CONSUMER PROTECTION AND LITIGATION:

1. CONSUMER PROTECTION AND LITIGATION: What financial educators need to know Ryan Mehm Attorney Bureau of Consumer Protection Federal Trade Commission The views expressed are those of the speaker and not necessarily those of the FTC.

2. FTC 101 • Independent law enforcement agency • Five Commissioners appointed by the President • Consumer protection and competition mandate • Section 5 of the FTC Act: Broad authority to prohibit unfair or deceptive acts or practices • Law enforcement and policy

3. FTC 101 • Mortgages • Debt and Debt Collection • Fair Credit Reporting Act • Privacy & Security/Identity Theft

4. mortgages • FTC enforces laws that protect consumers from deceptive practices – like foreclosure rescue or loan mod scams – by certain kinds of lenders • In addition to the FTC Act, the FTC enforces: • Mortgage Assistance Relief Services (MARS) Rule • Mortgage Acts and Practices (MAP) Rule

5. mortgages • MARS Rule • Issue: Bogus operations claim that, for a fee, they will negotiate with the consumer’s mortgage lender or servicer, to obtain a loan modification, short sale, or other foreclosure relief. • Key Features: • Advance Fee Ban • Disclosures • Prohibited Claims

6. mortgages • MAP Rule • Bans deceptive claims about consumer mortgages in advertising or other types of commercial communications • Broad Scope and enforcement authority • Allows FTC to seek appropriate relief, including civil penalties

7. DEBT • FTC enforces laws and rules against businesses that provide products or services meant to help consumers with their debt, including: • Fair Debt Collection Practices Act (FDCPA) • Debt Relief Amendments to the Telemarketing Sales Rules (TSR)

8. DEBT • FDCPA • Prohibits debt collectors from using abusive, unfair, or deceptive practices to collect from consumers • Recent Litigation: United States v. West Asset Management, Inc. • $2.8 million civil penalty

9. DEBT • Debt Relief Amendments to the Telemarketing Sales Rule (TSR) • Purpose: Curb deceptive and abusive practices associated with debt relief service companies • Under the Rule, it is illegal to: • (1) Charge Upfront Fees • (2) Fail to Disclose Certain Information • (3) Misrepresent Services

10. CREDIT • Fair Credit Reporting Act (FCRA) • Recent Development: Risk Based Pricing Rule • Applies to creditors who, based on a consumer’s credit score or information in a consumer’s credit report, offer that consumer credit on less favorable terms than to other consumers • When this occurs, a consumer is entitled to a risk-based pricing notice

11. PRIVACY & SECURITy/ID THEFT • What is ID Theft? • Occurs when someone steals your personal information (e.g., credit card info or SSN) and fraudulently uses it • How does ID theft happen? • Go through your trash or “dumpster dive” • Steal your wallet or purse • Use fake emails to get you to provide personal information

12. PRIVACY & SECURITy/ID THEFT • ID Theft – Advising consumers on how to stop ID thieves • Shred financial documents • Limit info in wallet or purse • Don’t click on links sent in unsolicited emails • Monitor accounts and review financial statements regularly

13. PRIVACY & SECURITy/ID THEFT • ID Theft – Advising consumers on how to stop ID thieves • Keep anti-virus software up to date • Be careful using social networking sites and peer-to-peer (P2P) file sharing software • Use difficult passwords for online accounts • Use secure internet connections