FTC Takes Action Against Deceptive Junk Fees
Payment Fintechs
Compliance Operations
May 31, 2024
The Case
The FTC recently took action against a bill payment company and its co-founders, accusing them of deceptive “junk fee” practices that harmed consumers. The FTC’s complaint alleges that the firm used misleading search ads and deceptive designs to conceal millions of dollars in “junk fees.”
The complaint also outlines the firm's “deceptive” process for signing up consumers for its recurring subscription program. It notes that, until February 2024, after learning of the FTC’s proposed complaint, the company automatically checked the box to sign up consumers when they clicked to read a “terms of service” document.
Why Does This Matter?
The action shows the agency’s focus on holding companies accountable for imposing “junk fees” on consumers. It aligns with the FTC’s recently proposed rule to ban junk fees.
InnReg's Experience
For over 10 years, InnReg has assisted fintechs in reviewing their fee structures and related disclosures and adhering to strict reporting and recordkeeping requirements to ensure they do not create regulatory risk.
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RIAs
The SEC recently brought settled enforcement actions against two registered investment advisers for failing to establish, maintain, and enforce written policies and procedures reasonably designed to prevent the misuse of material nonpublic information (MNPI), in violation of Section 204A of the Investment Advisers Act of 1940 (Advisers Act) and the Compliance Rule.
RIAs
On Sep. 4, 2024, FinCEN published a final rule (Final Rule) adding certain RIAs and ERAs (collectively, Covered Advisers) to the definition of “financial institution” under the regulations implementing the BSA, and imposing on Covered Advisers broad AML and CFT program requirements, as well as other BSA recordkeeping and reporting requirements.
Broker-Dealers
On November 22, the SEC announced (here) that broker-dealers Webull Financial LLC, Lightspeed Financial Services Group LLC, and Paulson Investment Company, LLC agreed to settle charges that they filed with law enforcement SARs that failed to include required information.