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The Federal Trade Commission today told the U.S. House Subcommittee on Commerce, Trade, and Consumer Protection of the Committee on Energy and Commerce that, in response to the current economic crisis, the FTC has substantially increased its law enforcement efforts to protect consumers of financial services. The FTC recommended legislative and other remedies to enhance the agency’s effectiveness.

Eileen Harrington, Acting Director of the FTC’s Bureau of Consumer Protection, testified that during the past five years the Commission has brought more than 70 law enforcement actions involving mortgage advertising and marketing, mortgage servicing, debt settlement and credit counseling, debt collection practices, credit repair operations, lending discrimination, and other financial services issues. The Commission has also brought enforcement actions against loan modification and foreclosure rescue scams, including recent actions as part of a federal-state crackdown in this area.

Describing the agency’s enforcement of the Equal Credit Opportunity Act, which prohibits discrimination in lending decisions, the testimony noted that the Commission has brought more than three dozen cases against large subprime lenders, major non-mortgage creditors, and small finance companies, including an action announced yesterday alleging that Golden Empire Mortgage and its owner charged Hispanic consumers higher prices for mortgage loans than non-Hispanic white consumers. The testimony also discussed FTC enforcement activity regarding non-bank credit card marketers, including a 2008 court settlement in which CompuCredit agreed to pay an estimated $114 million in credits and cash refunds to subprime consumers to settle charges that it deceptively marketed its credit cards.

The testimony stated that the FTC has new rulemaking authority under the Omnibus Appropriations Act of 2009 to prohibit or restrict entities within its jurisdiction from engaging in unfair or deceptive mortgage loan practices. With this authority, the Commission intends to address unfair or deceptive mortgage loan modification and foreclosure rescue practices, mortgage servicing, and other mortgage lending activities. The Commission believes that its new rulemaking authority will enable it to more effectively protect mortgage borrowers and financially distressed homeowners.

Finally, according to the testimony, the Commission strongly supports new legislation, the proposed Consumer Credit and Debt Protection Act, that would allow the FTC to issue rules prohibiting or restricting unfair or deceptive practices relating to consumer credit or debt services. The legislation would give the Commission authority to obtain civil penalties for violations of rules that the agency promulgates with regard to consumer credit or debt. The Commission believes that having this civil penalty authority would increase deterrence of would-be violators and allow it to protect consumers more effectively.

The Commission vote authorizing the testimony was 4-0.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(FTC File No. P064814)

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