FTC Testifies on Efforts to Protect Consumers of Financial Services; Urges New Tools for Stronger Enforcement Authority

The Federal Trade Commission today told the U.S. House Subcommittee on Commerce, Trade and Consumer Protection of the Committee on Energy and Commerce that the FTC will continue protecting consumers from predatory lending and other illegal practices through all stages of the credit life-cycle, from advertising of credit through collection of debt. The FTC also recommended legislative and other remedies to enhance the agency’s effectiveness.

FTC Chairman Jon Leibowitz testified about the Commission’s stepped-up law enforcement efforts to protect consumers of financial services – especially consumers in financial distress. The agency has targeted unfair, deceptive, or otherwise unlawful mortgage lending and credit offers. The FTC also has taken action against creditors and loan servicers who misrepresent fees and amounts owed when they collect payments from consumers who are current on their debts. For consumers who are delinquent or in default on their debts, the Commission provides protection from mortgage foreclosure “rescue” scams, bogus credit repair and debt settlement operations, and abusive and deceptive debt collection practices.

The testimony described the FTC’s consumer protection work in consumer and business outreach, and its broad-based research and policy development efforts. To allow the agency to perform a greater and more effective role in protecting consumers, the Commission’s testimony recommended that Congress:

• Permit the FTC to use “notice and comment” rulemaking procedures to declare acts and practices relating to financial services to be unfair or deceptive in violation of the FTC Act;
• Authorize the FTC to obtain civil penalties for unfair or deceptive acts and practices related to financial services and authorize the agency to bring suit in federal court to obtain civil penalties;
• Provide additional resources to assist the FTC in increasing its law enforcement activities related to financial services and expanding its critical research on the efficacy of disclosures and other topics; and
• Ensure that, because of the Commission’s unequaled and comprehensive focus on consumer protection, its independence from providers of financial services, and its emphasis on vigorous law enforcement, the FTC is considered as Congress moves forward in determining how to modify federal oversight of consumer financial services.

The Commission vote authorizing presentation of the testimony and its inclusion in
the formal record was 4-0.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(Financial Testimony)