CFPB and FTC Highlight Consumer Protection Priorities During the Coronavirus Pandemic in Separate Congressional Hearings
In testimony before the U.S. House Committee on Financial Services last Thursday, Consumer Financial Protection Bureau (CFPB) Director Kathleen L. Kraninger provided details about agency efforts to protect consumers during the COVID-19 pandemic. Director Kraninger’s testimony comes just over a week after the Federal Trade Commission (FTC) Bureau of Consumer Protection Director Andrew Smith appeared before the U.S. Senate Subcommittee on Manufacturing, Trade, and Consumer Protection at a hearing focused on protecting consumers from coronavirus-related scams. Both hearings shed light on how the agencies are shaping their responses to consumer concerns during the pandemic and previewed potential enforcement priorities.
Director Kraninger highlighted a multilevel effort at the CFPB to safeguard consumers which included:
Financial education initiatives to empower consumers;
Creating transparent regulations that enhance predictability and encourage industry compliance;
Utilizing the CFPB’s supervisory authority to prevent rule violations;
Commencing enforcement actions against intentional violators; and
Reforming the Dodd-Frank Wall Street Reform and Consumer Protection Act to reward whistleblowers who report violations of federal consumer financial protection laws.
Director Kraninger noted that the CFPB’s Fair Lending Supervision Program “initiated 14 supervisory events at financial services institutions under the Bureau’s jurisdiction to determine compliance with federal laws.” Of note from the multitude of CFPB enforcement activities highlighted by Director Kraninger from September 2019 through March 2020 included four referrals to the U.S. Department of Justice (DOJ) regarding alleged violations of the Equal Credit Opportunity Act, which “involved redlining in mortgage origination based on race and/or national origin, discrimination in mortgage origination based on receipt of public assistance income, and discrimination in auto origination based on race and national origin.”
In the Senate Subcommittee hearing, Director Smith focused on enforcement actions that the FTC is taking to address coronavirus scams in several areas. Specifically, he noted that the FTC is taking action against companies that are: claiming fake coronavirus cures; making illegal pandemic-related robocalls; committing small business fraud; and failing to honor agreements to deliver personal protective equipment. His testimony also highlighted the FTC’s efforts to coordinate enforcement actions with other agencies, including the Food and Drug Administration, the Federal Communications Commission, the DOJ, and the Small Business Administration (SBA). Director Smith stated that the FTC is working with the SBA to bring enforcement actions against companies that are offering Paycheck Protection Program funds to small businesses without SBA approval. He also noted that the FTC is “heavily focused” on privacy issues related to mobile contract tracing applications as the pandemic continues to spread.
As the effects of coronavirus continue to be felt nationwide, consumer protection agencies such as the CFPB and FTC continue to look for new ways to both educate consumers about potential scams and enforce laws and regulations on the books. Stakeholders across various industries should pay attention to how these agencies’ policies and priorities adapt to the “new normal.” Our biweekly recap of the agencies’ recent regulatory and enforcement activities – including those dealing with the COVID-19 pandemic – can be found here.