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Jonathan L. Pompan

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Jonathan Pompan is co-chair of the firm's Consumer Financial Services Practice Group and Consumer Financial Protection Bureau (CFPB) Task Force. Jonathan's practice focuses on providing comprehensive legal advice and regulatory advocacy to a broad spectrum of clients, such as nonbank financial products and services providers, advertisers and marketers, and trade and professional associations, before the CFPB, the Federal Trade Commission (FTC), state attorneys general, and regulatory agencies. At a time when government consumer protection agencies are stepping up their scrutiny, Jonathan develops strong and lasting relationships with clients by understanding their business objectives, helping them recognize opportunities and avoid legal pitfalls.

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Looking to avoid being caught in the crosshairs of increased scrutiny by the U.S. Department of Justice (DOJ), Consumer Financial Protection Bureau (CFPB), Federal Trade Commission (FTC), federal banking regulators, and state Attorneys General?

It’s no secret that consumer financial services providers and their vendors are being heavily scrutinized by federal and state enforcement agencies.  Federal and state enforcement officials have shifted their focus to financial services providers, including small dollar lenders, mortgage lenders and servicers, telemarketers, private student lenders, debt collectors, and their third party payment processors and other vendors.  The DOJ’s Operation Choke Point (OCP), and other government enforcement actions targeting financial services providers and vendors, are examples of this enforcement evolution.  In addition, state Attorneys General are actively enforcing the same laws and regulations as the CFPB. 
Continue Reading Understanding Federal and State AG Financial Services Enforcement Trends

The Federal Trade Commission (“FTC”) and Consumer Financial Protection Bureau (“CFPB”) have renewed their vow to continue to coordinate their activities and avoid duplication of federal law enforcement and regulatory efforts.  The FTC and CFPB have recently announced they reauthorized their ongoing Memorandum of Understanding (“MOU”), under the terms of the Consumer Financial Protection Act (“Act”), to coordinate efforts to protect consumers and avoid duplication of federal law enforcement and regulatory efforts, for three years.

As you may recall, back when the Dodd-Frank Act passed, there was much discussion about the potential for overlap between the FTC and CFPB’s jurisdiction to regulate and enforce consumer financial services laws.  The resulting act significantly altered the consumer financial protection landscape by consolidating rulemaking authority and, to a lesser extent, supervisory and enforcement authority in one regulator—the CFPB.  In contrast, the FTC had and retained statutory authority for enforcing general consumer protection requirements over nonbanks, but is prevented from conducting supervision over nonbanks and from regulating depository institutions altogether.  Due to the overlap between the FTC and CFPB’s authorities, the two agencies are required to coordinate.
Continue Reading The FTC and CFPB are Coordinating, but How Closely?

Successful marketing leads to sales, but sometimes those sales don’t result in customers making timely payments.  When that happens merchants and lenders often try to recover the cost of goods sold or loans through collections.  But what are the risk for merchants seeking to collect outstanding payments?  A lot, apparently, if two recent Consumer Financial Protection Bureau (“CFPB”) enforcement actions tell us anything.  Although “first-party” collections are largely exempt from the Fair Debt Collections Practices Act (“FDCPA”), the CFPB has begun using its enforcement powers to challenge first-party collection practices, including those used by retail merchants and other lenders.

In CFPB v. Freedom Stores, Inc., the CFPB (and several states) alleged that a Virginia-based retailer that operates near military bases nationwide engaged in unfair and deceptive collection practices by filing illegal lawsuits in distant forums, debiting consumers’ accounts without authorization, and contacting service members’ commanding officers.  To settle the allegations, Freedom Stores paid over $2.5 million in partial refunds to affected consumers.  Similarly, in In re DriveTime, a “buy-here, pay-here” car dealer paid an $8 million penalty to settle allegations that the company engaged in various unlawful collection practices.

These actions demonstrate the need for first-party creditors to implement appropriate collection policies and procedures or else risk CFPB scrutiny. At a minimum, creditors should consider the following when engaging in collections:Continue Reading Who’s on First? The CFPB’s Recent Focus on First-Party Collections

Looking back 2014 was a year of increased government scrutiny and compliance obligations for lead generators and online marketers, and so, for 2015, advertisers will need to ramp up compliance.  Avoiding banned terms, better use of disclosures, and other web and contact center compliance enhancements – with at least some reports of 66% of website URLs containing a potential compliance violation – should be a priority for the New Year.

At least, that’s what marketing compliance company PerformLine revealed last week in its infographic titled “Compliance Trends to Watch Out for in 2015.”  The infographic is part of its periodic overview of its research on websites and “contact centers” using “banned” compliance terms or missing “required” disclosures.  The infographic shows that 66% of credit monitoring sites, 72% of credit card sites, and 91% of finance sites contain potential compliance violations.  The company didn’t release more detailed breakdowns, but it did pinpoint certain keywords and disclosures as areas of concern.

One area that caught our attention was the identified a lack of required disclosures as one of its “Five Issues Causing Potential Violations.”  As we have written previously, the Federal Trade Commission (FTC) has placed renewed emphasis on clear disclosures in its Dot.com Disclosures Guides, and marketers’ ability to use fine print disclosures may be going the way of the dodo.  However, with high rates of non-compliance across all industries measured, it appears marketers may still be struggling with how to create clear and conspicuous online disclosures without detracting from the marketing message.Continue Reading Compliance Trends for Online Marketers

Online advertisers and marketers, including lead generators, and their service providers, have long had to contend with scrutiny from the FTC, state Attorneys General, competitors, and customers.  And, since 2012, advertisers of consumer financial products and services have had to contend with the CFPB.  Regardless of what you are promoting, bedrock advertising law says an advertiser can’t over promise, be misleading, or deceptive.  Moreover, depending on how you advertise, you may have to comply with numerous medium specific requirements, such as the Telemarketing Sales Rule.  Finally, some advertisers have to meet product specific regulations (e.g., consumer financial services laws).  And, the list goes on.  There are many ways for advertising to cause legal risk.  But, what are some of the root causes?  Survey says:
Continue Reading Striking Stats About Internet Marketing and Online Lead Generation

On August 12, the Consumer Financial Protection Bureau (CFPB or Bureau) entered into a consent order with an online mortgage company, its affiliated appraisal company, and its chief executive officer; they agreed to pay $20.8 million to settle allegations of deceptive advertising and illegal lending practices. This particular action, In the Matter of Amerisave Mortgage Corporation et al., reflects the CFPB’s continued focus on mortgage lending and online advertising practices. As such, this enforcement action provides a window into potential pitfalls that third-party marketers, including online lead generators, mortgage lenders, and brokers can encounter when advertising mortgages online.
Continue Reading Mortgage Lending: Important Lessons about Advertising, Affiliates, and Authorizations

3The Consumer Financial Protection Bureau (CFPB) turns 3 on Monday, July 21, 2014.   Created under Dodd-Frank, the CFPB already has made a significant impact on the consumer protection legal landscape and, more specifically, on how consumer financial services providers advertise and market their services.  Nevertheless, the CFPB’s track record continues to be controversial, despite…

A Federal Trade Commission (FTC) settlement with a lead buyer highlights the potential pitfalls with using lists from lead generators without considering how the lists were compiled or the requirements under the Telemarketing Sales Rule (TSR).  For lead generators, the settlement also provides a useful reminder of common hazards to avoid when developing leads.

The FTC, with the assistance of the U.S. Department of Justice, has settled a complaint against a home security company alleging that it illegally called millions of consumers on the FTC’s National Do Not Call (DNC) Registry to pitch home security systems.

According to the FTC, the lead generators that supplied the marketing list represented to the lead buyer that the lead generators had obtained consumers’ prior express consent to receive telemarketing calls about a home security system, but in reality, they had not.  Instead, the FTC’s complaint alleged that the leads were obtained by illegal means through rampant use by the lead generators of prerecorded message calls (also known as “robocalls”) from “Tom with Home Protection” and “safety survey” calls that were not bona fide surveys made to phone numbers on the DNC Registry.  According to the FTC’s complaint,
Continue Reading FTC Settlement Highlights Lead Generation “Warning Signs”

The Federal Trade Commission (“FTC”) recently announced that it intends to begin review of, and solicit comments on the Telemarketing Sales Rule (“TSR”).  The opportunity to provide comments will be a significant opportunity for marketers to weigh-in on one of the FTC’s main regulatory and enforcement tools.

Despite its focus on telemarketing practices, the TSR’s breadth and impact goes far beyond merely the telephone and the well-known Do Not Call Registry.  The TSR is one of the few methods the FTC can efficiently (although sometimes controversially) adopt rules prohibiting deceptive or abusive practices.  And, it’s the TSR’s broad scope of coverage that has made it a popular enforcement vehicle for the FTC, Consumer Financial Protection Bureau (“CFPB”), and state Attorneys General.

Since the TSR was promulgated it has undergone several significant expansions, and at the same time the marketplace for telemarketing has changed in significant ways that impact consumers and marketers. The TSR gives effect to the Telemarketing and Consumer Fraud and Abuse Prevention Act (the “Telemarketing Act”) that was signed into law in 1994. The Telemarketing Act directed the FTC to adopt a rule prohibiting deceptive or abusive practices in telemarketing and specified, among other things, certain acts or practices that should be addressed, and additional practices if found deceptive or abusive. Pursuant to its authority under the Telemarketing Act, the FTC promulgated the TSR in August 1995, and has subsequently amended the TSR on three occasions, in 2003, 2008, and in 2010. 
Continue Reading On Deck, Telemarketing Sales Rule Regulatory Review

Private Sector Schools and Third-Party Student Recruitment under FTC and CFPB Scrutiny The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) are intensifying their regulatory and enforcement focus on proprietary schools and third-party marketing companies.

In the fall of 2013, the FTC released revised Vocational School Guides (School Guides), which advise against deceptive marketing practices by businesses that offer vocational training.  While only a guide and not directly written for all degree-granting schools, the FTC’s discussion provides a useful roadmap for educational institutions for the type of conduct it may find objectionable.

The School Guides address questionable practices regarding misrepresentation of accreditation, the transferability of credit to other schools, government or employment agency affiliation, and testimonials or endorsements.  The Guides also warn against misrepresenting teacher or enrollment qualifications, the nature of courses, the availability of financial aid, and the availability of jobs for graduates.  In addition,
Continue Reading Private Sector Schools and Third-Party Student Recruitment under FTC and CFPB Scrutiny