In 2014, the United States Court of Appeals for the Third Circuit ruling in FTC v. Wyndham Worldwide Corporation agreed to hear an immediate appeal on two issues: “whether the FTC has authority to regulate cybersecurity under the unfairness prong of § 45(a); and, if so, whether Wyndham had fair notice its specific cybersecurity practices could fall short of that provision.” On August 24, 2015 the Third Circuit affirmed the decision of the District Court and denied Wyndham’s motion to dismiss the complaint. Factual Background n 2012, after a two-year investigation into Wyndham’s data security practices, the FTC filed suit against the hospitality company alleging that Wyndham had engaged in “unfair … acts or practices” in violation of the Federal Trade Commission Act 15 U.S.C. § 45(a), by failing to take “reasonable and appropriate” measures to adequately secure hotel guests’ personal information. … [Read more...] about FTC v. Wyndham: The Third Circuit Recognizes FTC Authority to Regulate Commercial Cyber Security Practices
Consumer protection from unfair trading regulations 2008
The legal challenge by PHH Corp. (PHH) to a June 4, 2015, decision by the director of the Consumer Financial Protection Bureau (Bureau) in connection with the Bureau’s enforcement proceeding against PHH has captivated the real estate settlement services industry. The attention is justified. Director Cordray’s ruling against PHH, which was the first appeal from a Bureau administrative trial, was shocking. The director had increased PHH’s disgorgement penalty 17-fold (from a $6.4 million penalty initially awarded to a massive $109 million), and in doing so trampled established rules and precedents for interpreting Section 8 of the Real Estate Settlement Procedures Act (RESPA). The director also declared that the Bureau is not subject to any statute of limitations if it decides to prosecute claims in its own administrative forum.PHH’s appeal of the director’s decision to the U.S. Court of Appeals for the D.C. Circuit drew seven amicus briefs, many of them … [Read more...] about Five Key Takeaways From the D.C. Circuit’s PHH Decision
On December 11, 2012, the U.S. Senate passed House Bill 4014 (HR 4014) without amendment and sent it to the President for signature. HR 4014 is the long-awaited and much sought after legislation that amends the Federal Deposit Insurance Act (FDIA)1 in order to protect banks2 and non-banks3 that are subject to the Consumer Financial Protection Bureau’s (CFPB or Bureau) supervision and examination authority from unintended waiver or destruction of a privilege that they could have otherwise claimed as to third parties. And while there is cause to be somewhat comforted or alleviated even there are still some real risks and considerations that lie ahead as examined entities are asked to turn over their privileged documents and communications.The CFPB itself is the impetus of some of the uncertainty that lies ahead as it continues to pursue Memorandums of Understanding with state regulators4 not covered under the FDIA, and has repeatedly professed policy … [Read more...] about Senate Passes House Bill 4014, Clearing the Way for Privilege Protection Documents Turned Over to the CFPB During Examination — But Murky Waters Still Lie Ahead.
Compliance officers may be in the bullseye again as a result of new regulatory proposals introduced during the prior two weeks by the New York State Department of Financial Services and the Commodity Futures Trading Commission. Meanwhile, another compliance officer put himself in the bullseye of the Securities and Exchange Commission by purportedly trading on confidential information his employer entrusted him to safeguard and not to profit from. Finally, the CFTC, for the first time, used its new Dodd-Frank anti-manipulation authority to sue and obtain a settlement from an individual charged with a securities law-type insider trading violation in connection with his personal futures trading. As a result, the following matters are covered in this week’s edition of Bridging the Weeks: CFTC Brings First Insider Trading-Type Enforcement Action Based on New Anti-Manipulation Authority (includes My View);NYS Proposes Tough New AML Requirements; International Bank Sanctioned by … [Read more...] about Insider Trading in Futures; Newer, Tougher AML Requirements; New CCO Obligations; Possible Bitcoin Fraud – Bridging the Weeks: November 23 – December 7, 2015 [VIDEO]
As we all know it takes more than legislation to shift a mindset away from business as usual. And by no means is the once overlooked world of consumer finance excepted from this truth. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), which seeks to change the corporate culture within American financial institutions, was just the start, but it cannot do it alone. This is where the regulators fit in. But are they rising to the challenge?Armed with four more years of President Obama’s administration, the Consumer Financial Protection Bureau (CFPB or Bureau), with the prudential regulators in tow, (e.g., Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve Board (FRB)) have been given the breathing room and the perceived electoral approval to address so called “deficient” compliance management systems (CMS)1 within the consumer finance space to ensure proper legal … [Read more...] about Are Compliance Management Systems the New Battlefront for the CFPB and Prudential Regulators?
A trend is being spotted in the enforcement activity of the Consumer Financial Protection Bureau (CFPB or Bureau). That is the vigorous cooperation as between the CFPB and other prudential bank regulators working together to protect consumers. This trend gives new life to the old adage that two is stronger than one, and a three (four or five for that matter) fold accord is not easily broken. The trend also suggests a stronger and more fortified financial stability oversight body, one that no longer looks at safety and soundness, and compliance with consumer financial laws as two separate silos. But is this trend here to stay? Will the regulators seize this opportunity? Such collaboration is unusual, and particularly challenging as between multiple agencies due to their respective mandates, manpower, budgets, priorities and jurisdiction. But now armed with a mandate to cooperate in supervisory activities, the prudential regulators and the CFPB can assist each other with … [Read more...] about Two is Stronger than One: Joint Enforcement Actions, Trend Spotting in the Consumer Financial Protection Bureau’s Recent Enforcement Activity
Title X of the Dodd-Frank Act created the Consumer Financial Protection Bureau (“Bureau” or “CFPB”). This Bureau is focused solely on consumer financial protection. The Bureau has six primary functions,1 including the authority and responsibility to supervise covered persons for compliance with Federal consumer financial law2 and take appropriate enforcement action to address violations of same. The Bureau does not supervise covered persons for safety and soundness the way bank regulators do; rather, its sole stated interest is the protection of financial consumers in particular.One year old on July 21, 2012, this Bureau has spent its first year aggressively pursuing its mandate: to implement and enforce Federal consumer financial law. It has been actively issuing proposed and final regulations and guidance, as well as filing amicus briefs in various court proceedings. The Bureau has also been conducting and participating in exams of covered parties. … [Read more...] about The Consumer Financial Protection Bureau – The New Sheriff in Town
After the financial crisis exposed the devastation caused by predatory lending, state and federal authorities vowed to protect consumers from practices that lured them into debt they couldn’t afford.But Congress kept most auto loans – the second largest source of debt for Americans – out of the reach of the fledgling U.S. Consumer Financial Protection Bureau. And now many of the same tactics that led to the mortgage meltdown – like fudging facts on the loan application or charging consumers hidden fees – continue to plague auto loans, an investigation by the Center for Public Integrity found.The politically powerful industry has also mastered a few high-pressure tactics of its own. Chief among them is the “yo-yo,” where dealers let buyers drive a new car home in hopes of locking them into a deal and later tell them their financing fell through. The tactic can lure buyers to accept a higher interest rate.And while the financial crisis rendered … [Read more...] about Buyer Beware – Car Dealers Adopt Outlawed Mortgage Tactics, New Consumer Agency Powerless Against Them
EXECUTIVE SUMMARY President Obama’s signature of the Patient Protection and Affordable Care Act on March 23, 2010, together with his expected signature of its companion reconciliation bill approved by Congress yesterday, will effect comprehensive changes to the country’s regulation of health insurance and the delivery of health care generally. The Act is intended, over a multiyear implementation period, to substantially expand the number of Americans having access to health insurance. The Act is financed in part by an increase in the level of federal insurance contribution taxes (known as FICA taxes), an expansion of such taxes to investment income, codification of the economic substance doctrine and other tax increases. Key provisions of the Act:Restrict coverage limitations and require various coverage terms in group health plans and individual policies issued after the enactment date, including through the definition of an“essential health benefits … [Read more...] about President Signs into Law the Patient Protection and Affordable Care Act Effecting Comprehensive Changes to the U.S. Health Care System
Regulatory bodies and lawsAviation in the United States is regulated primarily by the Department of Transportation and the Federal Aviation Administration (FAA) pursuant to Title 14 of the Code of Federal Regulations (the Federal Aviation Regulations, 49 USC (the Transportation Code) and the corresponding regulations.Safety regulationThe FAA regulates the safety of commercial and private air transport. Screening passengers and ensuring onboard security is the responsibility of the Department of Homeland Security's Transportation Security Administration. The National Transportation Safety Board conducts non-criminal aircraft accident investigations.The Federal Aviation Regulations (14 CFR Section 1.1) define a 'commercial operator' as:"A person who, for compensation or hire, engages in the carriage by aircraft in air commerce of persons or property... [W]here it is doubtful that an operator is for 'compensation or hire', the test applied is whether the carriage by air is … [Read more...] about Regulation of Aviation Operations