loans are rolled over or followed by another loan within 14 days, and the average borrower stays in debt for about 200 days out of the year.

As a Result of Wall Street Reform, an Independent Consumer Watchdog Can Now Take Action on Payday Lending: The CFPB is the first Federal regulator empowered to write rules that curb the abusive activities of payday lenders, and under that authority, today announced that it was considering proposing new rules that would end payday debt traps. The CFPB has made clear it recognizes the need for affordable small dollar credit while creating reasonable safeguards so that consumers are treated fairly and do not face an unsustainable debt cycle. The CFPB’s approach could serve as a Federal floor with states around the nation continuing to tailor their regulation of payday and similar loans as they see fit to meet the needs of their constituents.              

The CFPB’s Continuing Record of Action

Since its creation as an independent agency, the CFPB has taken bold action in a number of important areas, providing a total of $5.3 billion in relief through enforcement actions to more than 15 million consumers who were harmed, and setting stronger rules of the road that prevent abuse in credit card, debt collection, student loan servicing, and mortgage lending markets. Following are some examples of how the CFPB is delivering for middle class and working families:

Cracked Down on Fraudulent Credit Card Practices: The CFPB has cracked down on costly and often unneeded credit card add-on products like identity protection and disability insurance, bringing enforcement actions that resulted in over $1 billion returned to millions of consumers signed up for products without their knowledge or paying for services they did not receive.

Prohibited Abusive Mortgage Lending: The CFPB has implemented significant mortgage lending reforms to address the actions and products that hurt so many homeowners during and after the financial crisis. For example, lenders are now prohibited from offering mortgages that borrowers cannot repay, must use significantly improved mortgage disclosures that make products easier to understand, and must limit high fees and abusive payment structures. The CFPB has also created national mortgage servicing standards, established clear rules of the road for borrowers, and put in place pro-consumer restrictions for mortgage servicers.

Created New Protections for Student Loan Borrowers: The CFPB has set up a complaint database for borrowers and launched oversight of student loan servicers. The CFPB and the Department of Education also initiated complementary enforcement actions against for-profit colleges that engaged in predatory or deceptive student loan practices, winning loan forgiveness for thousands of students.

Established Rules for Remittances Abroad: The CFPB has established rules making it easier for people who send money abroad to compare prices and ensure that all the money they send reaches its destination.

Penalized Discriminatory Auto Lending Practices: The CFPB has assessed $18 million in penalties and returned $80 million to consumers who were victimized by auto loan programs which resulted in higher interest rates being charged because of a borrower’s race or national origin.

Protected Military Service Members from Abusive Practices: The CFPB has secured more than $1 million in restitution through 2014 for military service members, veterans, and their families based on over 14,000 complaints the Bureau received.

Created a System for Handling Consumer Complaints: The CFPB has received more than 540,000 consumer complaints about financial products and services since it began processing complaints in 2011, including 240,000 complaints in FY2014.  And this month, the CFPB announced that it will give consumers the choice to publicly share their personal financial complaint narratives with others through the Bureau’s complaint database, so consumers can learn from one another.

Building a Broader Record of Consumer Protection:

Apart from CFPB’s efforts, the Administration has taken a broad set of steps to fight to protect consumers from the abuses that led to the financial crisis. In the last year alone, President Obama:

Announced Steps to Crack Down on Conflicts of Interest That Sap Retirement Accounts: Last month, the President announced steps to crack down on backdoor payments and hidden fees that incentivize retirement advisers to recommend bad investments with high costs and low returns. These conflicts of interest sap away families’ hard earned dollars from their retirement accounts, costing working and middle-class families approximately $17 billion in losses each year. The Department of Labor is planning to issue a Notice of Proposed Rulemaking requiring retirement advisers to abide by a “fiduciary” standard—putting their clients’ best interest before their own profits.

Rolled Out A New Student Aid Bill Of Rights: This month the President underscored his vision for a quality, affordable education for all Americans through a new Student Aid Bill of Rights. Among the new actions, the President signed a Presidential Memorandum directing the Department of Education to work across the federal government to do more to help borrowers afford their monthly loan payments including by: creating a responsive student complaint system to ensure quality customer service and accountability for the Department of Education, its contractors, and colleges; requiring enhanced disclosures and stronger consumer protections for student loan borrowers; establishing a centralized hub for all federal student loan borrowers in repayment to access account and payment processing information; and ensuring fair treatment for struggling and distressed borrowers.

Provided Proactive Payment Relief to Active Duty Military and Their Families: The Administration has partnered with five large financial institutions to proactively offer interest rate reductions on their mortgage loans to active duty military and their families. Active duty military are entitled to this benefit under the 2003 Servicemembers Civil Relief Act (SCRA) but only if they request it and jump through hoops by providing unnecessary paperwork and documentation, which many of them do not. The President launched a coordinated effort across government to cut regulatory red tape, allowing participating lenders to proactively identify and reach out to our active duty service members to enroll them in these important financial protections.

Secured Billions in Penalties and Fines from Banks for their Involvement in the Mortgage Crisis:  The Department of Justice (DOJ) secured billions from the country’s largest financial services institutions as a result of civil investigations related to the packaging, marketing, sale, arrangement, structuring and issuance of Residential Mortgage-Backed Securities (RMBS), collateralized debt obligations (CDOs), and the banks’ practices concerning the underwriting and origination of mortgage loans.  A large portion of these settlements will be set aside as aid for hundreds of thousands of homeowners and other consumers harmed by the financial crisis precipitated in part by Wall Street’s unlawful conduct.

Protecting the Progress We’ve Made in Reforming Wall Street

The President’s Wall Street Reforms have made our financial system safer and stronger by limiting the excess risks and reckless practices that caused the crisis, providing substantial benefits to families, communities, and the broader economy.

Wall Street Reform has built a stronger and more stable foundation for economic growth and ended the worst of the practices that contributed to the financial crisis, such as curbing predatory lending and closing regulatory gaps.
Wall Street Reform has made our financial system safer and more resilient by curbing excessive risk-taking by financial institutions. Banks have added over $500 billion of capital to cushion against unexpected losses and reduce overall leverage.
These reforms benefit Main Street by providing businesses—large and small—with more stable access to credit to fund expansion, make payrolls, and help create jobs. Business lending is up by more than 50 percent since its post-crisis low.
These reforms also benefit middle-class families through new investor protections that will make it safer to invest and grow their savings, including through strengthened enforcement authorities for market regulators and enhanced disclosure requirements.
Yet, even as the President continues to work to build on this progress, Republicans in Congress are seeking to undermine it through attacks on Wall Street Reform. Given how far we have come since the crisis, it is hard to understand the efforts of some to undermine our ability to protect consumers, investors, and taxpayers from excessive risks taken by financial institutions. The Administration is willing to consider reasonable reforms that make the law work better and supports efforts by regulators to tailor rules to apply only where they should. But we cannot let Republicans take us back to the way things were before the crisis. Here are a few concerning ways that Wall Street lobbyists, the special interests, and their Republican allies in Congress are seeking to undermine these critical reforms:

Undermining the Consumer Financial Protection Bureau: Despite the CFPB’s progress, Republicans have consistently stood with Wall Street lobbyists and the special interests over middle class families by seeking to limit the power of the CFPB through proposals to replace its director with a five-member panel, limiting the Bureau’s ability to respond effectively to rapid changes in the financial services market, place additional procedural burdens on its rulemaking and data collection processes, and eliminate the fund that the CFPB uses to compensate consumers who have been the victims of fraudulent and deceptive practices. Just this week, Congressional Republicans are advancing budget plans and legislation designed to severely limit the ability of the CFPB to do its job of protecting consumers, among other things. The Administration will not allow Republicans to undermine the important work of the CFPB.

Using Small Lender Relief to let Big Banks Off the Hook: Small lenders play a vital role in their communities and the Administration supports tailoring regulations where appropriate, but we cannot allow measures that purport to help community banks be a back door to undermine reform, letting big banks take excessive risks like they took before the crisis.

Putting Roadblocks in the Way of Bringing the Financial System Under Stronger Regulatory Oversight and Supervision: Republicans in Congress are attempting to hobble financial overseers and independent watchdogs that are keeping an eye on risks in big banks and nonbank financial companies. Standing in the way of these independent watchdogs makes it tougher to catch and prevent the next threat to financial stability.

Sending us Back to the Days of “Too Big to Fail”: In the heart of the financial crisis, regulators needed to deal with faltering firms such as Lehman Brothers, Bear Stearns, and AIG but lacked the ability to wind them down in an orderly manner without damaging the broader financial system. Orderly liquidation authority—in “Title II” of Dodd-Frank—is a critical emergency tool for resolving firms in an orderly manner, when the failure of a firm could threaten the financial stability of the United States and only when bankruptcy is not an effective option. We cannot accept proposals that would roll back the very tools needed to allow any firm, no matter how large and complex, to fail without harming the economy.

FTC CONGRESSIONAL TESTIMONY ON 100TH ANNIVERSARY

FROM:  U.S. FEDERAL TRADE COMMISSION 
FTC Testifies on Its Work to Protect Consumers and Promote Competition As the Agency Approaches Its 100th Anniversary

The Federal Trade Commission testified before Congress on the agency’s long track record of protecting consumers and promoting competition in the U.S. economy, as well as the agency’s ongoing work and future challenges as it approaches its 100th anniversary next year.

Testifying before the House Energy and Commerce Subcommittee on Commerce, Manufacturing and Trade, FTC Chairwoman Edith Ramirez and Commissioners Julie Brill, Maureen K. Ohlhausen and Joshua D. Wright told lawmakers that the FTC is a highly productive and efficient, small independent agency with jurisdiction to protect consumers and maintain competition in broad sectors of the economy.

“Our agency structure, research capacity, continued commitment to bipartisanship and cooperation, and exceptional staff will allow the FTC to continue to adapt to external changes and successfully fulfill its mission of protecting consumers and competition into its next century,” the testimony states.

President Woodrow Wilson signed the Federal Trade Commission Act and the Clayton Act in 1914, and the FTC opened its doors on March 16, 1915.  The Commission was given enforcement authority and was empowered to conduct investigations, gather information, and publish reports.  Since then, Congress has expanded the FTC’s responsibilities through a number of other statutes, such as the Fair Credit Reporting Act; the Fair Debt Collection Practices Act; and the 1994 Telemarketing and Consumer Fraud and Abuse Prevention Act, which led to establishment of the popular National Do Not Call Registry.

The testimony outlines the FTC’s current work to protect consumers and promote competition.  In recent years, the FTC has emphasized protecting financially distressed consumers from fraud, protecting consumer privacy and data security, prosecuting false or deceptive health claims, and safeguarding children in the marketplace.

In fiscal year 2013, the FTC filed 72 new consumer protection complaints in federal district court and obtained 100 permanent injunctions and orders (including two civil contempt orders) requiring defendants to pay approximately $198 million in consumer redress or disgorgement of ill-gotten gains.

The FTC’s efforts to maintain competition focus on stopping anticompetitive mergers and other anticompetitive business practices in a wide range of industries of critical importance to American consumers, the testimony states.  These include health care, technology, energy, consumer goods and services, and manufacturing.  This work is critical to protect and strengthen free and open markets – the cornerstone of a vibrant economy.

In fiscal year 2013, the agency pursued 27 new competition law enforcement actions (merger and nonmerger) and undertook several important workshops, reports, and advocacy opportunities to promote competition and educate its stakeholders about the importance of competition to consumers.  Over the past three years, the agency estimated that it saved consumers approximately $3 billion in potential price increases by stopping illegal anticompetitive practices and mergers in the marketplace.

Finally, the testimony describes the challenges facing the FTC as it nears its 100th anniversary. In light of resource constraints and a growing workload, the FTC will continue to leverage its resources through careful case selection, by partnering with public and private entities, and by improving its own technological infrastructure to allow its staff to work more effectively, among other things.

The FTC will continue to adapt as technology continues to evolve.  The agency convenes public meetings, such as its recent workshop exploring the Internet of Things, that help the agency to identify the consumer protection and competition issues that may be raised by the use of new technology.

In addition, the testimony states, the FTC will seek to address challenges posed by increased globalization and an international marketplace, and will continue its longstanding initiative to review FTC rules and guides to ensure that they enhance consumer welfare without imposing undue burdens on business.

“As we approach our 100th anniversary, the FTC remains committed to finding ways to enhance its effectiveness in protecting consumers and promoting competition, to anticipate and respond to changes in the marketplace, and to meet current and future challenges,” the testimony states.

The Commission vote approving the testimony and its inclusion in the formal record was 4-0.

GOVERNMENT ISSUES MENTAL HEALTH AND SUBSTANCE ABUSE DISORDER PARITY RULE

FROM:  U.S. LABOR DEPARTMENT

Administration issues final mental health and substance use disorder parity rule
Final rules break down financial barriers and provide consumer protections

WASHINGTON — The Departments of Labor, Health and Human Services and the Treasury today jointly issued a final rule increasing parity between mental health/substance use disorder benefits and medical/surgical benefits in group and individual health plans.

The final rule issued today implements the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act, and ensures that health plan features like copays, deductibles and visits limits are generally not more restrictive for mental health/substance abuse disorders benefits than they are for medical/surgical benefits.

Today's action also includes specific additional consumer protections, such as:
Ensuring that parity applies to intermediate levels of care received in residential treatment or intensive outpatient settings; Clarifying the scope of the transparency required by health plans, including the disclosure rights of plan participants, to ensure compliance with the law; Clarifying that parity applies to all plan standards, including geographic limits, facility-type limits and network adequacy; and Eliminating an exception to the existing parity rule that was determined to be confusing, unnecessary and open to abuse.

By issuing this rule, the administration has now completed or made significant progress on all 23 executive actions included in the President and Vice President's plan to reduce gun violence. An updated report summarizing the status of all 23 executive actions is available here:http://www.whitehouse.gov/sites/default/files/docs/november_exec_actions_progress_report_final.pdf.

In January, as part of the President and Vice President's plan to reduce gun violence, the administration committed to finalize this rule as part of a larger effort to increase access to affordable mental health services and reduce the misinformation associated with mental illness. As the President and Vice President have made clear, mental illness should no longer be treated by our society — or covered by insurance companies — differently from other illnesses.
The Affordable Care Act builds on the Mental Health Parity and Addiction Equity Act and requires coverage of mental health and substance use disorder services as one of ten essential health benefits categories. Under the essential health benefits rule, individual and small group health plans are required to comply with these parity regulations.

"New efforts are underway to expand coverage to the millions of Americans who have lacked access to affordable treatment for mental and substance use disorders," said Labor Secretary Thomas E. Perez. "These rules will increase access to mental health and substance abuse treatment, prohibit discriminatory practices and increase health plan transparency. Ultimately, they'll provide greater opportunities for affordable, accessible, effective treatment to Americans who need it."

"This final rule breaks down barriers that stand in the way of treatment and recovery services for millions of Americans," said Health and Human Services Secretary Kathleen Sebelius. "Building on these rules, the Affordable Care Act is expanding mental health and substance use disorder benefits and parity protections to 62 million Americans. This historic expansion will help make treatment more affordable and accessible."

"Americans deserve access to coverage for mental health and substance use disorders that is on par with medical and surgical care," said Treasury Secretary Jacob J. Lew. "These rules mark an important step in ending the disparities that exist in insurance plans, and will provide families nationwide with critical coverage and protections that fulfill their health needs."

The final Mental Health Parity and Addiction Equity Act rule was developed based on the departments' review of more than 5,400 public comments on the interim final rules issued in 2010.

The final rules may be viewed at https://www.federalregister.gov.