b'For more information, please visit www.lenderlawwatch.com or www.enforcementwatch.com2019 Product by Recoverythe agency regardless of industry. With respect toto play an important role in 2020, particularly in an consumer finance specifically, the FTC has indicatedelection year, and the industry will likely see a slightTOTAL ACTIONS BY PRODUCT (WITH RECOVERIES)that its agenda will include monitoring and enforcementuptick in state enforcement activity as recently-elected of auto lending and debt collection, and scrutiny of theor appointed Democratic attorneys general and agency lead generation industry. heads further cement themselves and are better able On the state side, state enforcement activity was upto implement their agendas. We expect state and slightly in 2019 and resulted in some very large jointfederal agencies to focus on politically popular targetsStudentrecoveries in the student lending and servicing marketlike student lenders, auto lenders and repossessionPayday/SmallDebt Collection + MortgagesLendingconcerning for-profit universities and their lenders.companies, and debt collectors. Payday lending mayDollar Lending Debt Settlement $99.6MBut overall, despite the November 2018 electionalso continue to be a target at the state level. $17.8M $129.5M 13 $986.9Mresults that put Democrats in control of a number of14 14 18states, 2019 did not result in a stark increase in state2019 HIGHLIGHTS Auto enforcement. In fact, looking back to 2016, statesCredit Significant Enforcement ActionsLending Credit Card Reportinghave not stepped up and replaced federal agencies$9.5M $0Mprior role in enforcement. State attorneys general andAgain, as in 2017 and 2018, virtually all industries saw11 $14.85M 3agencies took 71 actions in 2016, yet only took 43a decrease in enforcement activity and recoveries.3actions in 2019, 13 of which were conducted jointly withMany of these decreases were significant. For example, federal agencies. Again, this is not entirely a productmortgage enforcement was down almost 50% from of political agenda or policies. We believe that much of2018 and recoveries plummeted by over 90%, while the decrease in state enforcement can be explainedcredit card actions were more than cut in half and by the industry reforming its financial crisis-era litigationrecoveries fell from $963 million in 2018 to a mere $15Federal actions continued to rely primarily on theAnd most recently, in December, the FTC joined the and practices. million this past year. Student and auto lending wereUnfair, Deceptive, or Abusive Acts or Practices (UDAAP)fray by announcing a settlement with the University the notable exceptions to this trend. With respect toprovision in the Consumer Financial Protection Actof Phoenix, requiring it to pay a $50 million fine and We expect 2020 to follow largely the same trends, withstudent lending, the overall number of actions did not(CFPA) and the Unfair and Deceptive Practices Actto cancel approximately $141 million in debt based decreased but targeted federal activity driven by theincrease significantly, yet the amount of recoveriesprovisions in the Federal Trade Commission Act (FTCon its purported use of advertising that deceptively CFPB and the FTC, and very limited participation bydwarfed years past primarily due to new stateAct). However, we also saw a notable increase insuggested that prestigious corporations worked with the DOJ and HUD. That said, political pressure on theenforcement initiatives and coordination amongst statefederal agencies use of the Telemarketing Sales Rulethe school to create job opportunities and tailor the CFPB could lead to a renewed emphasis on obtainingattorneys general.(TSR), particularly in debt collection and student debtschools curriculum for such jobs.consumer relief in certain cases. States should continuerelief-related actions. States continued to bring actions under various state consumer protection acts andThe Office of the Comptroller of the Currency (OCC) UDAAP provisions, but also notably brought a handfulEnters into Fair Housing Act Consent Order with of actions under federal CFPA provisions. Citibank. In March, Citibank agreed to pay a $25 TOTAL ACTIONS BY FEDERAL/STATE GOVERNMENT million civil money penalty for allegedly violating the State Attorneys General, CFPB, and FTC ObtainFair Housing Act, and to reimburse approximately Three Significant Settlements with Student Loan24,000 impacted borrowers at a cost of approximately 200 Providers and For-Profit Schools. The three largest$24 million. The OCC alleged that the lender failed to Total: 175 consumer finance settlements this year all concernedensure that its Relationship Loan Pricing program, which 14 Total: 148 for-profit universities and their lenders. First, in January,offered closing cost credits and interest rate deductions 150 7 49 state attorneys general secured a settlement forto existing customers, was offered to all eligible 56 Joint nearly $500 million with Career Education Corporation,customers and that the reasons for any program denialsTotal Actions63100 State a for-profit education company, resolving allegationswere documented. The allegations stemmed, in part, Total: 78 Total: 78 Federal that the company violated various states consumerfrom Citibanks self-reporting of data concerning the 104 78 26 5 13 protection laws by deceiving its students about theprogram in 2015. 50 30 total costs of enrollment, transferability of credits,Freedom Debt Relief Agrees to Pay $25 Million to 47 35 and potential for employment. Then in June, the 45Settle CFPB Lawsuit. In July, the CFPB and Freedom 0 state attorneys general and the CFPB reached a $168Debt Relief reached a settlement concerning the 2016 2017 2018 2019 million settlement with Student CU Connect CUSO,companys purported deceptive debt-settlement acts Year of Press Release LLC, a private student loan provider related to theor practices. The CFPB alleged that Freedom violated now-defunct for-profit school ITT Technical Institute. 6 7'