UNITED STATES OF AMERICA

FEDERAL TRADE COMMISSION WASHINGTON, D.C.

Division of Financial Practices

 May 26, 2022

 

David Uejio, Acting Associate Director 

Supervision, Enforcement, and Fair Lending

Bureau of Consumer Financial Protection 

1700 G Street, N.W.

Washington, D.C. 20552

Dear Mr. Uejio: 

This letter responds to your request for information concerning the Federal Trade 

Commission’s (Commission or FTC) enforcement activities related to compliance with 

Regulation Z (the Truth in Lending Act or TILA); Regulation M (the Consumer Leasing Act or

CLA); and Regulation E (the Electronic Fund Transfer Act or EFTA) (collectively “the 

Regulations”).1

 You request this information for use in preparing the Bureau of Consumer 

Financial Protection’s (CFPB) 2021 Annual Report to Congress. Specifically, you ask for 

information concerning the FTC’s activities with respect to the Regulations during 2021. We are 

pleased to provide the requested information below.2

I. FTC Role in Administering and Enforcing the Regulations

The Dodd-Frank Act, signed into law on July 21, 2010, substantially restructured the 

financial services law enforcement and regulatory system. Among other things, the Act made 

important changes to the TILA, CLA, and EFTA, and other consumer laws, such as giving the 

1 The TILA is at 15 U.S.C. § 1601 et seq.; the CFPB’s Regulation Z is at 12 C.F.R. Part 1026; and the Federal 

Reserve Board’s (Board’s) Regulation Z is at 12 C.F.R. Part 226. The CLA is at 15 U.S.C. § 1667 et seq.; the 

CFPB’s Regulation M is at 12 C.F.R. Part 1013; and the Board’s Regulation M is at 12 C.F.R. Part 213. The EFTA 

is at 15 U.S.C. § 1693 et seq.; the CFPB’s Regulation E is at 12 C.F.R. Part 1005; and the Board’s Regulation E is at 

12 C.F.R. Part 205. Our understanding is that your request encompasses the CLA, an amendment to the TILA.

2 A copy of this letter is being provided to the Board’s Division of Consumer and Community Affairs, in connection 

with its responsibility for some aspects of the Regulations after the transfer date of July 21, 2011. Among other 

things, the Board retained responsibility for implementing the Regulations with respect to certain motor vehicle 

dealers, under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act or Act), Pub. L. 

111-203, 124 Stat. 1376 (July 21, 2010). See, e.g., Dodd-Frank Act, § 1029 and Subtitle H. 
2

CFPB rulemaking and enforcement authority for the TILA, CLA, and EFTA. Under the Act, the 

FTC retained its authority to enforce the TILA and Regulation Z, the CLA and Regulation M, 

and the EFTA and Regulation E. In addition, the Act gave the Commission the authority to 

enforce any CFPB rules applicable to entities within the FTC’s jurisdiction, which include most 

providers of financial services that are not banks, thrifts, or federal credit unions.3

 In accordance 

with the memorandum of understanding that the Commission and the CFPB entered into in 2012

and reauthorized in 2015 and 2019, and consistent with the Dodd-Frank Act, the Commission 

has been coordinating certain law enforcement, rulemaking, and other activities with the CFPB.

4

II. Regulation Z (the TILA) and Regulation M (the CLA)

In 2021, the Commission engaged in law enforcement; rulemaking, research and policy 

development; and consumer and business education, all relating to the topics covered by the 

TILA and Regulation Z and the CLA and Regulation M, including the advertisement, extension, 

and certain other aspects of consumer credit and leasing.5

A. Truth in Lending and Consumer Leasing: Enforcement Actions

The Commission’s law enforcement efforts against those who market or extend credit 

included actions involving automobile financing, payday loans, and credit repair and debt relief. 

1. Automobiles (Credit and Leasing)

The FTC continued its efforts to combat deceptive automobile dealer practices with 

litigation in two enforcement actions involving the TILA and Regulation Z (credit) and the CLA 

and Regulation M (leasing). 

In July 2021, the FTC announced a settlement with Richard Berry, the owner and 

manager of a group of four auto dealers that operated in Arizona and New Mexico, near the 

3 The FTC has authority to enforce the TILA and Regulation Z, the CLA and Regulation M, and the EFTA and 

Regulation E, as to entities for which Congress has not committed enforcement to some other government agency. 

See 15 U.S.C. § 1607(c) (the TILA and Regulation Z, and the CLA and Regulation M) and 15 U.S.C. § 1693o (the 

EFTA and Regulation E). 

4 See FTC, Memorandum of Understanding between the Consumer Financial Protection Bureau and the Federal 

Trade Commission, Jan. 20, 2012, available at https://www.ftc.gov/system/files/120123ftc-cfpb-mou.pdf, and FTC, 

Memorandum of Understanding between the Consumer Financial Protection Bureau and the Federal Trade 

Commission, Mar. 6, 2015, available at

https://www.ftc.gov/system/files/documents/cooperation_agreements/150312ftc-cfpb-mou.pdf. In 2019, the FTC 

and CFPB again reauthorized the MOU. See FTC, Memorandum of Understanding between the Consumer 

Financial Protection Bureau and the Federal Trade Commission, Feb. 25, 2019, available at 

https://www.ftc.gov/system/files/documents/cooperation_agreements/ftc-cfpb_mou_225_0.pdf. See also DoddFrank Act, § 1024.

5 Your letter also asks for specific data regarding compliance examinations, including the extent of compliance, 

number of entities examined, and compliance challenges experienced by entities subject to the FTC’s jurisdiction. 

The Commission does not conduct compliance examinations or collect compliance-related data concerning the nonbank entities within its jurisdiction. As a result, this letter does not provide this information.
3

border of the Navajo Nation, and allegedly engaged in a range of illegal activities including 

falsifying consumers’ income and down payment information on vehicle financing applications 

and contracts submitted to third-party financing companies, and misrepresenting important 

financial terms in vehicle advertisements, in violation of the FTC Act.

6

 The complaint also 

charged Tate’s Auto with violating the TILA and Regulation Z (credit) and the CLA and 

Regulation M (leases) by failing to disclose required terms in advertisements, including in online 

and social media; an earlier ruling found defendants violated TILA and CLA by failing to 

disclose such legally required information in their advertisements.

7

 In addition to providing for a

$450,000 payment to the FTC for consumer redress, the settlement prohibits Berry from 

misrepresenting information in documents associated with a consumer’s purchase, financing, or 

leasing of a motor vehicle, misrepresenting the costs or any other material fact related to vehicle 

financing, and from violating the TILA and Regulation Z, and the CLA and Regulation M.

8

In October 2021, the Commission issued an administrative opinion and order ruling that 

Traffic Jam Events, LLC and its owner, David J. Jeansonne II (respondents) violated both the 

FTC Act and the TILA (credit), and banning them from the auto industry.

9 Among other things, 

the Commission found that the respondents sent deceptive mailers to consumers to entice them to 

auto sale sites suggesting they were affiliated with a government COVID-19 stimulus program 

when the company was not; sent direct mail advertisements deceptively indicating consumers 

had won specific valuable prices (such as $2,500 or $5,000 cash) that consumers learned they 

had not won when they appeared to claim the prizes; and sent mailers violating TILA, including 

by quoting monthly payments to purchase vehicles on credit that did not provide, or hid in small 

print, key financing terms required by law that consumers need to determine the true costs of the 

advertising financing.10 The Commission’s order also prohibits misrepresentations regarding 

financial assistance from the government, prizes and sweepstakes, affiliation with the 

6 FTC v. Tate’s Auto Center of Winslow, Inc., No. 18-cv-08176 (D. Ariz. July 30, 2021) (stipulated order for 

permanent injunction and monetary relief as to individual defendant), available at https://www.ftc.gov/legallibrary/browse/cases-proceedings/162-3207-x180041-tates-auto-center. Commissioner Rebecca Kelly Slaughter 

issued a concurring statement in this matter, available at https://www.ftc.gov/legal-library/browse/casesproceedings/public-statements/concurring-statement-commissioner-rebecca-kelly-slaughter-matter-tates-auto. The 

settlement also included a stipulated dismissal of relief defendant Linda Tate. FTC v. Tate’s Auto Center of 

Winslow, Inc., No. 18-cv-08176 (D. Ariz. July 26, 2021) (order). See also FTC, Press Release, FTC Obtains 

$450,000 Settlement in Tate’s Auto Group Case (Jul. 29, 2021), available at https://www.ftc.gov/news-events/pressreleases/2021/07/ftc-obtains-450000-settlement-tates-auto-group-case.

7 See FTC, Press Release, FTC Obtains $450,000 Settlement in Tate’s Auto Group Case (Jul. 29, 2021), available at 

https://www.ftc.gov/news-events/press-releases/2021/07/ftc-obtains-450000-settlement-tates-auto-group-case.

8 See FTC v. Tate’s Auto Center of Winslow, Inc., No. 18-cv-08176 (D. Ariz. July 30, 2021) (stipulated order for 

permanent injunction and monetary relief as to individual defendant), available at https://www.ftc.gov/legallibrary/browse/cases-proceedings/162-3207-x180041-tates-auto-center. 

9 In the Matter of Traffic Jam Events, LLC, FTC Dkt. No. 9395 (Oct. 25, 2021) (Opinion of the Commission; Final 

Order), available at https://www.ftc.gov/legal-library/browse/cases-proceedings/x200041-202-3127-traffic-jamevents-llc-matter. Among other things, the order also prohibits violations of the TILA and Regulation Z. The 

Commission’s order runs for twenty years. 

10 See id.
4

government, and other material restrictions regarding the purchase, receipt or use of any product 

or service. In addition, it prohibits respondents from violations of the TILA and Regulation Z. 

The administrative complaint the FTC filed in 2020 against the respondents alleged multiple 

counts of deceptive conduct in connection with deceptive mailers to consumers, in violation of 

the FTC Act, and charged respondents with violating the TILA and Regulation Z by failing to 

clearly disclose required credit information in their advertising.11 Litigation continues in this 

matter at the appellate level.

12 

2. Payday Lending (Credit)

In 2021, the FTC settled charges with the owners and operators of a payday lending 

enterprise (Harvest Moon), which the FTC had alleged deceptively overcharged consumers 

millions of dollars and used deceptive tactics to convince consumers that their loans would be 

repaid in a fixed number of payments when, in many instances, the defendants had applied the 

payments to finance-charge only amounts, and also failed to make required loan disclosures.13

The FTC charged the defendants with violating the FTC Act, the TILA and Regulation Z, and 

the Telemarketing Sales Rule (TSR).14 Under the terms of the settlement, among other things, 

the owners and operators of the settling entities are permanently prohibited from making loans or 

extending credit of any kind, and nearly all outstanding debt (which is comprised entirely of 

illegal finance charges) held by the company will be deemed as paid in full.

15 The settlement 

includes a monetary judgment of $114.3 million, which is partially suspended based on an 

inability to pay.16 The defendants will be required to turn over all corporate assets and almost all 

domestic personal assets along with a number of vehicles to the receiver, which will wind down 

and liquidate the business and provide all proceeds to the FTC, to be used for equitable relief for 

11 See In the Matter of Traffic Jam Events, LLC, FTC Dkt. No. 9395 (filed Aug. 7, 2020), available at

https://www.ftc.gov/enforcement/cases-proceedings/x200041-2023127/traffic-jam-events-llc-matter; see also FTC, 

Press Release, FTC Adds Charges Against Auto Marketer For Deceptive “Prize” Mailers (Aug. 13, 2020), available 

at https://www.ftc.gov/news-events/press-releases/2020/08/ftc-adds-charges-against-auto-marketer-deceptive-prizemailers. 

12 Traffic Jam Events, LLC and David J. Jeansonne II, individually and as an officer of the company, appealed the 

FTC order and opinion. Traffic Jam Events v. FTC, No. 21-60947 (5th Cir. Dec. 21, 2021) (appeal docketed). 

13 See FTC, Press Release, FTC Acts to Ban Payday Lender From Industry, Forgive Illegal Debt (Feb 11, 2021), 

available at https://www.ftc.gov/news-events/press-releases/2021/02/ftc-acts-ban-payday-lender-industry-forgiveillegal-debt. 

14 FTC v. Lead Express, Inc., No. 20-cv-00840 (D. Nev. filed May 11, 2020), available at 

https://www.ftc.gov/enforcement/cases-proceedings/192-3208/lead-express-inc-harvest-moon-financial.

15 FTC v. Lead Express, Inc., No. 20-cv-00840 (D. Nev. Apr. 1, 2021 (stipulated order for permanent injunction and 

monetary judgment as to defendants Lead Express Inc., Camel Coins, Inc., Sea Mirror, Inc., Naito Corp., Kotobuki 

Marketing, Inc., Ebisu Marketing, Inc., Hotel Marketing, Inc., Daikoku Marketing, Inc., Takehisa Naito, and Keishi 

Ikeda). See also FTC, Press Release, FTC Acts to Ban Payday Lender From Industry, Forgive Illegal Debt (Feb 11, 

2021), available at https://www.ftc.gov/news-events/press-releases/2021/02/ftc-acts-ban-payday-lender-industryforgive-illegal-debt. 

16 See id. The full judgment will become due if the defendants are found to have misrepresented their financial 

condition. 
5

consumers, including redress and its administration. The court also issued a default judgment 

against defendant La Posta Tribal Lending Enterprise on all FTC claims, including that it 

violated the FTC Act by misrepresenting the payment terms of its payday loans and the TILA

and Regulation Z by failing to make accurate disclosures, and permanently enjoining the 

defendant from, among other things, misrepresenting the payment schedule and total amount a 

consumer will owe, and from violating the TILA and Regulation Z, and awarding total 

disgorgement in an amount exceeding $5 million.17

In April 2021, the U.S. Supreme Court issued a decision in AMG Capital Management, 

LLC v. FTC resolving the challenge brought by Scott Tucker and several of the corporate 

defendants, overturning the lower court decision and remanding the case back for review; 

litigation continues in this appellate matter.

18 The case involved violations of the FTC Act, the 

TILA and Regulation Z, and other laws.19 The Court found that the FTC did not have the 

authority under Section 13(b) of the FTC Act to seek equitable monetary relief. In view of its 

loss of an important consumer protection tool with this decision, the Commission has asked 

Congress to amend the FTC Act to enable the Commission to obtain monetary relief for injured 

consumers under Section 13(b).20 

 

3. Credit Repair and Debt Relief (Credit)

In 2021, the operators of a student loan debt relief scheme agreed to settle Federal Trade 

Commission charges that they collected illegal upfront fees and falsely promised to lower or 

even eliminate consumers’ loan payments or balances.21 Among other things, the settlement 

bans the defendants from providing debt relief services, prohibits them from violating the 

Telemarketing Sales Rule (TSR), and includes a monetary judgment against certain defendants 

17 FTC v. Lead Express, Inc., No. 20-cv-00840 (D. Nev. Sept. 13, 2021 (order granting motion for default judgment, 

directing final judgment against La Posta Tribal Lending Enterprise), (D. Nev. Sept. 14, 2021) (default judgment 

entered).

18 FTC v. AMG Capital Management, LLC, 141 S. Ct. 1341, 593 US __ (2021), available at 

https://www.supremecourt.gov/opinions/20pdf/19-508_l6gn.pdf.

19 The Ninth Circuit had affirmed the district court judgment and order the FTC obtained against Tucker and several 

corporate defendants for violation of the FTC Act and the TILA, among other things, for deceiving consumers and 

illegally charging them undisclosed and inflated fees. FTC v. AMG Capital Mgmt., LLC, 910 F.3d 417 (9th Cir. 

2018).

20 See Testimony, Prepared Statement of the Federal Commission: The Urgent Need to Fix Section 13(b) of the 

FTC Act (Apr. 27, 2021), https://www.ftc.gov/legal-library/browse/prepared-statement-federal-trade-commissionurgent-need-fix-section-13b-ftc-act.

21 FTC v. Student Advocates Team, LLC, No. 8:19-cv-1728 (C.D. Cal. May 17, 2021) (stipulation as to entry of 

order for permanent injunction, monetary relief and final judgment as to Defendants Student Advocates Team LLC; 

Progress Advocates Group, LLC; Student Advocates Group, LLC; Assurance Solution Services, LLC; and Bradley 

Jason Hunt) (C.D. Cal. May 17, 2021), (stipulation as to entry of order for permanent injunction and final judgment 

as to Defendant Sean Quincy Lucero) (C.D. Cal. May 17, 2021), available at https://www.ftc.gov/legallibrary/browse/cases-proceedings/172-3036-student-advocates-team-llc-et-al. The full judgment will become due if 

the defendants are found to have misrepresented their financial condition. 
6

of more than $24.5 million, which is partially suspended due to an inability to pay.22 The 

defendants are prohibited from collecting any further payments from the consumers who 

purchased their debt relief services, and also are required to pay $11,500, to be used for 

consumer redress.

23 The complaint filed in 2019 alleged that defendants charged illegal upfront 

fees that they led consumers to believe went towards consumers’ student loans, falsely promised 

that their services would permanently lower or even eliminate consumers’ loan payments or 

balances, and signed customers up for high-interest loans to pay the fees without making 

required disclosures, in violation of the FTC Act, the TSR and the TILA.

24

4. Other Cases (Credit)

In 2021, the FTC mailed 4,505 refund checks to people who lost money in a financing 

scheme that targeted customers shopping for computers and related electronic devices.25 In a 

case previously reported on, the FTC alleged that BlueHippo Funding, LLC and affiliate 

BlueHippo Capital, LLC, among other things, violated the TILA and engaged in deceptive 

practices in violation of the FTC Act, and promised to finance new computers, collected money 

from customers, and then failed to provide them with computers.26 The Commission also 

alleged that the two companies failed to disclose key terms of BlueHippo’s refund policy to 

customers prior to their making payments.27 The FTC won a lengthy court battle and now is 

using the funds it recovered to provide more than $103,000 in refunds to consumers. 

B. Truth in Lending and Consumer Leasing: Rulemaking, Research, and Policy 

Development

 

 1. Military (Credit and Leasing)

In 2021, the FTC’s Military Task Force, which includes a cross-section of agency 

representatives, continued work on military consumer protection issues. The Task Force 

represents part of the agency’s collaborative effort to provide resources for military consumers 

and is aimed at identifying their needs and formulating initiatives to empower servicemembers, 

22 See FTC, Press Release, Operators of Student Loan Debt Relief Scheme Banned From Providing Debt Relief 

Services as Part of Settlement with FTC (May 17, 2021), available at https://www.ftc.gov/news-events/pressreleases/2021/05/operators-student-loan-debt-relief-scheme-banned-providing-debt. 

23 See id.

24 FTC v. Student Advocates Team, LLC, No. 8:19-cv-1728 (C.D. Cal. filed Sept. 11, 2019), available at 

https://www.ftc.gov/enforcement/cases-proceedings/172-3036/student-advocates-team-llc-et-al. 

25 See FTC, Press Release, FTC Sends Refund Checks to People Targeted in Computer Financing Scheme (Aug. 31, 

2021), available at https://www.ftc.gov/news-events/press-releases/2021/08/ftc-sends-refund-checks-peopletargeted-computer-financing-scheme. 

26 See id.

27 See supra note 25.
7

veterans, and their families, including through law enforcement actions. Additional information 

concerning FTC initiatives in 2021 to assist military consumers is included below.

 a. ABA Legal Assistance for Military Personnel

The FTC staff worked with the American Bar Association’s Standing Committee on 

Legal Assistance for Military Personnel (ABA LAMP or committee). The FTC serves as a 

liaison to ABA LAMP, and staff coordinates on FTC initiatives to assist military consumers, and 

provides training to servicemembers’ and veterans’ representatives in conjunction with the 

committee on consumer financial issues, including the Military Lending Act (MLA) and the 

Department of Defense (DoD) military lending rule, consumer credit and TILA-related matters, 

and consumer leasing and CLA-related matters.

 b. Department of Defense Military Lending Task Force

The FTC staff also participated in an interagency group that coordinates with the DoD on 

issues pertaining to the MLA and DoD’s military lending rule implementing the MLA, which 

includes issues related to the TILA and other credit matters.28 

C. Truth in Lending and Consumer Leasing: Consumer and Business Education 

In 2021, the FTC continued its efforts to educate consumers about issues related to 

consumer credit and lease transactions covered by, or closely related to, Regulation Z and 

Regulation M. The articles described below are all available in both English and Spanish. 

1. Automobiles Sales and Financing (Credit and Leasing)

The Commission updated a publication to provide guidance to consumers considering the 

purchase of a used car from a dealer.29 The publication provides a variety of tips, including 

about add-ons – optional products and services that can cost thousands of extra dollars and are 

often only mentioned at the end of a time-consuming day at the dealership; obtaining an 

independent vehicle inspection and considering the FTC’s Buyer’s Guide, which must be 

displayed on every used car offered for sale and also given to buyers after the sale; and 

considering payment options. The FTC also updated its publication on financing and leasing 

vehicles, providing guidance on what to consider before buying or leasing a car – including 

getting the “out-the-door” price of the car in writing before visiting the dealer’s lot and before 

discussing financing with the dealer, checking trade-in values, considering various financing 

28 The MLA requires the DoD to coordinate with several federal agencies, including the FTC, in prescribing 

regulations and not less than every two years thereafter. 10 U.S.C. § 987.

29 See Buying a Used Car From a Dealer (May 2021), https://consumer.ftc.gov/articles/buying-used-car-dealer; 

Como comprarle un carro usado a un concesionario (May 2021), https://consumidor.ftc.gov/articulos/comocomprarle-un-carro-usado-un-concesionario.
8

options, and shopping carefully for the best deal.30 It also notes differences between leasing and 

buying, and advises consumers to review the terms before signing the documents and to get a 

copy of the contract before leaving the dealership.

The FTC also released an update about car dealer ads and promotions, emphasizing the 

importance of asking the dealer to confirm if the vehicle is actually on the lot, noting that 

advertised prices might not include all fees and charges and that dealers may try to tack on addons to increase cost, and recommending that consumers get pre-approved for financing before 

working with the dealer’s financing office.31 The publication provides examples of deceptive car 

ads, including those offering very low prices, discounts, or monthly payments, and offers such as 

“$0 due at lease signing,” and advises consumers to confirm terms before visiting the dealership. 

Another publication focused on auto trade-ins and negative equity, explaining how negative 

equity can affect car values and how to effectively deal with this issue, including consulting 

independent publications on vehicle values, and considering options before purchasing, such as 

deferring a purchase until you have positive equity in the vehicle you are selling, or selling your 

current car yourself to obtain a higher price.

32 The FTC also released an updated publication 

alerting consumers that for new or used cars, salespersons might try to sell an auto service 

contract to help protect against unexpected or costly repairs, but it could duplicate coverage you 

have through your manufacturer’s warranty; it also provides additional information regarding

add-ons, including about how auto warranties differ from auto service contracts.33

2. Mortgages (Credit)

The Commission updated a mortgage article with tips on shopping for a mortgage, ways 

to prepare for getting a mortgage including getting quotes from several lenders or brokers, and 

information on what to expect after you apply for the loan.34 It includes a mortgage shopping 

30 See Financing or Leasing a Car (May 2021), https://consumer.ftc.gov/articles/financing-or-leasing-car; Como 

financiar un carro o adquirirlo en la modalidad de leasing (May 2021), https://consumidor.ftc.gov/articulos/comofinanciar-un-carro-o-adquirirlo-en-la-modalidad-de-leasing.

31 See Know Before You Go: Car Dealer Ads and Promotions (May 2021), https://consumer.ftc.gov/articles/knowyou-go-car-dealer-ads-promotions; Lo que tiene que saber sobre los anuncios y promociones de carros antes de ir al 

concesionario (May 2021), https://consumidor.ftc.gov/articulos/lo-que-tiene-que-saber-sobre-los-anuncios-ypromociones-de-carros-antes-de-ir-al-concesionario.

32 See Auto Trade-Ins and Negative Equity: When You Owe More than Your Car is Worth (May 2021), 

https://consumer.ftc.gov/articles/auto-trade-ins-negative-equity-when-you-owe-more-your-car-worth; Canje de 

carros y valor neto negative: Cuando debe mas de lo que vale su carro (May 2021), 

https://consumidor.ftc.gov/articulos/canje-de-carros-y-valor-neto-negativo-cuando-debe-mas-de-lo-que-vale-sucarro.

33 See Auto Warranties and Service Contracts (May 2021), https://consumer.ftc.gov/articles/auto-warranties-servicecontracts; Garantias y contratos de servicio para carros (May 2021), https://consumidor.ftc.gov/articulos/garantiasy-contratos-de-servicio-para-carros.

34 See Shopping for a Mortgage FAQS (May 2021), https://consumer.ftc.gov/articles/shopping-mortgage-faqs;

Preguntas frecuentes sobre como buscar, comparar y elegir una hipoteca (May 2021), 

https://consumidor.ftc.gov/articulos/preguntas-frecuentes-sobre-como-buscar-comparar-y-elegir-una-hipoteca.
9

worksheet to facilitate comparing costs and other terms of mortgage offers. Another publication 

on avoiding home improvement scams focused on signs of a scam, including scammers who 

pressure consumers for an immediate decision or suggest you borrow money from a lender they 

know, and ways to avoid the scams.35 It also advises consumers only to consider contractors 

who are licensed and insured, to check with consumer protection officials for complaints about a 

contractor and get multiple estimates, to never agree to a loan without understanding the terms 

and knowing whether one can make the payments, and to avoid transferring a deed to anyone 

without consulting an attorney, knowledgeable family member, or someone else you trust. 

3. Other Education (Credit)

The Commission updated a publication on payday and car title loans, to explain how they 

work and the high costs of these short-term loans, to highlight what to look for with these 

products, and to provide possible alternatives, such as asking creditors for more time to repay 

existing loans, getting loans from a credit union or community bank, and getting help managing 

debt.36 It also provides information on the Military Lending Act (MLA), which applies to 

various types of credit including payday loans, car title loans, personal loans, and credit cards. 

The article notes some of the MLA’s special protections for military consumers, including its 

limit on financing costs to 36%, and requirement that lenders provide military consumers with 

disclosures about your rights and financing costs. 

The FTC also issued a publication providing information to help consumers compare 

payments cards, including credit, charge, and secured credit cards with other cards.

37 The article 

describes the different types of cards, notes that they have different characteristics even those 

they may look similar, and offers tips on what to look for with each card.

III. Regulation E (the EFTA)

In 2021, the FTC had two ongoing cases pertaining to the EFTA and Regulation E. The 

Commission also engaged in research and policy work and educational activities involving the 

EFTA and Regulation E.

35 See How To Avoid a Home Improvement Scam (May 2021), https://consumer.ftc.gov/articles/how-avoid-homeimprovement-scam; Como evitar una estafa de mejoras del hogar (May 2021), 

https://consumidor.ftc.gov/articulos/como-evitar-una-estafa-de-mejoras-del-hogar.

36 See What To Know About Payday and Car Title Loans (May 2021), https://consumer.ftc.gov/articles/what-knowabout-payday-car-title-loans; Lo que hay que saber sobre los prestamos de día de pago y los prestamos con titulo de 

propiedad de un carro (May 2021), https://consumidor.ftc.gov/articulos/lo-que-hay-que-saber-sobre-los-prestamosde-dia-de-pago-y-los-prestamos-con-titulo-de-propiedad-de.

37 See Comparing Credit, Charge, Secured Credit, Debit, or Prepaid Cards (May 2021), 

https://consumer.ftc.gov/articles/comparing-credit-charge-secured-credit-debit-or-prepaid-cards.
10

A. Electronic Fund Transfers: Enforcement Actions

 1. Negative Option Cases 

One of the Commission’s cases alleging violations of the EFTA and Regulation E arose 

in the context of “negative option” plans.38 In 2021, the FTC continued litigation against the 

remaining defendants in an action that was previously reported on against Redwood Scientific, in 

which the FTC alleged that defendants engaged in a scheme that used illegal robocalls to 

deceptively market dissolvable oral film strips as effective smoking cessation, weight-loss, and 

sexual-performance aids, and enrolled consumers in auto-ship continuity plans without their 

consent, in violation of the FTC Act, the EFTA, and the TSR, among other statutes.

39 Litigation 

continued in this matter in 2021. 

 2. Other Cases 

As also described above, the FTC settled with owners and operators of a payday lending 

enterprise (Harvest Moon), resolving allegations that Harvest Moon deceptively overcharged 

consumers millions of dollars and used deceptive tactics.40 Among other things, the FTC had 

charged that the defendants continued to draw millions of dollars in payments from consumers’ 

bank accounts long after the loans’ original principal amount and stated repayment cost had been 

repaid, and until consumers completely closed their bank accounts or found some other way to 

cut off payments, violating the FTC Act and the EFTA and Regulation E, and other 

requirements.

41 In addition to the settlement terms described above, the settlement prohibits the 

defendants from making electronic fund transfers from a consumer’s bank account on a recurring 

basis without obtaining a written authorization signed or similarly authenticated from the 

consumer for preauthorized electronic fund transfers, from failing to provide the consumer with a 

38 Negative option plans can involve the use of debit cards, credit cards, or both. The EFTA and Regulation E apply 

to debit cards; the TILA and Regulation Z apply to credit cards. These can include plans where a consumer agrees 

to receive various goods or services from a company, often for a trial period at no charge or at a reduced price. The 

company also obtains, sometimes through misrepresentations, the consumer’s debit or credit card number. If the 

consumer does not cancel before the end of the trial period, the shipments of goods or provision of services 

continue, and the consumer incurs recurring charges. The EFTA and Regulation E prohibit companies from 

debiting consumers’ debit cards, or using other electronic fund transfers to debit their bank accounts, on a recurring 

basis without obtaining proper written authorization for preauthorized electronic fund transfers and without 

providing the consumer with a copy of the written authorization. 

39 See generally FTC, Enforcement, Cases and Proceedings, FTC v. Jason Cardiff (Redwood Scientific 

Technologies, Inc.), available at https://www.ftc.gov/enforcement/cases-proceedings/172-3117-x190001/jasoncardiff-redwood-scientific-technologies-inc. 

40 See FTC, Press Release, FTC Acts to Ban Payday Lender From Industry, Forgive Illegal Debt (Feb. 11, 2021), 

available at https://www.ftc.gov/news-events/press-releases/2021/02/ftc-acts-ban-payday-lender-industry-forgiveillegal-debt. 

41 See id. 
11

copy of the written authorization, and from violating the EFTA or Regulation E. 42 In addition, 

the default judgment against La Posta Tribal Lending Enterprise also permanently enjoined the 

defendant from, among other things, misrepresenting the number of payments, total payments or 

amount of interest and principal payments that will be withdrawn from any consumer’s bank 

accounts, and from violating the EFTA or Regulation E.43

As described above, the FTC filed mailed 4,505 refund checks to distribute more than 

$103,000 to people who lost money in a financing scheme that targeted customers shopping for 

computers and related electronic devices.44 The FTC’s case against BlueHippo Funding, LLC 

and affiliate BlueHippo Capital, LLC, previously reported, also alleged violations of EFTA, and 

of the FTC Act related to its promises to finance new computers, collection of money from 

customers, and failure to provide consumers with computers.45

B. Electronic Fund Transfers: Rulemaking, Research, and Policy Development

 

The FTC does not have rulemaking authority under the EFTA but in 2021 engaged in 

research and policy work that addressed EFTA-related issues. 

In 2021, the FTC issued an enforcement policy statement on negative options, warning 

companies against deploying illegal practices that trick or trap consumers into subscription 

services, and emphasizing it is ramping up enforcement in response to a rising number of 

complaints about financial harms caused by deceptive sign up tactics, including unauthorized 

charges or ongoing billing that is impossible to cancel.46 The statement notes that consumer 

suffer costs when marketers fail to make adequate disclosures, bill consumers without their 

consent or make cancellation, and that over the years, unfair or deceptive negative option 

practices have remained a persistent source of consumer harms, saddling shoppers with recurring 

payment for products and service they did not intend to purchase or did not want to continue to 

42 See FTC v. Lead Express, Inc., No. 20-cv-00840 (D. Nev. Apr. 1, 2021 (stipulated order for permanent injunction 

and monetary judgment as to defendants Lead Express Inc., Camel Coins, Inc., Sea Mirror, Inc., Naito Corp., 

Kotobuki Marketing, Inc., Ebisu Marketing, Inc., Hotel Marketing, Inc., Daikoku Marketing, Inc., Takehisa Naito, 

and Keishi Ikeda). 

43 See supra note 17.

44 See generally supra note 25.

45 See generally supra note 25.

46 See FTC, Press Release, FTC to Ramp up Enforcement against Illegal Dark Patterns that Trick or Trap 

Consumers into Subscriptions (Oct. 28, 2021), available at https://www.ftc.gov/news-events/pressreleases/2021/10/ftc-ramp-enforcement-against-illegal-dark-patterns-trick-or-trap.

In 2021, the FTC held a forum on digital “dark patterns,” a term used to describe a range of potentially manipulative 

user interface designs used on websites and mobile apps. See Bringing Dark Patterns to Light: An FTC Workshop 

(Apr. 29, 2021), available at https://www.ftc.gov/news-events/events/2021/04/bringing-dark-patterns-light-ftcworkshop. A webcast and event materials are available at that site.
12

purchase.47 It addresses statutes and regulations applicable to negative option programs on 

which the FTC’s enforcement actions against these programs primarily rely, including EFTA’s 

prohibition on the imposing of recurring charges on a consumer’s debit card or bank account 

without written authorization.48 It also puts companies on notice that they will face legal action 

if their sign-up process fails to provide clear, up-front information, obtain consumer’s informed 

consent, and make cancellation easy.49

The FTC also worked with the DoD interagency group and with ABA LAMP as 

discussed above, on electronic funds transfer issues. Among other things, the FTC staff 

coordinated with the DoD interagency group on issues related to preauthorized electronic fund 

transfers in the military lending rule. The FTC also provided input to ABA LAMP, and 

conducted trainings for judge advocates general and others in conjunction with ABA LAMP 

trainings, on EFTs, FTC cases in this area, and the EFTA requirements. 

 

C. Electronic Fund Transfers: Consumer and Business Education 

The FTC’s article on payment cards, described above, also provides information about 

debit and prepaid cards. It includes guidance on how these cards differ from other cards such as 

credit, charge or secured credit cards and important considerations for each type of card.50

* * * *

47 See FTC, Enforcement Policy Statement Regarding Negative Option Marketing (Enforcement Policy Statement), 

86 Fed. Reg. 60822 (Nov. 4, 2021), available at https://www.govinfo.gov/content/pkg/FR-2021-11-04/pdf/2021-

24094.pdf. Commissioner Phillips issued a concurring statement, and Commissioner Wilson issued a dissenting 

statement, in this matter. See Concurring Statement of Noah Joshua Phillips, 86 Fed. Reg. at 60826, and Dissenting 

Statement of Christine S. Wilson, 86 Fed. Reg. at 60826-27, both available at 

https://www.govinfo.gov/content/pkg/FR-2021-11-04/pdf/2021-24094.pdf, respectively.

48 Id.

49 See supra note 47.

50 See supra note 37.
13

We hope that the information discussed above responds to your inquiry and will be useful 

in preparing the CFPB’s Annual Report to Congress.51 Should you need additional assistance, 

please contact me at (202) 326-2972, or Carole Reynolds at (202) 326-3230.

Sincerely,

Malini Mithal

Associate Director

Division of Financial Practices

51 Your letter also requests information regarding compliance by credit card issuers with the Federal Trade 

Commission Act (FTC Act). The Commission does not have jurisdiction over banks or federal credit unions, and in 

2021, the Commission did not have enforcement or other activity regarding compliance with the FTC Act by 

nonbank credit card issuers over which it has jurisdiction.