The Consumer Protection Branch of the Civil Division of the U.S. Department of Justice celebrated its 50th-anniversary last year. “Following that milestone…[the Branch just issued its] first-ever report highlighting its recent work for consumers[,Recent Highlights]. For those of you not acquainted with the Branch,
The Consumer Protection Branch leads Department of Justice efforts to enforce laws that protect Americans’ health, safety, economic security, and identity integrity. To accomplish its mission, the Branch brings both criminal and affirmative civil enforcement cases throughout the country. The Branch uses its strong relationships with U.S. Attorneys’ Offices and investigative agencies, expertise with complex litigation, and nationwide reach to respond nimbly to emerging consumer threats. Areas of enforcement focus for the Branch include
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Deceptive Practices, Telemarketing, and Data Privacy. Through litigation under a variety of laws and regulations, including those administered by the Federal Trade Commission, the Consumer Protection Branch combats a wide range of deceptive trade practices, including those affecting consumers’ identity integrity. The Branch also is a specialist in combatting telemarketing violations, pursuing litigation, advising U.S. Attorneys’ Offices, and participating in the Department’s Executive Working Group on Telemarketing Violations.
The Branch has “more than 200 attorneys, support professionals, and embedded law enforcement agents.” Of interest to CDIA members, the Branch, along with the FTC recently “announced that a federal court in Houston, Texas, entered a permanent injunction barring a credit repair company and its CEO from representing that it can repair or improve consumers’ credit scores. The court also entered a preliminary injunction that prohibits the defendants from making large or non-essential expenditures to preserve assets for consumer redress.”
The Branch is among the only DOJ units to have both civil and criminal authority.
The Branch’s report notes its work in “enforcing statutes administered by the FTC involves complex civil and criminal litigation [and how it] litigates actions referred by the FTC seeking civil penalties for violations of [FCRA].”
Two cases of interest to CDIA members were highlighted:
- United States v. Adrianzen (S.D. Fla.). In May 2021, Angel Adrianzen was sentenced to 121 months in prison for conspiring with call-center operators to threaten and defraud Spanish-speaking U.S. consumers. Adrianzen’s coconspirators falsely threatened victims with court proceedings, negative marks on their credit reports, imprisonment, or immigration consequences if they did not pay for purportedly delivered products. Adrianzen received victims’ payments despite knowing that the call centers used fraudulent and extortionate tactics. Adrianzen was also convicted of, and sentenced for, two counts of possessing child pornography for images found on his computer and cell phone during the investigation of the fraud scheme.
- United States v. Vivint Smart Home, Inc. (D. Utah). In May 2021, the court issued a stipulated order imposing a permanent injunction against home security company Vivint and ordering it to pay $15 million in civil penalties and $5 million in consumer redress. The complaint alleged that Vivint failed to implement an Identity Theft Prevention Program, allowed its sales representatives to obtain credit reports of unsuspecting consumers without their knowledge or consent, and sold false debt to buyers or debt collectors in violation of the Fair Credit Reporting Act (FCRA) and the FTC’s Red Flags Rule. The civil penalties award is the most ever awarded for alleged FCRA violations.
As noted in a recent Law 360 article, “[i]n June 2020, then-Principal Deputy Assistant Attorney General Ethan Davis referred to the CPB as ‘up-and-coming,’ noting that the CPB had tripled in size since Eyler started just a few years before. As detailed in the new report, the CPB has continued to have an outsized presence in the enforcement of consumer protection laws across the country.” The article by attorneys at Wiley Rein LLP predicts what’s ahead for the Branch. They write:
Given U.S. Attorney General Merrick Garland’s stated focus on prosecution of corporate crime, we expect the CPB to achieve additional civil and criminal resolutions involving violations of the FDCA and Consumer Product Safety Act related to opioids and consumer products safety issues. We also expect to see the CPB creatively using the statutes under its authority to prosecute the manufacturers and distributors of the components of illegal drugs and other dangerous products sold throughout the U.S.
Finally, we expect the CPB to continue its enforcement efforts to stem the continuing consumer fraud schemes targeting the elderly and other vulnerable populations through the use of mass marketing and telemarketing activities.
Accordingly, entities and individuals operating in the pharmaceutical, consumer products, technology, social media and e-commerce spaces should keep abreast of cases initiated by the CPB, as that will provide additional insight into where the CPB is training its firepower. And with the CPB having created a unit dedicated to corporate compliance, entities operating in those areas would be well advised to assess their compliance functions — a good starting point would be the Fraud Section’s Evaluation of Corporate Compliance Programs.
In addition, with the U.S. Supreme Court’s 2021 decision in AMG Capital Management LLC v. FTC case restricting the FTC’s ability to obtain equitable relief — such as restitution or disgorgement — practitioners should expect an increase in referrals of actions from the FTC to the CPB to seek civil penalties.
Finally, executives in these and similar industries need to recognize the CPB’s aggressive use of civil and criminal enforcement mechanisms, and assure themselves their entities are aware of, and meeting, their regulatory obligations.