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Other Federal Enforcement Actions

Numerous federal agencies have authority to institute enforcement proceedings against wrongdoers.  These agencies include:

  • The Department of the Treasury and its divisions including the Financial Crimes Enforcement Network (FINCEN), which is responsible for safeguarding the U.S. financial system from illicit use and money laundering including through enforcement of the Bank Secrecy Act, and the Office of Foreign Assets Control (OFAC), which enforces economic and trade sanctions. Whistleblowers with knowledge of violations of the Bank Secrecy Act can submit a claim under the Anti-Money Laundering Whistleblower Program.  Violations of other laws enforced by the Department of Treasury may give rise to claims under different whistleblower reward programs.
  • The Federal Trade Commission (FTC), which is charged with preventing anticompetitive, deceptive, and unfair business practices. The FTC can bring enforcement actions under U.S. antitrust laws and to stop unfair, deceptive and fraudulent business practices. The FTC does not have any authority to pay financial rewards to whistleblowers; however, conduct that is regulated by the FTC may also give rise to a claim under a different whistleblower reward program.
  • The Consumer Financial Protection Bureau (CFPB), created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which regulates the offering and provision of consumer financial products or services under the federal consumer financial laws, and has the authority to bring enforcement actions against financial service providers. While the CFPB accepts tips from whistleblowers, and applicable laws offer whistleblowers protection from retaliation, there is currently no provision for CFPB whistleblowers to receive financial rewards. However, conduct that is regulated by the CFPB may also give rise to a claim under a different whistleblower reward program.
  • The Environmental Protection Agency, which enforces federal environmental laws and regulations. The EPA does not currently have any authority to pay financial rewards to whistleblowers; however, conduct that is regulated by the EPA may also give rise to a claim under a different whistleblower reward program, and a number of federal environmental laws protect government or private employees reporting environmental violations under the statutes from retaliation.

Below are summaries of recent settlements and successful enforcement actions involving these agencies. If you believe you have information about fraud which could give rise to a claim under a whistleblower reward program, please contact us to speak with one of our experienced whistleblower attorneys.

June 5, 2023

Microsoft Corp. will pay $20 million in civil penalties for violating the Children’s Online Privacy Protection Act for allowing children under 13 to provide personal information—first and last name, email address, and their date of birth—when creating a user account for Microsoft’s Xbox system, without parental consent. Microsoft retained this data even when the account was not finalized, allowing Microsoft to send promotional messages and to share user data with advertisers. Microsoft failed to comply with COPPA’s notice provisions and will be required under the proposed order to clearly communicate with parents about their child’s data and follow set procedures to monitor Microsoft’s compliance with federal statutes regarding children’s online privacy. DOJ, FTC

June 2, 2023

Cycra and its officer, Chad James, will pay $221,385.66 and stop making deceptive claims about products being “Made in USA.” The company is prohibited from making unqualified U.S.-origin claims for any product, unless it can show the final assembly or processing, as well as all significant processing, occurs in the US. On qualified claims, the company must provide a clear and conspicuous disclosure about the extent to which the product contains foreign parts, ingredients or components, or processing. And for assembly claims, Cycra must ensure that the product is last substantially transformed in the U.S. FTC

May 31, 2023

One of the largest non-depository personal installment lenders in the country, OneMain Financial, has been ordered to pay $20 million in penalties and restitution for tricking borrowers into signing up for optional products and failing to refund interest on purchases they claimed were fully refundable.  As part of the settlement, OneMain was also ordered to adjust its cancellation policies.  CFPB

May 31, 2023

For compromising its customers’ privacy, Ring will pay $5.8 million in customer refunds and implement a mandated privacy and security program under a proposed order secured by the FTC. Rather than providing the security promised to its customers, Ring deceived customers by failing to restrict access to its customers’ videos, without consent, using them to train algorithms, and failing to implement security safeguards. Ring’s extensive failures enabled hacking, harassment, spying, and, in at least one case, a Ring employee viewed thousands of video recordings belonging to female users of Ring cameras that surveilled intimate spaces in their home. Ring took no steps until January 2018 to adequately notify customers of its security failures. FTC

May 23, 2023

Rhode Island-based Citizens Bank, one of the 15 largest banks in the country, has agreed to pay a $9 million fine to the CFPB’s victim relief fund in order to resolve allegations of violating consumer financial protection laws.  Citizens Bank allegedly failed to inform consumers of the status of disputed credit card charges, failed to investigate claims of unauthorized charges, and failed to issue refunds for fees arising from the charges.  CFPB

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

March 24, 2023

Tony and Charles Gonzalez, two brothers behind a telemarketing scam operating under the companies American Vehicle Protection Corp. (“AVP”), CG3 Solutions, Inc., and Tony Gonzalez Consulting Group, have been banned for life from participating in the extended automobile warranty industry and all outbound telemarketing, and ordered to pay a suspended $6.6 million in monetary judgment.  An order found the companies violated the FTC Act and Telemarketing Sales Rule by making unsolicited calls to hundreds of thousands of customers on the FTC’s Do Not Call List, then tricking them into paying thousands of dollars for “bumper to bumper” warranty protection.  FTC

March 23, 2023

One of the largest debt collectors in the country, Portfolio Recovery Associates, will pay more than $24 million to settle claims that it violated the Fair Debt Collection Practice Act, the Consumer Financial Protection Act, and a 2015 CFPB order by continuing to employ illegal debt collection tactics.  According to the press release, some of the illegal tactics used included threatening consumers with legal action or initiating debt collection lawsuits while failing to possess proper documentation about debts; failing to timely send documentation about debts, resolve disputes, or inform consumers about investigation outcomes; and collecting and suing on debts beyond statutes of limitations.  CFPB

March 15, 2023

Ohio-based LCA-Vision, doing business as LasikPlus and Joffe MediCenter, have been ordered to pay $1.25 million for using deceptive bait-and-switch advertising to lure customers into getting laser eye surgery.  LCA-Vision allegedly ran ads that led customers to believe they could get both eyes corrected for less than $300, when in fact, only 6.5% were eligible for that price, and for many, the price was for one eye only.  Once customers came in for their consultation, LCA-Vision would then quote them rates of between $1,800 and $2,295.  FTC

March 14, 2023

The maker of the popular Fortnite video game, Epic Games, has been ordered to pay $245 million to settle charges of employing dark patterns to manipulate players, including children, into making unwanted or unauthorized purchases.  The design tricks included counterintuitive and inconsistent button configurations as well as the ability to make purchases using a single click.  When customers disputed the charges, Epic allegedly prevented them from accessing their accounts.  FTC
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