Earlier this month, the Federal Trade Commission (FTC) announced a $10 million settlement with the online learning company ABCmouse for allegedly violating the FTC Act as well as the Restore Online Shoppers’ Confidence Act (ROSCA). The FTC Act prohibits unfair or deceptive acts or practices in or affective commerce. ROSCA makes it illegal to automatically
The Financial Crimes Enforcement Network (“FinCEN”) just issued another Advisory pertaining to two consumer fraud schemes exacerbated by the COVID-19 pandemic. This Advisory focuses on “imposter schemes” and “money mule schemes, ”which we discuss below.
This most recent Advisory is the latest in a string of pronouncements relating to the pandemic by FinCEN, which has stated that it regularly will issue such documents. As we have blogged, FinCEN issued an Advisory on May 18 regarding medical scams related to the pandemic, and issued a companion Notice that “provides detailed filing instructions for financial institutions, which will serve as a reference for future COVID-19 advisories.” On April 3, 2020, FinCEN also updated its March 16, 2020 COVID-19 Notice in order to assist “financial institutions in complying with their Bank Secrecy Act (“BSA”) obligations during the COVID-19 pandemic, and announc[ing] a direct contact mechanism for urgent COVID-19-related issues.”
The most recent Advisory again provides a list of potential red flags that FinCEN believes that financial institutions should be monitoring for, in order to detect, prevent, and report such suspicious activity. As we previously have commented: although such lists can be helpful to financial institutions, they ultimately may impose de facto heightened due diligence requirements. The risk is that, further in time, after memories of the stressors currently imposed by COVID-19 have faded, some regulators may focus only on perceived historical BSA/AML compliance failures and will invoke these lists not merely as efforts by FinCEN to assist financial institutions in deterring crime, but as instances in which FinCEN was putting financial institutions on notice.
Further, the most recent Advisory suffers from the fact that its list of red flags for imposter schemes is best directed at consumers themselves, rather than at financial institutions offering services to consumers: many of the red flags pertain to anomalies in the communications sent directly by fraudsters to targeted consumer victims – information that financial institutions rarely possess.…
Continue Reading FinCEN Issues Advisory on COVID-19 and Imposter and Money Mule Schemes
With the ongoing covid crisis leaving businesses of all sizes concerned about the short and medium term future, the intimidating task of considering a liquidation or restructuring is inevitably starting to become a reality. Although privacy in the bankruptcy context is nothing new—especially in the context of personally identifiable information (“PII”) held by a company—it…
The widespread use of social media platforms make them ideal for companies trying to reach a large audience. Pharmaceutical and consumer products industries frequently maintain their own social media accounts and partner with celebrities, physicians, patients, and “influencers”—i.e., individuals who have achieved online celebrity and whose posts reach a wide audience—to endorse their…
Over the past several years, state legislatures have become more aggressive in passing laws to protect consumers’ digital rights. The promulgation of state data security and privacy laws, such as the California Consumer Privacy Act, is a prime example of this trend. Another less publicized example of state oversight of online activities is legislation regulating…
On July 26, 2019, Connecticut Governor Ned Lamont signed into the law the state’s new Insurance Data Security Law, which imposes new information security, risk management, and reporting requirements for carriers, producers, and other businesses licensed by the Connecticut Insurance Department (“CID”). In doing so, Connecticut joins New York, South Carolina, Ohio, Michigan, and Mississippi…
Just two days after the Federal Trade Commission (“FTC”) announced a historic settlement of privacy and security claims against Equifax, the FTC today announced that Facebook has agreed to pay $5 billion in civil fines, arising from its violation of a 2012 consent order with the FTC. According to the FTC, this is the largest fine ever levied by a U.S. regulatory agency against a company for a privacy or data security violation by a factor of 20—and one of the largest penalties ever assessed by the U.S. government.
Continue Reading Facebook to Pay $5 Billion for Violating 2012 FTC Consent Order
Equifax has agreed to pay $575 million to settle consumer as well as state and federal regulatory claims for its 2017 data breach. This is the largest data breach settlement to date.…
Continue Reading Equifax Reaches Historic $575 Million Settlement Agreement Arising from 2017 Data Breach
The Denmark Data Protection Authority (DPA) ruled on April 11, 2019 that affirmative consent is required when companies record customer telephone calls. Because voice recordings constitute personal data under the European Union’s (EU) General Data Protection Regulation (GDPR), international companies that communicate via telephone with EU customers will need to take steps to ensure GDPR compliance.
In this case, Denmark’s largest telecommunications company, TDC A/S, provided disclosures to its customers that calls may be recorded for training purposes, but the company offered no mechanism for customers to opt-in or opt-out of the recording. During one such call, the customer requested that the call not be recorded, but the service agent said there was no way to turn off the recording. The Denmark DPA rejected the company’s arguments that its recording practices served a legitimate interest, such as the improvement of its customer service, and concluded that the company’s telephone recording practices violated the GDPR.…
Continue Reading Denmark DPA Rules on How GDPR Applies to Voice Recordings
Recently, legislators in Texas introduced two bills relating to consumer privacy and data protection: H.B. No. 4518, the Texas Consumer Privacy Act (“Texas CPA”) and H.B. No. 4390, the Texas Privacy Protection Act (“TPPA”). These bills bear a strong resemblance to the California Consumer Privacy Act (the “California CPA”), and would lay the groundwork for extensive administrative schemes protecting consumers’ rights to their personal information.
The Texas CPA bears strong similarity to California CPA. The Texas CPA, which, if adopted, would take effect September 1, 2020, applies to companies that do business and collect consumer data and:
- Derive at least 50% of their annual revenue selling consumers’ personal information; or
- Exceed $25 million in gross annual revenue (with that amount subject to adjustment by the Texas Attorney General every two years); or
- Buy, sell, or receive the personal information of at least 50,000 consumers, households, or devices for commercial purposes
- The Texas CPA would also apply to entities owned by companies that would be subject to the law. Similar to the California CPA, the Texas CPA contains express provisions governing rulemaking, implementation, and enforcement of the law. Notably, the legislation highlights various consumer rights, including (but not limited to):
- A consumer’s right to disclosure, from the business, of the personal information the business collected.
- A consumer’s right to deletion of the personal information that the business collected (with some limited, specific exceptions).
- A consumer’s right to opt out of the sale of his or her personal information.