FDIC Home - Federal Deposit Insurance Corporation
FDIC Home - Federal Deposit Insurance Corporation

 
Skip Site Summary Navigation   Home     Deposit Insurance     Consumer Protection     Industry Analysis     Regulations & Examinations     Asset Sales     News & Events     About FDIC  

Home > Regulation & Examinations > Bank Examinations > Compliance Examination Handbook > VII - Abusive Practices




Compliance Examination Handbook

Handbook TOC  

VII. Abusive Practices


Federal Trade Commission Act, Section 5 Unfair or Deceptive Acts or Practices 1
Introduction
Advances in banking technology and changes in lending organization structure since Gramm-Leach-Bliley have permitted banks to engage in non-banking activities and given banking organizations the ability to structure financial products in increasingly complex ways and to market such products with increasingly sophisticated methods. While most banking organizations do not engage in unfair or deceptive acts or practices, the pace and complexity of these advances heighten the potential risk for consumer harm. This potential risk, coupled with identified abusive practices, warrants increased scrutiny by the FDIC and state and federal enforcement agencies. Unfair and deceptive practices are wrong, undermine consumer confidence, and present significant credit and asset quality risk undermining the financial soundness of banking organizations.

Section 5 of the Federal Trade Commission Act (FTC Act) declares that unfair or deceptive trade practices are illegal. See 15 USC �(a) (FTC Act Section 5). The FDIC confirmed its intent to cite state nonmember banks and their institutionaffiliated parties for violations of FTC Act Section 5 and will take appropriate action pursuant to its authority under Section 8 of the Federal Deposit Insurance Act (FDI Act) when unfair or deceptive trade practices are discovered.2 FDIC enforcement action against entities other than banks will be coordinated with the Federal Trade Commission, which also has authority to take action against nonbank parties that engage in unfair or deceptive trade practices.

On March 11, 2004, the FDIC and the Federal Reserve Board (FRB) issued additional guidance regarding unfair or deceptive acts or practices prohibited by section 5 of the FTC Act.3 The guidance explains:

  • the standards used to assess whether an act or practice is unfair or deceptive;
  • the interplay between the FTC Act and other consumer protection statutes; and
  • guidelines for managing risks related to unfair and deceptive practices.
Following the release of the UDAP guidance, the FDIC issued a revised consultation policy which requires examiners to consult with the Regional and Washington Offices whenever an apparent unfair or deceptive act or practice is found.

Standards for Determining What is Unfair or Deceptive
The legal standards for unfairness and deception are independent of each other. Depending on the facts, a practice may be unfair, deceptive, or both.

In order to determine whether a practice is "unfair," the FDIC will consider whether the practice "causes or is likely to cause substantial injury to consumers which is not reasonably avoided by consumers themselves and not outweighed by countervailing benefits to consumers or to competition", see 15 USC �(n). By adhering to this tenet, the FDIC will take action to address conduct that falls well below the high standards of business practice expected of banks and the parties affiliated with them.

To correct deceptive trade practices, the FDIC will take action against representations, omissions, or practices that are likely to mislead consumers acting reasonably under the circumstances, and are likely to cause such consumers harm. The FDIC will focus on material misrepresentations, i.e., those that affect choices made by consumers because such misrepresentations are most likely to cause consumers financial harm. See FTC Policy Statement on Deception (October 14, 1983).

Unfair or deceptive acts or practices that violate the FTC Act may also violate other federal or state laws. These include the Truth-in-Lending and Truth-in-Savings Acts, the Equal Credit Opportunity and Fair Housing Acts, and the Fair Debt Collection Practices Act. On the other hand, certain practices may comply fully with consumer protection or other laws and yet still violate the FTC Act. Examiners should consider both possibilities.

Unfair Acts or Practices
Standards for assessing whether an act or practice is unfair
An act or practice is unfair where it (1) causes or is likely to cause substantial injury to consumers, (2) cannot be reasonably avoided by consumers, and (3) is not outweighed by countervailing benefits to consumers or to competition. Public policy may also be considered in the analysis of whether a particular act or practice is unfair. Each of these elements is discussed further below.

  • The act or practice must cause or be likely to cause substantial injury to consumers.
    To be unfair, an act or practice must cause or be likely to cause substantial injury to consumers. Substantial injury usually involves monetary harm. An act or practice that causes a small amount of harm to a large number of people may be deemed to cause substantial injury. An injury may be substantial if it raises a significant risk of concrete harm. Trivial or merely speculative harms are typically insufficient for a finding of substantial injury. Emotional impact and other more subjective types of harm will not ordinarily make a practice unfair.
  • Consumers must not reasonably be able to avoid the injury.

    • A practice is not considered unfair if consumers may reasonably avoid injury. Consumers cannot reasonably avoid injury from an act or practice if it interferes with their ability to effectively make decisions. Withholding material price information until after the consumer has committed to purchase the product or service would be an example of preventing a consumer from making an informed decision. A practice may also be unfair where consumers are subject to undue influence or are coerced into purchasing unwanted products or services.

    The FDIC will not second-guess the wisdom of particular consumer decisions. Instead, the FDIC will consider whether a bank抯 behavior unreasonably creates or takes advantage of an obstacle to the free exercise of consumer decision-making.
  • The injury must not be outweighed by countervailing benefits to consumers or to competition.
    To be unfair, the act or practice must be injurious in its net effects 梩hat is, the injury must not be outweighed by any offsetting consumer or competitive benefits that are also produced by the act or practice. Offsetting benefits may include lower prices or a wider availability of products and services.

    Costs that would be incurred for remedies or measures to prevent the injury are also taken into account in determining whether an act or practice is unfair. These costs may include the costs to the bank in taking preventive measures and the costs to society as a whole of any increased burden and similar matters.
  • Public policy may be considered.
    Public policy, as established by statute, regulation, or judicial decisions may be considered with all other evidence in determining whether an act or practice is unfair. For example, the fact that a particular lending practice violates a state law or a banking regulation may be considered as evidence in determining whether the act or practice is unfair. Conversely, the fact that a particular practice is affirmatively allowed by statute may be considered as evidence that the practice is not unfair. Public policy considerations by themselves, however, will not serve as the primary basis for determining that an act or practice is unfair.
Deceptive Acts and Practices
Standards for assessing whether an act or practice is deceptive
A three-part test is used to determine whether a representation, omission, or practice is "deceptive." First, the representation, omission, or practice must mislead or be likely to mislead the consumer. Second, the consumer抯 interpretation of the representation, omission, or practice must be reasonable under the circumstances. Lastly, the misleading representation, omission, or practice must be material. Each of these elements is discussed below in greater detail.

  • There must be a representation, omission, or practice that misleads or is likely to mislead the consumer.
    An act or practice may be found to be deceptive if there is a representation, omission, or practice that misleads or is likely to mislead the consumer. Deception is not limited to situations in which a consumer has already been misled. Instead, an act or practice may be found to be deceptive if it is likely to mislead consumers. A representation may be in the form of express or implied claims or promises and may be written or oral. Omission of information may be deceptive if disclosure of the omitted information is necessary to prevent a consumer from being misled.

    In determining whether an individual statement, representation, or omission is misleading, the statement, representation, or omission will not be evaluated in isolation. The FDIC will evaluate it in the context of the entire advertisement, transaction, or course of dealing to determine whether it constitutes deception. Acts or practices that have the potential to be deceptive include: making misleading cost or price claims; using bait-andswitch techniques; offering to provide a product or service that is not in fact available; omitting material limitations or conditions from an offer; selling a product unfit for the purposes for which it is sold; and failing to provide promised services.
  • The act or practice must be considered from the perspective of the reasonable consumer.
    In determining whether an act or practice is misleading, the consumer抯 interpretation of or reaction to the representation, omission, or practice must be reasonable under the circumstances. The test is whether the consumer抯 expectations or interpretation are reasonable in light of the claims made. When representations or marketing practices are targeted to a specific audience, such as the elderly or the financially unsophisticated, the standard is based upon the effects of the act or practice on a reasonable member of that group.

    If a representation conveys two or more meanings to reasonable consumers and one meaning is misleading, the representation may be deceptive. Moreover, a consumer抯 interpretation or reaction may indicate that an act or practice is deceptive under the circumstances, even if the consumer抯 interpretation is not shared by a majority of the consumers in the relevant class, so long as a significant minority of such consumers is misled.

    In evaluating whether a representation, omission or practice is deceptive, the FDIC will look at the entire advertisement, transaction, or course of dealing to determine how a reasonable consumer would respond. Written disclosures may be insufficient to correct a misleading statement or representation, particularly where the consumer is directed away from qualifying limitations in the text or is counseled that reading the disclosures is unnecessary. Likewise, oral disclosures or fine print may be insufficient to cure a misleading headline or prominent written representation.
  • The representation, omission, or practice must be material.
    A representation, omission, or practice is material if it is likely to affect a consumer抯 decision regarding a product or service. In general, information about costs, benefits, or restrictions on the use or availability of a product or service is material. When express claims are made with respect to a financial product or service, the claims will be presumed to be material. Similarly, the materiality of an implied claim will be presumed when it is demonstrated that the institution intended that the consumer draw certain conclusions based upon the claim.

    Claims made with the knowledge that they are false will also be presumed to be material. Omissions will be presumed to be material when the financial institution knew or should have known that the consumer needed the omitted information to evaluate the product or service.
Relationship to Other Laws
Acts or practices that are unfair or deceptive within the meaning of section 5 of the FTC Act may also violate other federal or state statutes. On the other hand, there may be circumstances in which an act or practice violates section 5 of the FTC Act even though the institution is in technical compliance with other applicable laws, such as consumer protection and fair lending laws. Banks should be mindful of both possibilities. The following laws warrant particular attention in this regard:

Truth in Lending and Truth in Savings Acts
Pursuant to the Truth in Lending Act (TILA), creditors must "clearly and conspicuously" disclose the costs and terms of credit. The Truth in Savings Act (TISA) requires depository institutions to provide interest and fee disclosures for deposit accounts so that consumers may compare deposit products. TISA also provides that advertisements shall not be misleading or inaccurate, and cannot misrepresent an institution抯 deposit contract. An act or practice that does not comply with these provisions of TILA or TISA may also violate the FTC Act. On the other hand, a transaction that is in technical compliance with TILA or TISA may nevertheless violate the FTC Act. For example, consumers could be misled by advertisements of "guaranteed" or "lifetime" interest rates when the creditor or depository institution intends to change the rates, whether or not the disclosures satisfy the technical requirements of TILA or TISA.

Equal Credit Opportunity and Fair Housing Acts
The Equal Credit Opportunity Act (ECOA) prohibits discrimination in any aspect of a credit transaction against persons on the basis of race, color, religion, national origin, sex, marital status, age (provided the applicant has the capacity to contract), the fact that an applicant抯 income derives from any public assistance program, and the fact that the applicant has in good faith exercised any right under the Consumer Credit Protection Act. Similarly, the Fair Housing Act (FHAct) prohibits creditors involved in residential real estate transactions from discriminating against any person on the basis of race, color, religion, sex, handicap, familial status, or national origin. Unfair or deceptive practices that target or have a disparate impact on consumers who are members of these protected classes may violate the ECOA or the FHAct, as well as the FTC Act.

Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act prohibits unfair, deceptive, and abusive practices related to the collection of consumer debts. Although this statute does not by its terms apply to banks that collect their own debts, failure to adhere to the standards set by this Act may support a claim of unfair or deceptive practices in violation of the FTC Act. Moreover, banks that either affirmatively or through lack of oversight, permit a third-party debt collector acting on their behalf to engage in deception, harassment, or threats in the collection of monies due may be exposed to liability for approving or assisting in an unfair or deceptive act or practice.

Examination Procedures
Required Consultations with FDIC Regional and Washington Offices
Because Congress drafted the FTC Act prohibition against unfair and deceptive practices broadly, it is flexible enough to address change in market conduct as it emerges. To determine whether an act or practice is unfair or deceptive, examiners must carefully evaluate the facts in consultation with policy and legal staff from the FDIC Regional and Washington Offices.

FDIC examiners must consult with Field and Regional Office staff when they identify an act or practice that appears to be unfair or deceptive. This requirement applies when potential unfair or deceptive acts or practices are identified during an examination, through a consumer complaint, or from another source. Further formal consultation with the FDIC Washington Office is required once the preliminary facts have been established and the Region believes a violation should be cited. Formal FDIC Washington Office consultation memoranda should be addressed to the Associate Director. They should include a description of the act or practice that explains why it meets the standards for unfairness or deception described above.

Scoping
The scope of an examination to determine whether an institution is engaging in unfair or deceptive practices encompasses the institution抯 product(s), service(s), target market(s), operations, and compliance management systems and programs. Consistent with the FDIC抯 risk-focused examination approach, examiners should develop a compliance risk profile for the institution using information about the institution抯 business lines, organizational structure, operations, past supervisory performance and identified high risk areas, such as subprime lending, servicing and collections by third-parties, and situations in which allegations of misleading advertising have been made.

Consumer complaints received by the FDIC or the bank are also an important source of information in identifying possible areas of concern, even if previously resolved. Although a consumer complaint may not evidence an unfair or deceptive practice when considered in isolation, additional information or a pattern of complaints may reveal such practices.

Evaluating Compliance Management Systems and Programs
When reviewing a bank抯 compliance management system (CMS), examiners should consider whether it ensures that the institution avoids unfair or deceptive acts or practices, and promptly remedies any such practices that may nevertheless arise.

The degree of specificity with which a CMS can be expected to address this area will vary depending on the bank抯 size, complexity and product offerings. A small institution that offers a limited number of products through a few branches, with marketing restricted to local newspaper and radio outlets, will not need the kind of specific, documented compliance program that should be in place at an institution engaged in nationwide mortgage or credit card lending. On the other hand, where an institution offers products or uses business strategies that have repeatedly raised concern about consumer treatment, a compliance program should be in place that specifically addresses steps taken to ensure that unfair or deceptive conduct does not occur.

Consider these general questions when conducting the examination:

  • What is the role and approach of the compliance function in the bank? Does it go beyond merely checking whether the letter of the law is followed, to considering the larger question of whether interactions with customers are clear and fair?
  • Does the compliance function have sufficient resources and authority to be in a position to both detect potentially unfair or deceptive acts or practices, and take action to address them?
  • Does the bank have a complaint resolution process that will not only appropriately resolve individual problems, but also evaluate complaints to detect potentially unfair or deceptive practices that should be changed to avoid customer harm?
Identify the risks for unfair or deceptive acts or practices in the bank抯 product lines, interactions with customers and potential customers, and outsourcing practices. Then consider:

  • Has the bank identified these risks, either explicitly or implicitly? Are there risks that are not identified?
  • Does the bank抯 CMS address the identified risks? Is the attention given commensurate with the degree of risk?
  • How effective is the CMS in practice?
Based upon your review of the risks and the bank抯 CMS, determine whether additional, more specific evaluation is required.

Evaluating Products, Operations and Communications
The prohibitions against unfair or deceptive acts or practices apply to all bank products and services. However, there are some activities that have been particularly susceptible to violations of the FTC Act and warrant additional scrutiny. These include:

  • marketing to the elderly or financially vulnerable or unsophisticated,
  • subprime mortgage and credit card lending,
  • payday lending,
  • overdraft or "bounce" protection, and
  • marketing and collection practices that result in increased fees.
Some operational areas also have a heightened risk of producing unfair or deceptive practices. These include:

  • development of product structure and terms,
  • advertising and solicitation,
  • repricing and change of terms,
  • servicing and collections, and
  • the management and monitoring of employees and thirdparties.
Section 5 of the FTC Act does not impose specific requirements on banks. Policies and procedures necessary to avoid engaging in unfair or deceptive activities will largely be based upon the bank抯 products and services, marketing and advertising, and its outsourcing agreements with third parties.

Examiners should use the questions below as applicable. If it appears that unfairness or deception may be occurring, examiners should analyze the situation by applying the standards above and the UDAP Guidance. As they develop this analysis, FDIC examiners should consult with Regional and Washington Office policy staff as well as the Legal Division.

Product Structure and Terms
The structure and pricing of consumer products, particularly mortgages and credit cards, has become increasing complex and diverse. Consequently, it has become increasingly important that communications with consumers are meaningful and easily understood.

Examiners should use copies of disclosures, notices, agreements, and promotional materials for the products and services4 at risk for unfair or deceptive practices, as well as discussions with appropriate bank personnel, to respond to the following questions, as applicable:

  1. Does the bank review all promotional materials, marketing scripts, and customer agreements and disclosures to ensure that they fairly and adequately describe the terms, benefits, and material limitations of the product or service being offered, including any related or optional products or services, and that they do not misrepresent such terms either affirmatively or by omission?
  2. Do the promotional materials and/or customer agreements and disclosures draw the attention of customers to key terms, including limitations and conditions that are important in enabling the customer to make an informed decision regarding whether the product or service meets the customer抯 needs?
  3. Do the promotional materials and/or customer agreements and disclosures used clearly disclose all material limitations or conditions on the terms or availability of products or services, such as a limitation that applies a special interest rate only to balance transfers; the expiration date for terms that apply only during an introductory period; material prerequisites for obtaining particular products, services or benefit (e.g., discounts, refunds or rebates); or conditions for canceling a service without charge when the service is offered on a trial basis?
  4. Do the promotional materials and/or customer agreements and disclosures inform consumers in a clear and timely manner about any fees, penalties, or other charges (including charges for any force-placed products) that have been imposed, and the reasons for their imposition?
  5. Do the promotional materials and/or customer agreements and disclosures clearly inform customers of contract provisions that permit a change in the terms and conditions of an agreement?
  6. Does the bank advertise services or benefits provided in connection with an account that it does not intend or is not able to provide? Are the conditions imposed to receive such services or benefits so burdensome or difficult to meet that the advertised service or benefit is illusory?
  7. Does the bank clearly disclose when apparently optional products and services � such as insurance, travel services, credit protection, and consumer report update services that are offered simultaneously with credit � are required to obtain credit or considered in decisions to grant credit?
  8. When making claims about amounts of credit available to consumers, does the bank accurately and completely represent the amount of potential, approved, or useable credit that the consumer will receive? Is the product structured so that the amount of available credit is so low as to significantly reduce or eliminate the consumer抯 ability to use the product? Do fees and charges, imposed both initially and throughout the term of the loan, similarly impair the utility of the loan?
  9. Does the bank avoid making representations to consumers that they may pay less than the minimum amount due required by the account terms without adequately disclosing any late fees, over-the-limit fees, or other account fees that will result from the consumer paying such reduced amount? Does the bank waive the consumer抯 credit limit for the purpose of obtaining additional over-the- limit fees?
  10. Does the bank, if offering a variety of interest rates on different types of balances, clearly advise consumers how their payments will be applied?
  11. Is the "please pay by" date stated on the periodic statement consistent with the product抯 grace period?
Advertising and Solicitation
The need for clear and accurate marketing and disclosures that are sensitive to the sophistication of the target audience is heightened for products and services that have been associated with deceptive practices. Accordingly, banks should take particular care in marketing credit and other products and services to the elderly, the financially vulnerable, and customers who are not financially sophisticated. In addition, creditors should pay particular attention to ensure that disclosures are clear and accurate with respect to:

  • the points and other charges that will be financed as part of home-secured loans;
  • the terms and conditions related to insurance offered in connection with loans;
  • loans covered by the Home Ownership and Equity Protection Act;
  • reverse mortgages;
  • secured and other credit cards designed to rehabilitate the credit position of the cardholder;
  • overdraft or "bounce" protection; and
  • loans with pre-payment penalties, temporary introductory terms, or terms that are not available as advertised to all consumers.
Examiners should use representative samples of all marketing and advertising materials, including print, electronic and other media, such as the Internet, e-mail and text messages, telephone solicitation scripts, agreements and disclosures for the product(s) and service(s) under analysis, together with any marketing and solicitation policies or instructions, as well as discussions with appropriate bank personnel, to respond to the following questions:

  1. Does the bank ensure that there is a reasonable factual basis for all representations made?
  2. Does the bank ensure that these promotional materials do not use fine print, separate statements or inconspicuous disclosures to correct potentially misleading headlines?
  3. When using terms such as "pre-approved" or "guaranteed," do the promotional materials and/or customer agreements and disclosures used by the bank clearly disclose any limitations, conditions, or restrictions on the offer?
  4. Does the bank tailor advertisements, promotional materials, disclosures and scripts to take account of the sophistication and experience of the target audience? Do the promotional materials or customer agreements/disclosures used by the bank make claims, representations or statements that may mislead members of the target audience about the cost, value, availability, cost savings, benefits, or terms of the product or service?
  5. Does the bank ensure that costs and benefits of optional or related products and services, such as overdraft protection, are not misrepresented or presented in an incomplete manner?
  6. Does the bank avoid advertising terms that are not available to most customers and using unrepresentative examples in advertising, marketing, and promotional materials?
  7. Do the promotional materials or customer agreements/ disclosures used by the bank clearly disclose a telephone number or mailing address (and, as an addition, an email or website address if available) that consumers may use to contact the bank or its third-party servicers regarding any complaints they may have, and maintain appropriate procedures for resolving complaints?
Repricing and Other Changes in Terms
The terms and conditions governing many credit and deposit products provide for periodic adjustments tied to an external variable such as changes in a defined prime rate or the London Inter Bank Offering Rate (LIBOR). Many of the terms governing credit cards may be changed automatically following the occurrence of a specified event. Such events may include an increase in the interest rate upon the consumer抯 delinquency with either the credit card issuer or other creditor, or upon fifteen-day written notice to the consumer. The terms and notices given to consumers should be meaningful and easy to understand.

Examiners should use representative samples of customer notification forms, periodic statements, telephone scripts, and any related print or electronic materials, together with repricing and other change-in-terms policies or procedures and associated employee instructions and policy manuals, as well as discussions with appropriate bank personnel, to obtain responses to the following questions:

  1. Do credit agreements clearly disclose that the bank or subsidiary may unilaterally make future changes to the rate or other terms and conditions? Do those disclosures clearly explain the circumstances under which such changes may be made, such as a delinquency with the creditor or with any other creditor, on the credit line or with any other credit and the nature and potential range of such changes?
  2. Does the bank or subsidiary have policies and procedures to ensure the reasonable and clear disclosure of postorigination changes?
Servicing and Collections
Servicing practices have a noteworthy capacity to be unfair, as do a number of collection practices. These activities are often conducted by bank subsidiaries and third-party contractors, in which case examiners should review these activities both in light of the questions below as well as those found under "Monitoring the Conduct of Employees and Third Parties."

Examiners should use servicing and collection policies, telephone scripts, training and compliance manuals, as well as periodic statements and payment histories, in addition to discussions with appropriate bank personnel, to determine:

  1. Does the bank charge customers for products or services they did not bargain for, like various credit protection programs or insurance?
  2. Are the amounts due stated and any associated fees or charges on the periodic billing statements accurately and clearly disclosed?
  3. Does the bank ensure that the institution and its third party servicers have and follow procedures to credit consumer payments in a timely manner? Consumers should be clearly told when and if monthly payments are applied to fees, penalties, or other charges before being applied to regular principal and interest.
  4. Does the bank promptly post payments upon receipt?
  5. Does the bank mail periodic statements in a manner calculated to increase late payments?
  6. Does the bank structure the product to trigger multiple charges or fees for late payment or exceeding the credit limit?
  7. If the bank uses an automated call answering service for billing questions, is there a mechanism to obtain a human representative for questions that are unanswered or have not been resolved?
  8. Does the bank continue to contact consumers at work after being advised not to do so?
  9. Does the bank disclose the consumers� debt to third-parties without the consumer抯 consent? Does the bank discontinue calls to third-parties once they have notified the institution that they do not have any location information about the consumer?
  10. Does the bank make repeated telephone calls to consumers and/or third parties with the intent to annoy, abuse, or harass any person at the number called?
Monitoring the Conduct of Employees and Third-Parties
Banks should have procedures in place to assure that their employees and third-party contractors, as well as other individuals and entities with whom they do business, avoid engaging in unfair or deceptive acts or practices. Examiners should evaluate how the bank monitors the activities of thirdparty contractors, vendors and service providers to ensure that they comply with the FTC抯 prohibition on unfair or deceptive acts.

Examiners should use training and policy manuals, scripts, oversight and compliance policies, and discussions with appropriate bank personnel, to respond to the following questions:

  1. Does the bank ensure that employees and third parties who market or promote bank products, or service loans, are adequately trained to avoid making statements or taking actions that might be unfair or deceptive?
  2. Does the bank review compensation arrangements for bank employees as well as third-party contractors and service providers to ensure that they do not create unintended incentives to engage in unfair or deceptive practices, particularly with respect to loan originations and collections?
  3. Has the bank implemented and maintained effective risk and supervisory controls to select and manage third-party contractors or service providers?


References
DSC Memorandum 6428, Procedures for Determining Compliance with the Prohibition on Unfair or Deceptive Acts or Practices found in Section 5 of the Federal Trade Commission Act, June 17, 2005


FDIC Consultation Policy
DSC RD Memo 04-17: Consultation Policy and Procedures for Compliance Examination and Community Reinvestment Act Issues
http://fdic01/division/dsc/memos/memos/direct/04-017.pdf


Policy Statements and Enforcement Actions Involving
Unfair or Deceptive Acts or Practices
FTC Policy Statement on Unfairness,
http://www.ftc.gov/bcp/policystmt/ad-unfair.htm

FTC Policy Statement on Deception,
http://www.ftc.gov/bcp/policystmt/ad-decept.htm

FIL 57-2002: Guidance on Unfair or Deceptive Acts or Practices
http://www.fdic.gov/news/news/financial/2002/fil0257.html

FIL 26-2004: Unfair or Deceptive Acts or Practices by State-Chartered Banks
http://www.fdic.gov/news/news/financial/2004/fil2604.html

OCC Advisory Letter 2002-3: Guidance on Unfair or Deceptive Acts or Practices,
http://www.occ.treas.gov/ftp/advisory/2002-3.txt

OCC Unfair and Deceptive Enforcement Actions
http://www.occ.treas.gov/Consumer/Unfair.htm

FTC抯 Subprime Lending Cases
http://www.ftc.gov/opa/2002/07/subprimelendingcases.htm

FTC Unfair or Deceptive Acts or Practices Enforcement Actions: Mortgage Servicing
http://www.ftc.gov/bcp/conline/edcams/fairbanks/index.htm

FTC Unfair or Deceptive Acts or Practices Enforcement
Actions: Collection Practices
http://www.ftc.gov/opa/2004/08/appliedcard.htm

OCC Policy Statements and Enforcement Actions Relating to Credit Cards
http://www.occ.treas.gov/Consumer/creditcard.htm


Other Regulations with Provisions that Relate to Accurate Advertising
12 CFR Part 226: Regulation Z, Truth in Lending
12 CFR Section 226.16: Open-end advertising
http://www.fdic.gov/regulations/laws/rules/6500-1650.html#6500226.16

12 CFR Section 226.24: Closed-end advertising
http://www.fdic.gov/regulations/laws/rules/6500-1700.html#6500226.24

12 CFR Part 230: Regulation DD, Truth in Savings
Advertising: 12 CFR Section 230.8
http://www.fdic.gov/regulations/laws/rules/6500-3250.html#6500230.8

12 CFR Section 230.11: Additional disclosure requirements for institutions advertising the payment of overdrafts
http://www.fdic.gov/regulations/laws/rules/6500-3250.html#6500230.11

12 CFR Part 343: Consumer Protection in Sales of Insurance
12 CFR Section 343.40(d): Advertising
http://www.fdic.gov/regulations/laws/rules/2000-6300.html





Credit Practices Rule (Regulation AA)
Introduction
The Credit Practices Rule (Rule), contained in Subpart B of the Federal Reserve Board抯 Regulation AA, was adopted to prohibit certain unfair and deceptive practices related to consumer credit contracts. The prohibitions contained in the Rule apply to all credit contracts originated or purchased by financial institutions other than those for the purchase of real estate.

Regulation Overview
The Credit Practices Rule applies to all consumer credit contracts other than those for the purchase of real estate. It prohibits banks from using certain remedies to enforce consumer credit obligations. Under the Rule, banks may not include these remedies in their consumer credit contracts, and, if banks purchase contracts that contain a prohibited provision(s), banks are prohibited from enforcing the provision(s).

The prohibited provisions are: (1) A confession of judgment clause, (also known as a cognovit or warrant of attorney) which permits a creditor to obtain a judgment based on the borrower抯 agreement in advance that, in the event of a suit on the obligation, the borrower waives the right to notice and the opportunity to be heard; (2) a waiver of exemption in which the consumer relinquishes a statutory right protecting his or her home and other necessities from seizure to satisfy a judgment, unless the waiver applies solely to property that serves as security for the obligation; (3) an irrevocable assignment of future wages which gives the bank the right to receive the consumer抯 wages or earnings directly from the consumer抯 employer, unless the assignment constitutes a payroll deduction plan or other preauthorized payment plan; and (4) the taking of nonpossessory security interests in household goods, unless such goods are purchased with the credit extended by the bank.

The Rule also prohibits a practice known as "pyramiding late charges." Under the pyramiding provision, a bank is prevented from assessing multiple late charges based on a single late payment that is subsequently paid. This provision applies only to closed-end credit contracts.

Finally, the Rule prohibits a bank from misrepresenting a cosigner抯 liability and requires the bank to give a cosigner, prior to becoming obligated in a consumer credit transaction, a disclosure notice which explains the nature of the cosigner抯 obligations and liabilities under the contract.

Examination Procedures
  1. Determine through discussion with financial institution management and staff if the financial institution attempts to enforce confessions of judgment, assignments of wages, security interests in household goods, or waivers of exemption in originated or acquired consumer contracts. (227.13)
  2. Review the financial institution抯 collection policies, procedures, and practices to ensure that staff members are not using an assignment of wages except where permissible. (227.13(c))
  3. Review past due loans to determine if the financial institution collects or attempts to collect overdue payments through assignments of wages. 227.13(c))
  4. Review past due loans to determine if the financial institution collects, or attempts to collect, a late charge on a timely payment because of the consumer抯 failure to pay a late charge attributable to a prior delinquent payment. This prohibited practice is known as pyramiding of late charges. (227.15)
  5. Determine, through a review of procedures, policies, and practices, whether the financial institution takes steps to prevent its staff from engaging in prohibited co-signer practices on loans. (227.14(a))
  6. Determine through discussions with financial institution management and staff, if there is evidence that the financial institution engages in prohibited co-signer practices. Examples include misrepresentation of a co-signer抯 liability and contractually obligating co-signers prior to informing them of their liability. (227.14(a))
  7. Determine through discussions with financial institution management and staff and a review of loan files, whether the co-signer is informed prior to becoming obligated, of the nature and extent of the co-signer抯 liability in accordance with Section 227.14(a).
References
Regulation AA, Unfair or Deceptive Acts or Practices, Part 227
12 CFR �7, 15 USC �a
http://www.fdic.gov/regulations/laws/rules/6500-3205.html#6500part227udapregaa

Staff Guidelines on the Credit Practices Rule
http://www.fdic.gov/regulations/laws/rules/6500-3205.html#6500part227staffguidelines


Job Aids

Examiner Checklist桟redit Practices Rule
  Yes No
1. Do the consumer contracts or related documents originated by the institution contain any of the following prohibited provisions:

� Confession of judgment? (227.13(a))

  
� Waiver of statutory property exemption, (unless the waiver applies solely to the property which will serve as security for the loan)? (227.13(b))

  
� Assignment of wages or other earnings (except where permitted)? (227.13(c))

  
� Blanket security interests in household goods? (227.13(d))

  
2. Does the institution acquire loans originated by other creditors?

If so, does it attempt to enforce any of the following prohibited practices:

  
� Confession of judgment? (227.13(a))

  
� Waiver of statutory property exemption, (unless the waiver applies solely to the property which will serve as security for the loan)? (227.13(b))

  
� Assignment of wages or other earnings (except where permitted)? (227.13 (c))

  
� Blanket security interests in household goods? (227.13(d))

  
3. Does the institution take a nonpossessory security interest in household goods (as defined in Section 227.12(d)) not purchased with the loan proceeds? (Review financial institution security agreement forms.)

  
4. Has the institution attempted to enforce any prohibited practices with respect to the consumer credit contracts it has originated? (227.13(a) or 227.13(b))

  
5. Does the institution collect or attempt to collect a late charge on a timely payment because of the consumer抯 failure to pay a late charge attributable to a prior delinquent payment? (227.15)

  
6. Has the institution engaged in any prohibited cosigner practices (for example, misrepresenting the cosigner抯 liability or obligating cosigners prior to providing the required notification)? (227.14(a))

  
7. Does the institution provide each cosigner, prior to becoming contractually obligated, the required notice or one that is substantially similar (whether separate or contained in the credit document)? (227.14(b))

  




FTC Rule � Preservation of Claims and Defenses
Introduction
The purpose of the Federal Trade Commission抯 (FTC) 1976 rule concerning the Preservation of Consumers� Claims and Defenses (16 CFR Part 433), sometimes called the Holderin- Due-Course Rule (Rule), is to ensure that consumer credit contracts used in financing the retail purchase of consumer goods or services specifically preserve the consumer抯 rights against the seller. The FTC determined that it constitutes an unfair and deceptive practice for a seller, in the course of financing a consumer purchase of goods or services, to employ procedures which make the consumer抯 duty to pay independent of the seller抯 duty to fulfill its obligations.

Regulation Overview
The Holder-in-Due-Course Rule prohibits a seller from taking or receiving a consumer credit contract that does not contain a prescribed notice which preserves the consumer抯 claims and defenses in the event that the contract is negotiated or assigned to a third party creditor. In addition, the Rule provides that the seller may not accept the proceeds of a purchase money loan unless the evidence of the loan contains the prescribed notice preserving as against the lender whatever claims and defenses the consumer may have against the seller. Omission of the required notice by the seller, or acceptance by the seller of the proceeds of the purchase money loan where the evidence of the loan does not contain the notice, constitutes an unfair or deceptive practice within the meaning of Section 5 of the Federal Trade Commission Act.

The Rule does not apply to all credit instruments. The Notice must appear in written obligations defined as "Consumer Credit Contracts" in the Rule. The definition includes any written instrument which, under the Truth in Lending Act and Regulation Z constitutes a consumer credit contract and which is used to "Finance a Sale" or in connection with a "Purchase Money Loan," as those terms are defined in the Rule. Credit card instruments are specifically exempted from the Rule.

Under the Rule, banks which purchase consumer paper containing the notice required of sellers cannot avail themselves of the holder-in-due-course doctrine. Also, banks which make purchase money loans containing the notice will be subject to all claims and defenses which the consumer could assert against the seller.

If banks accept consumer paper which fails to contain the notice required of sellers, they may be considered to be a participant in the seller抯 violation of the Rule. Banks making purchase money loans must include the prescribed notice in their contracts.

The required notice, which follows, must be in at least ten point, bold face, type:

NOTICE
Any holder of this consumer credit contract is subject to all claims and defenses which the debtor could assert against the seller of goods or services obtained pursuant hereto or with the proceeds hereof. Recovery hereunder by the debtor shall not exceed amounts paid by the debtor hereunder.

References
FTC Trade Regulation Rule Concerning the Preservation of Consumers� Claims and Defenses, and Staff Guidelines
http://www.fdic.gov/regulations/laws/rules/6500-2600.html#6500ftctradereg



Job Aids

Preservation of Consumers� Claims and Defenses (PCCD)
Flowchart that illustrates the Preservation of Consumers' Claims and Defenses (PCCD). Please call the FDIC at 1 (877) 275-3342 for additional information.




Fair Debt Collection Practices Act 5
Introduction
The Fair Debt Collection Practices Act (FDCPA), effective in 1978, was designed to eliminate abusive, deceptive, and unfair debt collection practices. The federal law also protects reputable debt collectors from unfair competition and encourages consistent state action to protect consumers from abuses in debt collection.

The FDCPA applies only to the collection of debt incurred by a consumer primarily for personal, family or household purposes. It does not apply to the collection of corporate debt or to debt for business or agricultural purposes.

Regulation Overview
Debt That Is Covered
The FDCPA applies only to the collection of debt incurred by a consumer primarily for personal, family or household purposes. It does not apply to the collection of corporate debt or to debt owed for business or agricultural purposes.

Debt Collectors That Are Covered
Under FDCPA, a "debt collector" is defined as any person who regularly collects, or attempts to collect, consumer debts for another person or institution or uses some name other than its own when collecting its own consumer debts. That definition would include, for example, an institution that regularly collects debts for an unrelated institution. This includes reciprocal service arrangements where one institution solicits the help of another in collecting a defaulted debt from a customer who has moved.

Debt Collectors That Are Not Covered
An institution is not a debt collector under the FDCPA when it collects:

  • Another抯 debts in isolated instances.
  • Its own debts under its own name.
  • Debts it originated and then sold but continues to service (for example, mortgage and student loans).
  • Debts that were not in default when they were obtained.
  • Debts that were obtained as security for a commercial credit transaction (for example, accounts receivable financing).
  • Debts incidental to a bona fide fiduciary relationship or escrow arrangement (for example, a debt held in the institution抯 trust department or mortgage loan escrow for taxes and insurance).
  • Debts regularly for other institutions to which it is related by common ownership or corporate control.
Debt collectors that are not covered also include:

  • Officers or employees of an institution who collect debts owed to the institution in the institution抯 name.
  • Legal process servers.
Communications Connected with Debt Collection
For communications with a consumer or third party connected with the collection of a debt, the term "consumer" is defined to include the borrower抯 spouse, parent (if the borrower is a minor), guardian, executor, or administrator.

When, Where, and With Whom Communication is Permitted
Communicating with the Consumer
A debt collector may not communicate with a consumer at any unusual time (generally before 8 a.m. or after 9 p.m. in the consumer抯 time zone) or at any place that is inconvenient to the consumer, unless the consumer or a court of competent jurisdiction has already given permission for such contacts. A debt collector may not contact the consumer at his or her place of employment if the collector has reason to believe the employer prohibits such communications.

If the debt collector knows the consumer has retained an attorney to handle the debt, and can easily ascertain the attorney抯 name and address, all contacts must be with that attorney, unless the attorney is unresponsive or agrees to allow direct communication with the consumer.

Ceasing Communication with the Consumer
When a consumer refuses, in writing, to pay a debt or requests that the debt collector cease further communication, the collector must cease all further communication, except to advise the consumer that:

  • The collection effort is being stopped.
  • Certain specified remedies ordinarily invoked may be pursued or, if appropriate, that a specific remedy will be pursued.
Mailed notices from the consumer are official when they are received by the debt collector.

Communicating with Third Parties
The only third parties that a debt collector may contact when trying to collect a debt are:

  • The consumer.
  • The consumer抯 attorney.
  • A consumer reporting agency (if permitted by local law).
  • The creditor.
  • The creditor抯 attorney.
  • The debt collector抯 attorney.
The consumer or a court of competent jurisdiction may, however, give the debt collector specific permission to contact other third parties. In addition, a debt collector who is unable to locate a consumer may ask a third party for the consumer抯 home address, telephone number and place of employment (location information). The debt collector must give his or her name and state that he or she is confirming or correcting location information about the consumer. Unless specifically asked, the debt collector may not name the collection firm or agency or reveal that the consumer owes any debt.

No third party may be contacted more than once unless the collector believes that the information from the first contact was wrong or incomplete and that the third party has since received better information, or unless the third party specifically requests additional contact.

Contact with any third party by postcard, letter or telegram is allowed only if the envelope or content of the communication does not indicate the nature of the collector抯 business.

Validation of Debts
The debt collector must provide the consumer with certain basic information. If that information was not in the initial communication and if the consumer has not paid the debt five days after the initial communication, the following information must be sent to the consumer in written form:

  • The amount of the debt;
  • The name of the creditor to whom the debt is owed;
  • Notice that the consumer has 30 days to dispute the debt before it is assumed to be valid;
  • Notice that upon such written dispute, the debt collector will send the consumer a verification of the debt or a copy of any judgment; and
  • Notice that if, within the 30-day period, the consumer makes a written request for the name and address of the original creditor, if it is different from the current creditor, the debt collector will provide that information.
If, within the 30-day period, the consumer disputes in writing any portion of the debt or requests the name and address of the original creditor, the collector must stop all collection efforts until he or she mails the consumer a copy of a judgment or verification of the debt, or the name and address of the original creditor, as applicable.

Prohibited Practices
Harassing or Abusive Practices
A debt collector in collecting a debt, may not harass, oppress, or abuse any person.

Specifically, a debt collector may not:

  • Use or threaten to use violence or other criminal means to harm the physical person, reputation, or property of any person.
  • Use obscene, profane, or other language which abuses the hearer or reader.
  • Publish a list of consumers who allegedly refuse to pay debts, except to a consumer reporting agency or to persons meeting the requirements of sections 603(f) or 604(3) of the Act.
  • Advertise a debt for sale to coerce payment.
  • Annoy, abuse, or harass persons by calling repeatedly their telephone number or allowing their telephones to ring continually.
  • Make telephone calls without properly identifying oneself, except as allowed to obtain location information.
False or Misleading Representations
A debt collector, in collecting a debt, may not use any false, deceptive, or misleading representation. Specifically, a debt collector may not:

  • Falsely represent or imply that he or she is vouched for, bonded by, or affiliated with the United States or any state, including the use of any badge, uniform, or similar identification.
  • Falsely represent the character, amount, or legal status of the debt, or of any services rendered, or compensation he or she may receive for collecting the debt.
  • Falsely represent or imply that he or she is an attorney or that communications are from an attorney.
  • Threaten to take any action which is not legal or intended.
  • Falsely represent or imply that nonpayment of any debt will result in the arrest or imprisonment of any person or the seizure, garnishment, attachment or sale of any property or wages of any person, unless such action is lawful and intended by the debt collector or creditor.
  • Falsely represent or imply that the sale, referral, or other transfer of the debt will cause the consumer to lose a claim or a defense to payment, or become subject to any practice prohibited by the FDCPA.
  • Falsely represent or imply that the consumer committed a crime or other conduct to disgrace the consumer.
  • Communicate, or threaten to communicate, false credit information or information which should be known to be false, including not identifying disputed debts as such.
  • Use or distribute written communications made to look like or falsely represented to be documents authorized, issued, or approved by any court, official, or agency of the United States or any state if it would give a false impression of its source, authorization, or approval.
  • Use any false representation or deceptive means to collect or attempt to collect a debt or to obtain information about a consumer.
  • Fail to disclose in the initial written communication with the consumer, and the initial oral communication if it precedes the initial written communication, that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose. In addition, the debt collector must disclose in subsequent communications that the communication is from a debt collector. (These disclosures do not apply to a formal pleading made in connection with a legal action.)
  • Falsely represent or imply that accounts have been sold to innocent purchasers.
  • Falsely represent or imply that documents are legal process.
  • Use any name other than the true name of the debt collector抯 business, company, or organization.
  • Falsely represent or imply that documents are not legal process or do not require action by the consumer.
  • Falsely represent or imply that he or she operates or is employed by a consumer reporting agency.
Unfair Practices
A debt collector may not use unfair or unconscionable means to collect or attempt to collect a debt. Specifically, a debt collector may not:

  • Collect any interest, fee, charge or expense incidental to the principal obligation unless it was authorized by the original debt agreement or is otherwise permitted by law.
  • Accept a check or other instrument postdated by more than five days, unless he or she notifies the consumer, in writing, of any intention to deposit the check or instrument. That notice must be made not more than ten or less than three business days before the date of deposit.
  • Solicit a postdated check or other postdated payment instrument to use as a threat or to institute criminal prosecution.
  • Deposit or threaten to deposit a postdated check or other postdated payment instrument before the date on the check or instrument.
  • Cause communication charges, such as those for collect telephone calls and telegrams, to be made to any person by concealing the true purpose of the communication.
  • Take or threaten to repossess or disable property when the creditor has no enforceable right to the property or does not intend to do so, or if, under law, the property cannot be taken, repossessed or disabled.
  • Use a postcard to contact a consumer about a debt.
Multiple Debts
If a consumer owes several debts that are being collected by the same debt collector, payments must be applied according to the consumer抯 instructions. No payment may be applied to a disputed debt.

Legal Actions by Debt Collectors
A debt collector may file a lawsuit to enforce a security interest in real property only in the judicial district in which the real property is located. Other legal actions may be brought only in the judicial district in which the consumer lives or in which the original contract creating the debt was signed.

Furnishing Certain Deceptive Forms
No one may design, compile and/or furnish any form which creates the false impression that someone other than the creditor (for example, a debt collector) is participating in the collection of a debt.

Civil Liability
A debt collector who fails to comply with any provision of the FDCPA is liable for:

  • Any actual damages sustained as a result of that failure;
  • Punitive damages as allowed by the court�
    • in an individual action, up to $1,000; or
    • in a class action, up to $1,000 for each named plaintiff and an award to be divided among all members of the class of an amount up to $500,000 or 1 percent of the debt collector抯 net worth, whichever is less;
  • Costs and a reasonable attorney抯 fee in any such action.
In determining punitive damages, the court must consider the nature, frequency and persistency of the violations and the extent to which they were intentional. In a class action, the court must also consider the resources of the debt collector and the number of persons adversely affected.

Defenses
A debt collector is not liable for a violation if a preponderance of the evidence shows it was not intentional and was the result of a bona fide error that arose despite procedures reasonably designed to avoid any such error. The collector is also not liable if he or she, in good faith, relied on an advisory opinion of the Federal Trade Commission even if the ruling is later amended, rescinded, or determined to be invalid for any reason.

Jurisdiction and Statute of Limitations
Action against debt collectors for violations of the FDCPA may be brought in any appropriate U.S. district court or other court of competent jurisdiction. The consumer has one year from the date on which the violation occurred to start such as action.

Administrative Enforcement
The Federal Trade Commission (FTC) is the primary enforcement agency for the FDCPA. The various financial regulatory agencies enforce the FDCPA for the institutions they supervise. Neither the FTC nor any other agency may issue regulations governing the collection of consumer debts by debt collectors. The FTC may, however, issue advisory opinions under the Federal Trade Commission Act on the meaning and application of the FDCPA.

Relation to State Law
The FDCPA preempts state law only to the extent that a state law is inconsistent with the FDCPA. A state law that is more protective of the consumer is not considered inconsistent with the FDCPA.

Exemption for State Regulation
The FTC may exempt certain classes of debt collection practices from the requirements of the FDCPA if the FTC has determined that state laws impose substantially similar requirements and that there is adequate provision for enforcement.

Examination Objectives
The objectives of the examination are to:

  1. Identify financial institutions that are debt collectors;
  2. Determine the adequacy of the institution抯 internal procedures and controls to assure consistent compliance with FDCPA; and
  3. Determine if the institution complies with the requirements of the FDCPA in collecting or attempting to collect thirdparty consumer debts.
Examination Procedures
The following procedures are to be completed through interviews with personnel knowledgeable about and directly engaged in the institution抯 collection activities and through reviews of any written collection procedures, reciprocal collection agreements, collection letters, dunning notices, envelopes, scripts used by collection personnel, validation notices, individual collection files, complaint files, and other relevant records.

  1. Determine if the institution is a debt collector under the FDCPA.
  2. Determine if the institution has established internal procedures and controls to assure compliance with the FDCPA.
  3. If the institution has acted or is acting as a debt collector under the FDCPA, determine if the institution has:
    • Communicated with the consumer or third parties in any prohibited manner;
    • Furnished the written validation notice within the required time period and otherwise complied with applicable validation requirements;
    • Used any harassing, abusive, unfair or deceptive colletion practice prohibited by the FDCPA;
    • Collected any amount not expressly authorized by the agreement creating the debt or by state law;
    • Applied all payments received as instructed and, where no instruction was given, applied payments only to undisputed debts; and
    • Filed suit in an authorized forum if the institution sued to collect the debt.
References
15 USC �92: Fair Debt Collection Practices Act
http://www.fdic.gov/regulations/laws/rules/6500-1300.html#6500titleviidcp

Federal Trade Commission Staff Commentary on the FDCPA
http://www.ftc.gov/os/statutes/fdcpa/commentary.htm

FIL 26-97: Amendment to the Fair Debt Collection Practices Act
http://www.fdic.gov/news/news/inactivefinancial/1997/fil9726.html




Job Aids

Examination Checklist桭air Debt Collection Practices Act
 
Yes
No
1. Is the institution aware of the circumstances in which the FDCPA applies and, as appropriate, has it established internal procedures and controls to assure compliance with the FDCPA?

    
2. Has the institution acted as a "debt collector" under the FDCPA by either:

    
a. regularly attempting to collect defaulted consumer debts owed to others; or,

    
b. attempting to collect its own consumer debts in a name other than its own?

NOTE: If the answers to questions 2a and 2b are "No," the institution has not acted as a debt collector under the FDCPA and the examiner should not complete the remainder of the checklist.

    
3. In attempting to collect consumer debts as a "debt collector" under the FDCPA, did the institution:

    
a. communicate with the consumer or any third party in a prohibited manner?

    
b. adhere to the required debt validation procedure?

    
c. use any harassing, abusive, unfair or deceptive practice or means?

    
c. use any harassing, abusive, unfair or deceptive practice or means?

    
e. properly apply any payment received in the case of multiple debts owned by the same consumer?

    
f. bring legal action only in a judicial district permitted under the FDCPA?

    


Footnotes:

1 This section fully incorporates the examination procedures issued under DSC RD Memo 05-021: Procedures for Determining Compliance with the Prohibition on Unfair or Deceptive Acts or Practices Found in Section 5 of the FTC Act.

2 See FIL 57-2002

3 See FIL 26-2004

4 Examiners should review sample periodic statements if they are used to convey offers, particularly offers that relate to fees or collection practices.

5 This section fully incorporates the examination procedures issued under DCA RD Memo 97-020: Fair Debt Collection Practices Act.





Last Updated 03/15/2007 consumeralerts@fdic.gov

Home    Contact Us    Search    Help    SiteMap    Forms
Freedom of Information Act (FOIA) Service Center    Website Policies    USA.gov
FDIC Office of Inspector General