Sarin study finds interventions in credit and overdraft markets increased consumer welfare but interventions in debit market decreased it

Natasha Sarin of Penn has written Making Consumer Finance Work. Here's the abstract:

The financial crisis exposed major faultlines in banking and financial markets more broadly. Policymakers responded with far-reaching regulation that created a new agency—the CFPB—and changed the structure and function of these markets. 

Consumer advocates cheered reforms as welfare-enhancing, while the financial sector declared that consumers would be harmed by interventions. With a decade of data now available, this Article presents the first empirical examination of the successes and failures of the consumer finance reform agenda. Specifically, I marshal data from every zip code and bank in the United States to test the efficacy of three of the most significant post-crisis reforms: in the debit, credit, and overdraft markets. 

The results of my analysis are surprising. Despite cosmetic similarities, these reforms had very different outcomes. Two (changes in the credit and overdraft markets) increase consumer welfare, while the other (in the debit market) decreases it. These findings run counter to prior work by prominent legal scholars and push us to reevaluate our (mis)conceptions about the efficacy of regulation. 

The empirical evidence leads me to novel insights for regulatory design. First, banks regularly levy hidden fees on consumers, obscuring the true cost of financial products. Regulators should restrict such practices. Second, consumer finance markets are regressive: low-income customers pay higher prices than their higher-income counterparts. Regulators should address this inequity. Finally, profit-maximizing banks will always discourage regulation by promising its costs will be passed through to consumers. Regulators should not be overly swayed by their dire warnings.

New Report from U.S. PIRG Education Fund and the Frontier Group on Auto Lending

Today, my colleagues at U.S. PIRG Education Fund and the Frontier Group released a new report, “Driving Into Debt: The Hidden Cost of Risky Auto Loans to Consumers and Our Communities.”

According to the executive summary (emphasis in original):

In much of America, access to a car is all but required to hold a job or lead a full and vibrant life. Generations of car-centric transportation policies – including lavish spending on roads, sprawl-inducing land use policies, and meager support for other modes of transportation – have left millions of Americans fully dependent on cars for daily living.

Car ownership is costly and often requires households to take on debt. In the wake of the Great Recession, Americans rapidly took on debt for car purchases. Since the end of 2009, the amount of money Americans owe on their cars has increased by 75 percent. A significant share of that debt has been incurred by borrowers with lower credit scores, who are particularly vulnerable to predatory loans with high interest rates and inflated costs.

Americans’ rising indebtedness for cars raises concerns for the financial future of millions of households. It also demonstrates the real costs and risks imposed by our car-dependent transportation system. Americans deserve protection from predatory loans and unfair practices in auto lending. Americans also deserve a transportation system that provides more people with the freedom to choose to live without owning a car.

The full report is available here. The full executive summary is available here. The news release is available here.

FTC reports increase in romance scams

Scammers who use love to target consumers can take both an emotional and a financial toll on their victims. New complaint data from the Federal Trade Commission shows romance scams generated more reported losses than any other consumer fraud type reported to the agency in 2018.

The FTC reports that romance scammers "often find their victims online through a dating site or app or via social media. These scammers create phony profiles that often involve the use of a stranger’s photo they have found online. The goals of these scams are often the same: to gain the victim’s trust and love in order to get them to send money through a wire transfer, gift card, or other means."

The number of romance scams reported to the FTC exceeded 21,000 in 2018, representing losses totaling $143 million. The median reported loss was $2,600; for people 70 and over, the median loss was $10,000.

The FTC's report is here.

Study finds increase in people behind on auto loans

Seven million Americans are at least 90 days behind on payments for automobile loans, according to a study by the Federal Reserve Bank of New York. According to the study, more people are now delinquent or late on loan payments than at the height of the 2008 financial crisis.

A blog post by the study's authors is here. The Hill summarizes the report, here.

NYT: "Trump’s Payback for Payday Lenders"

A New York Times editorial today addresses the proposal by the Consumer Financial protection Bureau to gut the Bureau's own rule protecting low-income borrowers from predatory practices of payday lenders. As the NYT put it, "The federal Consumer Financial Protection Bureau betrayed financially vulnerable Americans last week by proposing to gut rules conceived during the Obama era that shield borrowers from predatory loans carrying interest rates of 400 percent or more."

The editorial explains that "voluminous data collected by the consumer protection bureau showed that the industry’s business model — in which a $500 loan could cost a borrower $75 or more in interest just two weeks later — was built on the presumption that customers would be unable to pay at the appointed time and would be forced to run up the tab by borrowing again."

The editorial suggests that the CFPB's "s abdication of its mandate to protect consumers underscores the need for state usury laws, which have passed in 16 states and offer the surest path to curtailing debt-trap lending."

The full editorial is here. The CFPB's proposed rule is here. 

Consumer Warning: Copyright Trolling by Higbee and Associates

Over the past few years, the law firm Higbee and Associates (based in Los Angeles, although it pretentiously labels itself a "National Law Firm") has become identified with a pattern of making aggressive and, in many cases, unsupportable demands for the payment of significant sums of money by individuals and nonprofits whose web sites feature copyrighted graphics, and especially photographs, that they saw online but have never tried to license. The firm’s principal, Mathew Higbee, revels in his reputation for aggressive enforcement. (The interview linked above, for example, is featured on his own firm’s web site.)

Either in concert with a specialized search firm or using his own firm’s software, this firm patrols the Internet looking for graphics (especially photographs) that have been copied improperly from online sources. The firm then sends a demand letter bearing Higbee's signature, threatening to seek up to $150,000 in statutory damages as well as attorney fees unless the target of the letter promptly agrees to pay a specified amount. Deploying a tactic that is all too familiar from the depredations of Evan Stone and Prenda Law, the specified amount is low enough – usually in the low four figures, but I have seen high three figures as well —that it is not likely to be cost-effective for the target to hire a knowledgeable copyright lawyer to litigate an infringement lawsuit, even if the claim is bunk or, at least, if there is good reason to believe that the claim can easily be defended. The letter encloses a document identifying the allegedly infringing use as well as the online location where the work was found; another document that purports to authorize the firm to represent the copyright holder in seeking damages in connection with the work; a proposed “settlement agreement”; and a credit card payment form. If the target of the letter does not respond, or responds without agreeing to pay, then the Higbee firm increases the pressure: a non-lawyer who calls herself a “claim resolution specialist” sends an email warning that the claim is going to be “escalated to the attorneys,” at which point “[t]claim gets more stressful and expensive,” and an assurance that “my goal is to not let that happen to you.”

The documents linked above all relate to a single Higbee demand to a single target, but I have seen a number of other demand letters and ensuing emails from this firm, and spoken to several other copyright lawyers who have helped clients respond to Higbee’s blustering and threats, and it appears to me that these are pretty standard exemplars. Indeed, when I was reaching out to some other copyright lawyers to try to get their sense of some of the documents I was reviewing, a number of them guessed that it was Higbee based only on what I said I wanted to ask about, based on work they had done for their clients trying to address his threats against them. Plainly, this is a copyright troll with an outsized reputation.

CFPB proposes to drop protections for low-income borrowers

In 2017, the Consumer Financial Protection Bureau issued a rule to protect borrowers from payday lending practices that harmed consumers. Today it proposed to eliminate several important protections that it earlier adopted to prevent industry practices from trapping low-income people in cycles of debt. I have not yet had a chance to read proposal in full. The CFPB's announcement, with a link to the proposed rule, is here. Coverage by the Washington Post is here.

Ninth Circuit Strikes Down San Francisco Soda Warnings

In an en banc decision late last week, the U.S. Court of Appeals for the Ninth Circuit held that a San Francisco ordinance requiring ads for sugar-sweetened beverages to warn of the link between overconsumption and obesity violates the First Amendment.

The decision indicates that the Supreme Court's decision last term in National Institute of Family and Life Advocates v. Becerra, which struck down California's disclosure requirements applicable to clinics that offer some pregnancy-related services but not others, is likely to have significant effects on cases involving more traditional commercial speech disclosure requirements.

Although the Ninth Circuit stated that Becerra did not change the law applicable to commercial speech disclosure requirements, the court held that the decision did require it to strike down San Francisco's requirements as unduly burdensome.

The decision is likely to prompt more challenges to government mandated health and safety warnings benefiting consumers.

U. of Chicago Summer Institute in Law & Economics: Regulation of Consumer Markets

It includes lectures by Omri Ben-Shahar on economic analysis of consumer protection law and Jonathan Masur on the behavioral law & economics of consumer choice. More here.

CFPB settles deceptive marketing case with payday lenders (for $0)

The Consumer Financial Protection Bureau today filed a proposed settlement with several payday lenders: NDG Financial Corp., E-Care Contact Centers, Ltd., Blizzard Interactive Corp., New World Consolidated Lending Corp., New World Lenders Corp., Payroll Loans First Lenders Corp., New World RRSP Lenders Corp., Northway Financial Corp., Ltd., and Northway Broker, Ltd., as well as several corporate officials.

The CFPB alleges that the defendants, all based in Canada and Malta, violated the Consumer Financial Protection Act "by misrepresenting to consumers in states where loans offered by the defendants violated state licensing or usury laws that they were obligated to repay loan amounts when such an obligation did not exist because state law voided the loan." The defendants also misrepresented that the loan agreements were not subject to United States federal or state law; misrepresented that non-payment of debt would result in lawsuits, arrests, imprisonment, or wage garnishment; and conditioned loan agreements upon irrevocable wage assignment clauses, which the Bureau alleges violated the Credit Practices Act.

Under the agreement, the defendants are permanently barred from advertising, marketing, promoting, offering, originating, servicing, or collecting any consumer loan issued to any consumer residing in the United States.

The defendants will pay no monetary penalty.

CFPB issues $1 fine for scamming veterans

I missed this last week: The Consumer Financial Protection Bureau settled a case against Mark Corbett, a broker of contracts offering high-interest credit to veterans. The CFPB explained that it "found that Corbett violated the Consumer Financial Protection Act of 2010 by misrepresenting to consumers that the contracts he facilitates are valid and enforceable when, in fact, the contracts are void because veterans’ pension payments are unassignable under federal law; misrepresenting to consumers that the offered product is a purchase of payments and not a high-interest credit offer; misrepresenting to consumers when they will receive their funds; and failing to disclose to consumers the applicable interest rate on the credit offer."

The penalty for this string of wrongdoing? Corbett agreed not to broker, offer, or arrange "agreements between veterans and third parties under which the veteran purports to sell a future right to an income stream from the veteran’s pension." And he will pay a civil penalty of $1.00.

Hmm. $1.00.

As the Center for Responsible Lending noted, this agreement came a few days after CFPB Director Kraninger announced that the CFPB will not monitor lenders to verify compliance with the Military Lending Act--a law that protects military servicemembers and their dependents from predatory loans.

Important Decision from the Illinois Supreme Court Protecting Consumer Privacy

Can a consumer sue if a company took that consumer’s biometric information without first getting the consumer’s informed consent? Yes, said the Illinois Supreme Court in a January 25, 2019 unanimous opinion in Rosenbach v. Six Flags Entertainment Corporation. This decision is a clear win for consumer privacy. (Disclosure: I served as co-counsel on an amicus brief filed in the case on behalf of Illinois PIRG Education Fund, the ACLU, the ACLU of Illinois, the Center for Democracy & Technology, the Chicago Alliance Against Sexual Exploitation, the Electronic Frontier Foundation, and Lucy Parsons Labs.)

At issue in the case was how to interpret the word “aggrieved” in Illinois’ Biometric Information Privacy Act (BIPA). The statute creates an express private right of action for “[a]ny person aggrieved by a violation of this Act.” The law prohibits private entities from collecting a person’s biometric information (like a fingerprint) unless it first informs the individual in writing that biometric information will be collected, the specific purpose for the collection, the length of time that the information will be stored, and receives a written release from the individual. In Rosenbach, there was no question that Six Flags had collected the plaintiff’s thumbprint without getting informed consent, but the plaintiff did not allege any harm beyond the violation of his statutory privacy rights.

BIPA does not define “aggrieved,” so the court looked to the definition that was “embedded in [Illinois’] jurisprudence when the Act was adopted”—to be “aggrieved . . . simply ‘means having a substantial grievance; a denial of some personal or property right.” In the court’s opinion, this definition is consistent with the “plain and ordinary meaning” of “aggrieved,” which one dictionary defined as “suffering from an infringement or denial of legal rights.”

According to the court, the Illinois legislature, when it passed BIPA, “codified that individuals possess a right to privacy in and control over their biometric identifiers and biometric information.” The court found that arguing that such violations of the law are merely “technical” in nature “misapprehends the nature of the harm [the Illinois] legislature is attempting to combat through this legislation.” The loss of the individuals’ right to maintain his or her biometric privacy is a “real and significant” injury and is not a mere “technicality.”

In addition, the court concluded that its reading of the statute was also supported by the legislature’s identification of the “risks posed by the growing use of biometrics by businesses and the difficulty in providing meaningful recourse once a person’s biometric identifiers or biometric information has been compromised.” Thus, the strategy pursued by the legislature was to “head off such problems before they occur.”

Importantly, the court noted that subjecting private entities that fail to follow the statute’s requirements to “substantial potential liability” is integral to the implementation of the legislature’s objectives. Other than a private right of action, no other enforcement mechanism is available. Thus, “[i]t is clear that the legislature intended for this provision to have substantial force.”

This passage highlights the court’s reasoning particularly well:

When private entities face liability for failure to comply with the law’s requirements without requiring affected individuals or customers to show some injury beyond violation of their statutory rights, those entities have the strongest possible incentive to conform to the law and prevent problems before they occur and cannot be undone. Compliance should not be difficult; whatever expenses a business might incur to meet the law’s requirements are likely to be insignificant compared to the substantial and irreversible harm that could result if biometric identifiers and information are not properly safeguarded; and the public welfare, security, and safety will be advanced. That is the point of the law. To require individuals to wait until they have sustained some compensable injury beyond violation of their statutory rights before they may seek recourse, as defendants urge, would be completely antithetical to the Act’s preventative and deterrent purposes.

The full opinion is available here. Additional commentary from the Electronic Frontier Foundation is available here and from the Center for Democracy & Technology is available here.

New article on class-action "ascertainability"

Law prof Rhonda Wasserman has written Ascertainability: Prose, Policy, and Process. "Ascertainability" is a judge-made doctrine about, among other things, whether a would-be class representative must prove that there is an administratively feasible means of identifying class members before the court may certify a case as a class action. Here's the abstract:

One of the most hotly contested issues in class action practice today is ascertainability – when and how the identities of individual class members must be ascertained. The courts of appeals are split on the issue, with courts in different circuits imposing dramatically different burdens on putative class representatives. Courts adopting a strict approach require the class representative to prove that there is an administratively feasible means of determining whether class members are part of the class. This burden may be insurmountable in consumer class actions because people tend not to save receipts for purchases of low-cost consumer goods, like soft drinks and snacks and have no other objective proof of their membership in the class. Thus, in circuits adopting the strict approach, class certification may be denied, whereas in other circuits, the same class may be certified. Notwithstanding the circuit split on this critical issue, the Supreme Court has denied several petitions for writs of certiorari raising the issue; the Senate has failed to act on a bill passed by the House to address it; and the Advisory Committee has placed the issue on hold. Given the current state of disuniformity and the resultant inequitable administration of the laws, the time is ripe to address the issue. 

Ascertainability is not only of great practical importance, but it is interesting on three different levels. First, there is a question of prose – whether the text of the Rule supports the implication of the strict ascertainability requirement. Second, there is a question of policy – whether concern for the class action defendant, the absent class members, or the trial court overseeing the action justifies imposition of the strict requirement, notwithstanding its harsh impact on consumer class actions. Third, there is a process question: which governmental actor – the lower courts, the Supreme Court, the Advisory Committee on Civil Rules, or Congress – has the greatest institutional competency to resolve the policy issue and establish a uniform approach to ascertainability. This Article addresses each of these questions in turn.

 

Bayer supplement class action headed for jury trial in under a month

By Stephen Gardner

The Bayer case (for Bayer's widespread deceptions about One-A-Day vitamins), where I was lead counsel until I left private practice (to set up an expert consulting practice), is set for jury trial February 19.

As far as I know, this is one of the few (if not the only) supplement fraud class actions to make it to trial, and it’s a doozy. For background on the case, see this CSPI press release.

In a Minutes Order issued on January 22, 2019, the Court ruled on several pending motions, most of them specious efforts by Bayer to avoid trial.

In this order the Court recognizes that “[g]iven the structure and requirements of the consumer protection claims at issue in this case, utilizing a presumption of reliance based on materiality and the need (for some of the claims only) to show reliance, there is no disconnect with the 'full refund' damages model and no Comcast problem.”

It is very significant that the Court agrees that it’s possible to presume reliance because the claims are material. And Court’s acceptance of the “full refund” damages model is also very good. This avoids needing an expert to parse out class damages, because the product is effectively worthless for most people.

Congratulations to Plaintiffs’ counsel at Stanley Law Group (my old firm), Tillotson Law, and Kaplan Fox on their victory in getting this case to trial!

Benoliel & Becher Paper on the Unreadability of Web Site Sign-In Wrap Contracts

Uri Benoliel of the College of Law and Business - Ramat Gan Law School and Shmuel I. Becher of the Victoria University of Wellington have written The Duty to Read the Unreadable. Here's the abstract:

The duty to read doctrine is a well-recognized building block of U.S. contract law. Under this doctrine, contracting parties are held responsible for the written terms of their contract, whether or not they actually read them. The application of duty to read is especially interesting in the context of consumer contracts, which consumers generally do not read. 

Under U.S. law, courts routinely impose this doctrine on consumers. However, the application of this doctrine to consumer contracts is one-sided. While consumers are excepted to read their contracts, suppliers are generally not required to offer readable contracts. This asymmetry creates a serious public policy challenge. Put simply, consumers might be expected to read contracts that are, in fact, rather unreadable. This, in turn, undermines market efficiency and raises fairness concerns. 

Numerous scholars have suggested that consumer contracts are indeed written in a way that dissuades consumers from reading them. This Article aims to empirically test whether this concern is justified. The Article focuses on the readability of an important and prevalent type of consumer agreements: the sign-in-wrap contract. Such contracts, which have already been the focal point of many legal battles, are routinely accepted by consumers when signing up for popular websites such as Facebook, Amazon, Uber, and Airbnb. 

The Article applies well-established linguistic readability tests to the 500 most popular websites in the U.S. that use sign-in-wrap agreements. We find, among other things, that effectively reading these agreements requires, on average, more than 14.5 years of education. This result is troubling, given that the majority of U.S. adults read at an 8th-grade level. These empirical findings hence have significant implications for the design of consumer contract law.

Do really high prescription drug prices violate the antitrust laws?

Our readers might be interested in Excessive Drug Pricing as an Antitrust Violation by law prof Harry First. Here is the abstract:

It is nearly four years since Martin Shkreli bought an off-patent drug named Daraprim and raised its price overnight by nearly 5500%. Public outcry was intense and Shkreli became the poster-child for excessive drug pricing. But his drug was not the only example of excessive price increases. Indeed, the excessively high prices of numerous pharmaceutical drugs has become a matter of intense public policy debate. High prices have been condemned by presidential candidates, by members of congress, by the President, and by federal bureaucrats. Effective federal action has not materialized, so states have tried to fill the gap. So far, though, either the proposals have made little sense or, even if sensible and adopted, have had little effect.

One might think that antitrust would be on the list of public policy tools to wield against high pharmaceutical prices, but it's not. This is because of the conventional wisdom that the antitrust laws do not forbid high prices simpliciter. In this Article I argue that we are not condemned to that result. Closer examination of prior efforts to deal with excessive prices in other areas of the economy shows a willingness to take on excessively high prices, at least where the seller is exploiting what might be a temporary power to raise prices of much-needed products. Further, closer examination of antitrust case law shows that there is no direct precedent barring the courts from finding that raising prices to an excessive level is conduct that violates Section 2 of the Sherman Act. Indeed, decisions in the area of licensing of standard essential patents come close to condemning such pricing.

 

Unconventional mortgages make a comeback

The Wall Street Journal reports today that "[l]enders are turning to borrowers with harder-to-document finances, helping growth in the kind of home loans panned for role in housing meltdown." The article is here. (Subscription may be required.)

More Americans without health insurance

Reporter Sarah Kliff explains that "[u]nder Trump, the number of uninsured Americans has gone up by 7 million," while Gallup has found that the "U.S. Uninsured Rate Rises to Four-Year High," at least in part because of Trump Administration policy changes.

State attorneys general urge FDIC to protect consumers from predatory loans

Today, 14 state attorneys general submitted a comment to the Federal Deposit Insurance Corporation in response to the FDIC's request for comment on small-dollar lending. The attorneys general urged the FDIC to ensure consumers are protected from high-interest predatory small dollar loans.

The letter is here.

Shutdown's effects on finances of federal workers

Politico reports that on the effects of the government shutdown on federal workers, some of whom are turning to installment loans, car title loans, and payday cash advances, which charge exorbitantly high interest. Others are making payments late, risking long-term damage to their credit scores. The article is here.

California payday lender settles predatory lending allegations

In a consent order with California's Department of Business Oversight, a payday lender called California Check Cashing Stores agreed to refund about $800,000 to consumers, to settle allegations that it steered borrowers into high-interest loans and engaged in other illegal practices. It also agreed to pay $105,000 in penalties and other costs. The settlement involves alleged violations regarding administration of payday loans, which are capped at $300, and the steering of borrowers into consumer loans of more than $2,500 to avoid the state rate caps.

The Los Angeles Times article is here.

CNN.com Op-Ed:Congress should follow California's lead in protecting consumers

by Jeff Sovern

My latest, here. The conclusion:

When it comes to these varied privacy problems, Congress has somehow managed to be both comatose and angry. Given its inability to respond nimbly in the rapidly shifting privacy arena, Congress should avoid hamstringing those who can. Any federal privacy law should preserve the power of states to protect consumers so states can continue experimenting and respond quickly to privacy challenges. Congress should also increase the FTC's budget and give the Commission the power to issue regulations. Congress should follow California's lead in obliging companies to tell consumers upon request what they know about them and what they do with the information. If Congress cannot help, it at least should not make things worse.

Holding Facebook Accountable

According to a recent story from Tony Romm and Elizabeth Dwoskin at the Washington Post, “U.S. regulators have met to discuss imposing a record-setting fine against Facebook” for violating a 2011 consent decree that settled charges that Facebook deceived consumers with regard to its privacy policies and practices. In March 2018, the Federal Trade Commission confirmed that it had an “open non-public investigation” into Facebook’s privacy practices. That investigation was prompted, in large part, by the Cambridge Analytica scandal. According to the reporting:

The FTC’s exact findings in its Facebook investigation and the total amount of the fine, which the agency’s five commissioners have discussed at a private meeting in recent weeks, have not been finalized, two of the people said. Staff has briefed the commissioners about their probe, the third person said, and plan to issue a formal recommendation for a fine soon — a move that would then trigger a vote by the commissioners.

The full story is available here.

Jacob Hale Russell Paper Shows Death of Unconscionablity Doctrine is Greatly Exaggerated

Jacob Hale Russell of Rutgers and Stanford's Arthur & Toni Rembe Rock Center for Corporate Governance has written Unconscionability's Greatly Exaggerated Death. Here is the abstract:

Reports of unconscionability’s demise are greatly exaggerated. According to conventional wisdom, the common-law contracts doctrine is rarely used, except in limiting clauses that purport to waive consumers’ remedial rights. In fact, as this Article documents, the doctrine is quietly flourishing: courts are using it to strike down substantive terms, including interest rates, in consumer finance contracts. In recent years judges across the country have rewritten or voided payday loans, signature loans, overdraft fees, and mortgage contracts on the grounds that their interest rates or other core terms were unconscionably unfair. 

Since unconscionability is alive and well, the time is ripe to answer an unexplored question in the doctrine’s contours. How tailored should the unconscionability analysis be to the characteristics of a particular consumer entering into a contract, versus untailored to the typical, median, or “reasonable” consumer? This Article advances an argument in favor of tailoring unconscionability. In addition to consistency with unconscionability’s theoretical underpinnings, tailoring brings the doctrine in line with modern contracting practices. Today’s consumer contracts involve increasing market segmentation, individualized pricing, and customization of terms, in stark contrast to the stylized view of boilerplate that most scholars take for granted. Unconscionability can thus play an important role in consumer protection policy, which faces the challenge that consumers are highly heterogeneous and need different protections. Courts have a particular edge here: they specialize in individualized fact-finding, in contrast to regulations, which are generally one-size-fits-all.

CFPB and NY settle with Sterling Jewelers over enrolling customers in credit cards without the customers' consent

The State of New York and the Consumer Financial Protection Bureau (which is not shut down) yesterday settled claims against Sterling Jewelers, based on findings that that the company violated the Consumer Financial Protection Act of 2010 by opening store credit-card accounts without customer consent; enrolling customers in payment-protection insurance without their consent; and misrepresenting to consumers the financing terms associated with the credit-card accounts. The CFPB also found Truth in Lending Act violations, based on Sterling signing customers up for credit-card accounts without having received an oral or written request or application from them.

Under the settlement, the company will pay a $10 million civil money penalty to the CFPB and a $1 million civil money penalty to New York. The settlement also includes injunctive relief designed to prevent the continuation of the wrongdoing.

The consent order is here.

So apparently Wells Fargo is not the only company to sign people up for accounts without consent. The scope of wrongdoing by Wells Fargo, and the penalty, were of course much larger.