Financial

On February 15, Senators Sherrod Brown (D-OH), Jack Reed (D-RI) and Elizabeth Warren (D-MA) sent a letter to a leading payment app seeking clarification of its reimbursement policy for victims of imposter scams. Calling its protocol for reporting fraud and scams “unnecessarily complicated,” the Senators asked the payment app to add more categories of scams for which users can be reimbursed, and to streamline its process for reporting fraud, scams, and unauthorized transactions. The Senators noted that the company’s policy did not make clear which types of scams would qualify for reimbursement or what steps consumers needed to take to exercise
Continue Reading Congress Continues to Pressure Payment Apps to Change their Fraud Policies

On February 16, the CFPB issued revised rules updating its internal supervisory appeals process for institutions seeking to appeal a compliance rating or an adverse material finding. The updated rules open up new avenues for financial institutions to challenge supervisory evaluations and reflect a significant evolution from its 2015 updates
Continue Reading CFPB’s Enhanced Supervisory Appeals Process: A Potentially Beneficial Shift for Financial Institutions

In a move to bridge significant data gaps identified through its February 2023 Auto Finance Data Pilot where it sent information requests to nine large auto lenders about their lending portfolios, the Consumer Financial Protection Bureau is requesting comments for the collection of additional auto financing data. As with its prior requests, the Bureau is issuing these orders under its market monitoring authority which allows it to “gather information from time to time regarding the organization, business conduct, markets, and activities of covered persons and service providers.” 12 U.S.C. C. § 5512(c)(1) & (4). Compliance with the requests is mandatory.
Continue Reading CFPB Ramps Up Auto Finance Scrutiny: A Look at the New Data Collection Initiative

California’s Legislature has been busy, proposing a number of bills that may affect California food retailers and manufacturers, should they be signed into law. Some could become effective as early as July 2024. Below are the highlights of some of these bills.
Continue Reading New Bills Being Served Up That May Soon Impact Food Retailers and Manufacturers

On January 12, South Dakota’s Division of Banking issued a mandate setting March 31, 2024 as the deadline for all South Dakota licensed money lenders and non-residential mortgage brokers to comply with their Bank Secrecy Act/Anti-Money Laundering (BSA/AML) requirements under a 2020 Final Rule published by the Financial Crimes Enforcement Network (FinCEN). FinCEN’s 2020 Final Rule notably closed a regulatory loophole, extending BSA/AML requirements to banks that lack a federal functional regulator. A “federal functional regulator” is any one of the following: Federal Reserve Board, FDIC, NCUA, OCC, OTS, SEC, or CFTC. There are over 550 banks that currently lack a federal functional
Continue Reading South Dakota Lenders on Tight Deadline for BSA/AML Compliance

On February 7, a Florida-based cryptocurrency company agreed to settle charges brought by the SEC and the California Department of Financial Protection and Innovation alleging that, an interest-earning feature offered on the company’s platform, constitutes an illegal securities offering.
Continue Reading Crypto Platform Settles SEC and State Regulator Charges over Interest Bearing Feature on Customer Accounts

On January 11, 2024, an administrative law judge for the NLRB issued an opinion holding that the employment agreement used by a major mortgage lender for all of its approximately 6,000 employees violates the National Labor Relations Act (NLRA). The mortgage lender’s standard employment contract included provisions that: 1) restricted disclosure of confidential information; 2) governed the use and return of company property, information, and communications; and 3) required that certain disputes be resolved through arbitration. Many of these provisions are common in employment agreements between lenders and their employees. Nevertheless, the ALJ found that parts of these provisions violated the NLRA because
Continue Reading NLRB Finds Common Provisions in Mortgage Lender Employment Contract Illegal

On January 29, a Missouri-based bank and its Kansas-based fintech loan servicer filed a joint motion to dismiss a purported class action filed against them alleging violations of the Georgia Installment Loan Act (GILA) and state RICO law, arising out of a consumer installment loan. 
Continue Reading Bank Partnership Moves to Dismiss Class Action Asserting Violations of Georgia Rate Cap Law

On February 5, several trade groups, including the American Bankers Association, the Independent Community Bankers of America, and the U.S. Chamber of Commerce, filed suit against the Federal Reserve Board, the FDIC, and the OCC accusing the regulators of exceeding their authority under federal law when promulgating new rules under the Community Reinvestment Act (CRA). 
Continue Reading Bank Groups Sue to Overturn New Community Lending Rules

California has recently proposed legislation that, if enacted, would impose a new licensing requirement for any person providing “commercial brokerage” services to a borrower in connection with a commercial loan of $5,000 or more. The legislation, Senate Bill 869, would expand the current commercial loan broker licensing requirements under the California Financing Law, which, as of now, does not require a license to broker non-real estate secured commercial loans.
Continue Reading California Bill Proposes to License All Commercial Loan Brokers

On January 2, 2024, New York Governor Kathy Hochul announced “a sweeping consumer protection and affordability agenda,” what she termed as the “most significant expansion of consumer laws since 1980.” As part of that agenda, she announced expanding UDAAP protections and registration requirements for BNPL providers.
Continue Reading New York Governor Consumer Protection Agenda Targets Unfair and Deceptive Practices and BNPL Providers

On January 18, the FTC issued a consent order prohibiting a digital platform and data aggregator from selling or licensing precise consumer location data on the grounds that it did not obtain consumer consent before collecting and selling the data to advertisers.
Continue Reading FTC Cracks Down on Data Aggregator, Bans Sale of Precise Consumer Location Data