UK: CFPB Turns One, Announces First Enforcement Action (Advertising News & Analysis - July 26, 2012)

Last Updated: 6 August 2012

Edited by Jeffrey D. Knowles and Gary D. Hailey

NEWS

CFPB Turns One, Announces First Enforcement Action

Last weekend marked the first anniversary of the Consumer Financial Protection Bureau (CFPB). Over the past several weeks, the CFPB has unveiled numerous regulatory proposals and initiatives in such areas as private student loans, mortgage disclosures, and credit reporting agencies. Moreover, the media's coverage of the CFPB has taken a new tack as information about its initial investigations, exams, and enforcement activity has become public. These investigations and the CFPB's enforcement actions will have long-term consequences for their targets and will be an important indicator of its approach to consumer protection in the future.

Last week, the CFPB gave industry a taste when it issued a compliance bulletin asserting that institutions will be held responsible for deceptive marketing practices and the actions of their third-party vendors. The CFPB stressed that companies engaging in deceptive practices will be expected to refund fees paid by consumers and pay an appropriate penalty, particularly in cases in which such deceptive practices are widespread.

The CFPB's work in its first year and more recent announcements underscore the importance of the careful development of specific products and services, policies and procedures, employee incentive plans, advertising and marketing, service provider compliance requirements, fulfillment, quality assurance, monitoring, training, and handling of complaints.

Click here to read the CFPB's compliance bulletin.

Click here to visit Venable's collection of articles analyzing developments at the CFPB over the past year.

FTC Weighs in on FCC's Consideration of Mobile "Cramming"

The Federal Trade Commission (FTC) announced this week that it had provided comment to the Federal Communications Commission (FCC) about the "cramming" of unauthorized charges on wireless telephone bills. According to its press release, the FTC told the communications regulator that "cramming" poses a serious problem.

The FTC's comment noted that both the FTC and the FCC have received and reviewed thousands of complaints about unauthorized third-party charges on wireless bills. In fact, the FTC claimed in its comment to have launched at least 24 investigations involving wireless cramming. Those are in addition to a number of state AG investigations of wireless cramming, some of which have resulted in multi-million dollar settlements. Despite this application of state and federal enforcement muscle, the FTC stated in its comment that the problem is only likely to grow.

The comment also noted that there are a number of legitimate uses of third-party charges on wireless bills, such as serving as a conduit for text message-based charitable fund raising. Although the comment stopped short of calling for a full ban or default blocking of third-party charges, the FTC does believe that wireless providers should be required, at a minimum, to give customers the option to block all third-party charges from their bills.

Click here to read the FTC's press release and comment to the FCC.

California Announces Privacy Enforcement and Protection Unit

In a July 19 press release, California Attorney General Kamala D. Harris announced the formation of a California Privacy Enforcement and Protection Unit. The unit, which will be part of the state Department of Justice's eCrime Unit, will be charged with protecting consumer and individual privacy through civil prosecution of state and federal privacy laws, educating consumers and forging partnerships with industry.

The creation of the Privacy Unit is just the latest California initiative intended to protect consumer privacy. The state has also created a coalition of leading mobile and social application platforms to improve privacy protections for consumers in California and around the globe. Amazon.com, Apple, Facebook, Google, Hewlett-Packard, Microsoft and Research in Motion have all signed onto that initiative.

Click here to read the press release announcing the formation of the unit.

Microsoft Setback in Xbox Text Messaging Suit

In a class action against Microsoft Corp. alleging that the company sent unlawful text messages promoting its Xbox game console, a federal district court recently ruled that the plaintiff did not have to allege that he was charged for the text message he received in order to have standing to sue.

The plaintiff alleges that Microsoft sent the text messages to consumers in violation of the Telephone Consumer Protection Act (TCPA), which prohibits calls "to any telephone number assigned to a...cellular telephone service...or any service for which the called party is charged to make a call." One federal court of appeals has held that text messages are "calls" subject to the TCPA.

Microsoft moved to dismiss the suit on the basis that the plaintiff lacked standing because he did not allege that he was charged for the text message. The district court denied the motion, finding that the term "charged" in the relevant TCPA provision applies to "cellular telephone service," not to "call." Thus, according to the court, the plaintiff demonstrated standing by alleging that he was charged for his cellular telephone service and did not have to allege that he was charged specifically for the allegedly unlawful text message or otherwise allege that he suffered economic harm.

Click here to read the court's opinion in the case.

ANALYSIS

Class Actions "Piggybacking" FTC Enforcement Face Setback

There is no private right of action for violations of the FTC Act, writes Venable partner Leonard L. Gordon in a recent post to Venable's advertising law blog, www.allaboutadvertisinglaw.com. However, he says, aggressive plaintiffs' lawyers often try to "piggyback" on FTC enforcement actions by bringing private class actions premised on the same conduct as the FTC action.

His post details a recent case in which Nestlé secured summary judgment and dealt a setback to similar "piggyback" suits.

Gordon's post details a consolidated class action that followed close on the heels of the FTC's 2010 settlement with Nestlé over claims made about the company's BOOST Kid Essentials drink. All parties and the court agreed that the state statutes under which the suits were brought did not provide for a claim based on a lack of prior substantiation. Accordingly, the plaintiffs argued that they were not bringing a prior substantiation claim, like the FTC, but were instead alleging that Nestlé's claim that the health benefits were "clinically shown" was false.

After reviewing the expert opinions both parties submitted, the judge in the case concluded that "[p]laintiffs do not present evidence that Nestlé actually lacks scientific support for its 'clinically shown' claims or that such support does not exist; they argue that this support should have been stronger."

Finding that the plaintiffs' claims were premised on a lack of substantiation not falsity, the judge granted summary judgment.

Click here to read Gordon's full post on www.allaboutadvertisinglaw.com.

Jonathan Pompan Comments on CFPB's First Year

Venable attorney Jonathan L. Pompan was quoted in a July 20 Blog of The Legal Times story about the first anniversary of the CFPB.

"They're not messing around," Pompan told the publication. "A year ago, we said there was a new sheriff in town. It's not just a sheriff — it's an army." While the CFPB has been a political target, it has made considerable progress in executing its mission, growing its staff, rolling out regulatory proposals, launching investigations and enforcement.

Speaking about the CFPB's multifaceted approach to drawing attention to consumer protection issues in nonbank areas such as prepaid cards, mortgages, small dollar lending, money transmission, private student loans, credit reporting agencies, debt relief services, and debt collection, Pompan said that the CFPB's "consistency in approach rivals a political campaign." He added, the CFPB has embraced "the power of the bully pulpit," and noted that "non-rulemaking guidance and other pronouncements seem to be far more prevalent than actual substantive rules."

Click here to read all of Pompan's comments in the story.

UPCOMING EVENTS

Webinar: How Nonprofits Can Raise Money and Awareness through Promotional Campaigns without Raising Legal Risk
August 2, 2012
Please join Venable for a complimentary luncheon and program/webinar, moderated by Venable partner Jeffrey S. Tenenbaum. Venable partner Melissa Landau Steinman and Venable attorney Kristalyn J. Loson, each well-versed in the related areas of promotions and charitable fundraising, will help explain the myriad of legal and regulatory issues involved in promotional and fundraising campaigns, as well as the latest developments in the area. The luncheon portion will take place from 12:00 p.m. - 12:30 p.m. EDT, and the program/webinar portion will take place from 12:30 p.m. - 2:00 p.m. EDT.

Please RSVP by July 27. To RSVP, please click here.

American Bar Association Annual Meeting – Chicago
August 2-7, 2012
Venable's attorneys will present sessions at this conference, which provides top-notch continuing education to the nation's lawyers. Please join Venable partner Ralph S. Tyler as he presents "Overriding the Experts: Executive Rejection of Administrative Agency Expertise." Also, Venable partner Amy Ralph Mudge will moderate a panel discussion titled "Government Cases and Class Actions: Making and Breaking the Links."

2012 Electronic Retailing Association D2C Convention - Las Vegas
September 11-13, 2012
Venable is a proud sponsor of the ERA D2C Convention. The ERA is the only trade association in the U.S. and internationally that represents leaders of the direct-to-consumer marketplace, which includes members that maximize revenues through direct-to-consumer marketing on television, online, mobile and on radio. Please visit the attorneys of our Advertising and Marketing Group at booth #915.

Two Venable attorneys are presenting educational sessions at ERA D2C. Join Venable partner Jeffrey D. Knowles as he presents "Driving Change in Electronic Retailing: Enforcement, Self-Regulation and Legislation." Venable partner Gregory J. Sater will moderate a panel entitled "Riding the Social Media Roller Coaster."

To obtain a complimentary exhibitor-hall pass that will allow you to attend the expo as a guest of Venable, please click hereand register, using the code VBND3607.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.