b'FTC Reaches Settlement with Payday Lenders New California Department of Financial Protection In February, the FTC announced that it had reachedand Innovation Initiates First Enforcement Action a $114 million settlement with Lead Express, Inc. andAgainst Debt Collectorseveral affiliated entities and individual defendantsIn September, the new California Department of (collectively, Lead Express) to resolve allegations thatFinancial Protection and Innovation (DFPI) brought its Lead Express operated a tribal lending scheme thatfirst enforcement action against a debt collector under violated Section 5 of the FTC Act and other consumerthe California Consumer Financial Protection Law protection statutes. The FTC alleged that Lead Express(CCFPL). The DFPI issued a cease-and-desist order to had initiated debits to customers accounts withoutF&F Management Inc. for allegedly threatening to sue crediting those debits to customers balances, hadconsumers and garnish their wages, and submitting misrepresented the amounts that customers ended upnegative information to a credit bureau without notifying paying for their loans, and had failed to make requiredthe consumer (i.e., debt parking). The DFPI found that credit transaction disclosures. Under the terms of thethese actions violated the CCFPL and ordered the settlement, all outstanding consumer loans issued bycompany to pay an administrative penalty of $375,000.Lead Express will be considered paid in full if the original amount of the loan and one finance charge have beenSignificant Regulatory Developmentsrepaid by the customer. The settlement also permanentlyCFPB Rescinds Statement of Policy Regarding banned Lead Express from the payday lending industry.Prohibition on Abusive Acts or PracticesFTC Reaches Largest-Ever FCRA Settlement WithIn March, the CFPB announced the rescission of its Smart Home Monitoring Company Over AllegedStatement of Policy Regarding Prohibition on Abusive Misuse of Credit Reports Acts or Practices, which had been issued in January In April, the FTC reached a settlement with Vivint,2020. That policy was intended to address uncertainty a Utah-based home security company, resolvingwith regard to how the CFPB would exercise its allegations that the company had violated the FCRA,supervisory and enforcement authority to address FTC Act, and FTCs Red Flags Rule. The FTC allegedabusive acts or practices. In rescinding the policy, the that Vivints sales representatives would use creditCFPB indicated that the principles set forth in the policy reports associated with similarly-named consumerswere inconsistent with the CFPBs duty to enforce the in order to qualify prospective customers for thestandards established by Congress under the CFPA and companys home security and monitoring services, andcontrary to the CFPBs mission. Thus, the bureau stated would in some circumstances add relatives or otherthat it now intends to exercise its supervisory and persons with better credit as a co-signer on the accountenforcement authority consistent with the Dodd-Frank without permission. If the customer later defaulted,Act and with the full authority afforded by Congress, to Vivint then referred the third-party co-signer toidentify and remediate abusive acts or practices. its debt buyer. The $25 million monetary judgmentCFPB Finalizes Amendments to Regulation Xobtained by the FTC is the largest monetary judgmentto Protect Borrowers Against Increase Inobtained by the FTC to date for a FCRA case. COVID-19 ForeclosuresCFPB Enters Into $6 Million Consent Order WithIn June, the CFPB finalized amendments to implementing JPay Over Prepaid Cards to Incarcerated Consumers regulation of the Real Estate Settlement Procedures Act In October, the CFPB announced that it had entered(RESPA), Regulation X, which would establish temporary into a consent order with JPay, a prison financialprotections for mortgage borrowers as the Coronavirus services company that provides prepaid debit cards toAid, Relief, and Economic Security Act (CARES Act) currently incarcerated individuals and those recentlyand various Federal and State foreclosure moratoria discharged from incarceration. The CFPB alleged thatare phased out over time. 12 C.F.R.1024 (2021). The JPay had abused its market dominance and violatedamendments extend additional borrower protections the Consumer Financial Protection Act (CFPA) andrelated to loss mitigation and loan modifications. the Electronic Funds Transfer Act (EFTA) by chargingThese amendments went into effect on August 31 and consumers unavoidable fees for prepaid cards used toregulators have already indicated their intent to closely return money owed to consumers at the time of theirmonitor and enforce mortgage loan servicer compliance release from incarceration, requiring consumers inwith the new provisions.certain states to sign up for a JPay card as a conditionThe CFPB Seeks Information From Payment of receiving government benefits, and misrepresentingProcessing Companiesfees to consumers. Under the terms of the consentIn October, the CFPB issued an order requiring several order, JPay agreed to pay $4 million in consumermajor tech companies that have operations in the redress and $2 million in civil penalties. payment services sector to provide information on their business practices. The orders reflect the Bureaus 8'