Other Federal Enforcement

April 19, 2023

Manufacturer Seagate Technology LLC will pay a $300 million penalty to resolve allegations that it violated U.S. export control standards.  As part of the settlement, Seagate admitted that it unlawfully sold millions of hard disk drives, valued at more than $1 billion, to Huawei Technologies in 2020 and 2021, after Huawei became a listed entity, requiring sales to it by U.S. companies to be made by export license, based on a U.S. determination that Huawei was  involved in activities contrary to the national security or foreign policy interests of the United States.  Seagate also agreed to ongoing audits by the government.  BIS DOC

January 24, 2023

Popular Bank was fined $2.3 million by the Federal Reserve Board following an investigation into its processing of Paycheck Protection Program loans.  Popular Bank was approved as a PPP lender by the Small Business Administration, and was required to follow the Bank Secrecy Act and program guidelines, including verification of customer identity and the documentation, investigation, and reporting of suspicious activities.  The Board’s Consent Order found that in August 2020, the Bank processed and funded six PPP loans, totaling approximately $1.1 million, despite having detected that the loan applications contained significant indicia of potential fraud.  The Bank self-reported to the Board.  Fed

December 20, 2022

Wells Fargo will pay a $1.7 billion penalty, and more than $2 billion in consumer restitution, following findings by the CFPB that the bank engaged in unlawful conduct including the imposition of improper fees and interest charges on auto and mortgage loans, misapplication of payments on such loans, and the imposition of unlawful surprise overdraft fees.  Wells Fargo’s failures in its servicing of auto loans resulted in the wrongful repossession of borrowers’ vehicles, and its improper denial of mortgage modifications led to some customers losing their homes to wrongful foreclosures.  According to the CFPB, the bank knew about problems in its account management and servicing for years before it took steps to correct them.  CFPB

July 28, 2022

U.S. Bank will pay a $37.5 million penalty and is required to make harmed customers whole for illegally accessing their credit reports and opening new, unauthorized accounts in these customers’ names. The bank’s actions violated the Consumer Financial Protection Act, the Fair Credit Reporting Act, the Truth in Lending Act, and the Truth in Savings Act. The bank pressured its employees to hit certain sales goals and implemented an incentive-compensation program that financially rewarded employees for selling bank products. As a result, the bank’s customers held unwanted accounts, had negative effects on their credit profiles, and lost control over their personally identifiable information—not to mention the time-consuming hassle of closing unauthorized accounts and resolving other consequences stemming from this practice.  CFPB

July 27, 2022

Trident Mortgage Company entered into a settlement agreement with federal and state agencies to resolve allegations that the non-bank lender intentionally discriminated against minority loan applicants by engaging in a pattern or practice of lending discrimination through “redlining.”  Trident agreed to invest over $20 million to increase credit opportunities in neighborhoods of color in the Philadelphia metropolitan area, and pay a $4 million penalty to the CFPB. DOJ; CFPB; PA; NJ; DE

July 26, 2022

Hyundai Capital America will pay $19 million for their failures to provide accurate information to nationwide credit reporting companies, tarnishing the records of more than 2.2 million consumer accounts through no fault of their own. Between January 2016 and March 2020, because of their outdated systems and processes, Hyundai violated the Fair Credit Reporting Act and failed to: report complete and accurate loan and lease account information; provide date of first delinquency information when required; modify or delete information when required; have reasonable identity theft procedures; and have reasonable accuracy and integrity policies and procedures. CFPB

July 14, 2022

Bank of America will pay fines totaling $225 million to following federal investigation into its administration of state unemployment insurance and other public benefit programs, which it provided pursuant to contracts with 12 states to deliver benefits through prepaid debit cards. When demand for benefits surged with the COVID-19 pandemic, the Bank adopted automated fraud detection practices which it the government alleged it knew or should have known would lead to its incorrectly freezing or blocking accounts. The CFPB and OCC found that the Bank imposed unreasonable barriers that made it difficult for people to report fraudulent use of their cards or unfreeze their prepaid debit cards, and failed to establish adequate operational processes, risk management, and internal controls. In addition to the penalties – $100 million imposed by the CFPB and $125 million imposed by the OCC – the Bank was ordered to provide redress to consumers and take corrective action with respect to its oversight over the programs.  CFPB; OCC

May 17, 2022

R360 LLC and its owner, Steven Doumar, were hit with a $3.8 million civil penalty judgment under the Opioid Addiction Recovery Fraud Prevention Act of 2018, for deceiving people seeking addiction treatment. The case, a first for the FTC under the Act, alleges that R360 made misrepresentations in its television ads for its “R360 Network,” comprised of supposed addiction treatment and recovery specialists. R360 and Doumar touted a rigorous evaluation process for its service providers, to meet the customers’ individualized needs, when, according to the government’s complaint, Doumar was the one responsible for assessing and selecting the treatment centers, even though he had no expertise or education in the field. The FTC also secured an order prohibiting Doumar from making similar misrepresentations going forward. FTC

April 15, 2022

Caribbean Saint James School of Medicine a/k/a Human Resource Development Services, Inc., and its operator Kaushik Guha will pay $1.2 million in refunds to students who were lured by exaggerated promises of future success. For a period spanning at least 4 years, the defendants misrepresented their students’ medical license exam pass rate and misrepresented their residency match rate, stating that theirs was equal American schools’ match rate. Defendants violated the FTC’s Holder Rule, which requires specific notice to credit-holding consumers informing them of their right to assert claims, and also failed to provide a CPR disclosure in their credit agreements. FTC

March 17, 2022

USAA Federal Savings Bank will pay $140 million in penalties and admit that it willfully failed to implement and maintain an anti‑money laundering (AML) program that met the requirements of the Bank Secrecy Act, and willfully failed to submit timely and accurate suspicious activity reports.  FinCEN imposed a $140 million penalty, and the bank will receive credit for its payment of a $60 million penalty imposed by the Office of the Comptroller of the Currency (OCC) for related violations. FinCEN; OCC