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The Roundup: CFPB Details BNPL and EWA Supervision, MA AG Issues Historic $165M Penalty, and OCC UDAAP Red Flags

PerformLine
January 22, 2025
Welcome to the PerformLine Regulatory Roundup, home of the latest news, articles, and reports from our industry, curated for you.

Welcome to the PerformLine Regulatory Compliance Roundup, home of the latest news, articles, and reports from our industry, curated for you. Let’s get into it.

In this edition: The CFPB details BNPL and EWA supervision for the first time, FTC and NY AG take action against gig economy company for deceiving workers, MA Superior Court orders health insurance companies to pay $165M for deceptive sales practices, CFPB releases recommendations to increase state-level consumer protection, FTC finalizes order with tax preparation company requiring them to overhaul advertising practices, and getting out ahead of OCC UDAAP compliance red flags.

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The CFPB Details BNPL and EWA Supervision for the First Time

The Consumer Financial Protection Bureau (CFPB) has published its first supervisory review of buy now, pay later (BNPL) and earned wage access (EWA) services, revealing several concerning practices in these popular payment options.

The report indicates that some BNPL providers have failed to meet advertised terms, resulting in consumer complaints about delays in dispute resolution and misleading advertisements. Additionally, there are issues with unfairly denying consumers payment options. EWA providers were also found to engage in potentially deceptive tipping practices and to complicate account closure processes for users. In light of these findings, some companies have begun issuing refunds and improving their monitoring systems and marketing strategies.

FTC and New York Attorney General Take Action Against Gig Economy Company for Deceiving Workers About Potential Earnings

A major gig economy platform in the home services sector has faced legal action from the Federal Trade Commission (FTC) and New York Attorney General for allegedly misleading workers about earnings potential and failing to disclose fees adequately.

The company was accused of advertising unrealistic pay rates and imposing hidden fines on workers, including penalties for client-canceled jobs. As part of a proposed settlement, the firm has agreed to pay $2.95 million in worker refunds and implement more transparent practices regarding fees, fines, and earnings claims.

Significant Stat: 49%: Out of the 39 finalized marketing compliance enforcement actions in Q4 2024, almost half (49%) came from state regulators across 13 different states. Read more

Massachusetts Superior Court Orders Health Insurance Companies To Pay Over $165 Million For Deceptive Sales Scheme

The Massachusetts Superior Court ordered three health insurance companies to pay over $165 million for deceptive sales practices that cheated consumers. The companies misled consumers about the objectivity of sales agents, deceptively bundled major medical and supplemental insurance products, and violated a previous consent judgment. These practices particularly affected financially vulnerable individuals, leading to widespread consumer harm across the state.

CFPB Releases New Recommendations to Strengthen State-Level Consumer Protections

The CFPB has released guidance to help states strengthen consumer financial protections, focusing on addressing modern market challenges like junk fees, data privacy, and abusive practices.

The report provides recommendations and potential legislative text to support state-level enforcement of consumer financial laws, emphasizing the importance of federal-state partnerships in protecting consumers from emerging market risks and predatory practices.

FTC Finalizes Order with Tax Preparation Company, Requiring Them to Pay $7 Million and Overhaul Advertising and Customer Service Practices

The FTC has finalized an order against a major tax preparation company, requiring them to pay $7 million and implement significant changes to their practices. The company was charged with deceptive advertising and making it difficult for users to downgrade products. The settlement mandates that they provide clear downgrade options, preserve user data during product changes, and accurately represent “free” tax filing eligibility.

Get Ahead of the OCC’s UDAAP Compliance Red Flags with PerformLine

In December 2024, the Office of the Comptroller of the Currency (OCC) released Version 1.1 of its Unfair or Deceptive Acts or Practices and Unfair, Deceptive, or Abusive Acts or Practices (UDAP/UDAAP) handbook, introducing enhanced guidance to help banks identify these risks early and take action before it’s too late.

Here are the critical marketing compliance red flags identified by the OCC and how PerformLine’s robust compliance monitoring solutions help banks uncover, address, and resolve these risks.

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