Charles A. Harwood, Deputy Director of the Bureau of Consumer Protection of the Federal Trade Commission, testified before a U.S. Senate committee last week about military consumer protection issues. Deputy Director Harwood's remarks, titled "Soldiers as Consumers: Predatory and Unfair Business Practices Harming the Military Community," focused on the FTC's efforts to combat practices that affect servicemembers and their families, touching on recent enforcement activities and educational initiatives.

Deputy Director Harwood highlighted a recent case in which the FTC alleged that Mortgage Investors Corporation, which it identifies as "one of the nation's largest refinancers of veterans' home loans," had made misleading claims directed at current and former servicemembers. He identified the case, United States v. Mortgage Investor Corp. of Ohio, Inc., as "the first action to enforce the Mortgage Acts and Practices – Advertising Rule (MAP Rule)," which has been recodified by the CFPB as Regulation N. The case, which also included allegations that Mortgage Investors Corporation violated the Do Not Call provisions of the FTC's Telemarketing Sales Rule, was settled with the defendant agreeing to pay a $7.5 million civil penalty.

Deputy Director Harwood explained that enforcement actions like the Mortgage Investors case often flow from the FTC's "active monitoring of the marketplace." For example, the FTC uses its Consumer Sentinel Complaint Network and its military-specific subset, Military Sentinel, to track and analyze consumer protection complaints. He said that the top complaint categories for military consumers in 2012 were debt collection; impostor scams; fraud involving offers of prizes, sweepstakes, or gifts; unlawful banking or lending practices; and scams that offer mortgage foreclosure relief or debt management services.

Although Deputy Director Harwood suggested that the complaint trends among military consumers "largely mirror those of the general population," he noted that "mortgage foreclosure relief and debt management services" are exceptions to that general rule. For 2012, they were the sixth-most common complaints for military members, but the 15th-most common for the population as a whole.

Deputy Director Harwood emphasized that the FTC continues to expand its relationships with other agencies and organizations, including the Department of Defense, Department of Veterans Affairs, and the CFPB. The FTC and these organizations will continue to work together to take and review complaints, initiate enforcement actions, and organize initiatives to educate servicemembers of their rights.

Deputy Director Harwood's remarks suggest that the FTC, CFPB, and other agencies will continue a trend of increased scrutiny of issues affecting servicemembers and their families. Industries under FTC and CFPB jurisdiction, particularly those the FTC has identified as the source of significant numbers of complaints, should carefully evaluate their policies relating to servicemembers. Also testifying before the Senate committee were Holly Petraeus, CFPB Assistant Director with the Office of Servicemember Affairs, and representatives from the New York Attorney General's office.

On December 12, 2013, from 12 p.m. to 1 p.m. ET, Ballard Spahr lawyers will conduct a webinar, "Understanding the CFPB's Defense Strategy on Military Lending." Our webinar presenters will discuss recent developments pertaining to the MLA and the Servicemembers Civil Relief Act and the effects of these laws on the financial services industry. More information and a link to register are available here.

Ballard Spahr's Mortgage Banking Group combines broad regulatory experience assisting clients in both the residential and commercial mortgage industries with formidable skill in litigation and depth in enforcement actions and transactions. It is part of the firm's Consumer Financial Services Group, which publishes CFPB Monitor, a blog that focuses exclusively on important CFPB developments. To subscribe, use the link provided to the right.

For more information, please contact CFS Practice Leader Alan S. Kaplinsky at 215.864.8544 or, John L. Culhane, Jr., at 215.864.8535 or, Anthony C. Kaye at 801.531.3069 or

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