Markets Wired

The Federal Trade Commission testified today before the U.S. Senate Committee on Commerce, Science, and Transportation about the agency’s increased focus on protecting consumers in financial distress. The testimony described the FTC’s stepped-up law enforcement and consumer education efforts addressing mortgage foreclosure rescue scams, bogus debt relief and credit repair services, and unlawful debt collection. The FTC also recommended legislative and other remedies to enhance the agency’s effectiveness.

Commission testimony, delivered by Commissioner Pamela Jones Harbour, stated that with so many Americans struggling financially the FTC has increased its focus on preventing harm to those who are already in debt. The FTC is engaged in efforts to thwart abusive debt collectors, deceptive credit repair and debt settlement firms, and mortgage foreclosure scam artists who target consumers who are delinquent or in default. The Commission testimony also discussed the agency’s efforts against brokers, lenders, and others who made deceptive credit offers, and creditors and loan servicers who misrepresent fees and amounts owed.

The testimony noted that today the Commission is issuing its debt collection workshop report, which takes a comprehensive look at how the debt collection industry has changed in the past 30 years and recommends changes in the law to modernize and reform the debt collection regulatory system.

To enhance the FTC’s ability to protect consumers in the financial services marketplace, the testimony made the following recommendations:

• Permit the FTC to employ 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;
• Authorize the FTC to issue rules to implement the Fair Debt Collection Practices Act; and
• Provide additional resources to assist the FTC in increasing its law enforcement activities related to consumer financial services and expanding its critical empirical work on the efficacy of disclosures.

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)