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The U.S. Department of the Treasury recently released a report titled “Assessing Impacts of New Entrant Non-bank Firms on Competition in Consumer Finance Markets,” a product of the Biden administration’s effort to assess competition in different aspects of the economy. The report focuses primarily on FinTechs and other new entrant non-bank firms, including the consequences of their participation with insured depository institutions in core consumer finance markets (e.g., credit, deposits, and payments) and recommendations to enhance oversight of non-bank financial institutions.
Continue Reading Treasury Report Sets Guidelines For Oversight on FinTech Participation in Core Finance Markets

On November 15, the FTC announced a six month extension to the deadline for companies to comply with the Safeguards Rule. The Safeguards Rule requires non-banking financial institutions, such as mortgage brokers, motor vehicle dealers, and payday lenders, to develop, implement, and maintain a comprehensive security program to keep their customers’ information safe (we discussed the Safeguards Rule in a previous blog post here). The deadline for complying with some of the updated requirements of the Safeguards Rule is now June 9, 2023.
Continue Reading FTC Extends Deadline for Safeguards Rule Compliance to June 9, 2023

On November 3, the FTC and a software company operating internet-based telephone services filed an agreed upon proposed court order, which includes a $100 million fine, following an FTC suit alleging that the software company participated in illegal dark patterns and charged junk fees. In its original complaint, the FTC alleged that the software company provided simple ways to sign up for their phone plans, but made it difficult to cancel those plans, and harmed consumers by:
Continue Reading FTC Action Alleging Dark Patterns Forces Software Company to Pay Damages and Adopt New Practices

Recently, the FTC and California Department of Financial Protection (DFPI) sued several companies and owners for allegedly operating an illegal mortgage relief operation. This action alleges that the defendants’ conduct violated the California Consumer Financial Protection Law (CCFPL), the FTC Act, the FTC’s Mortgage Assistance Relief Services Rule (the MARS Rule or Regulation O), the Telemarketing Sales Rule, and the Covid-19 Consumer Protection Act.
Continue Reading FTC, DFPI Shut Down Mortgage Relief Operation

Recently, the CFPB released an outline of proposed measures related to the Bureau’s Dodd-Frank Section 1033 rulemaking efforts that would allow consumers the rights over their personal financial data. The outline discusses proposed regulations that would require covered data providers to make consumer financial data available directly to a consumer and to any third parties authorized by the consumer. Under these proposed regulations, consumers would be able to easily switch financial providers and transfer their account history to a new provider. In a high-level summary of the proposed regulations, the CFPB discusses the regulatory provisions it is considering proposing, including
Continue Reading CFPB Issues Proposed Rulemaking on Data Access and Portability

On October 26, the CFPB issued guidance to help banks avoid charging illegal overdraft fees on consumer deposit accounts. In its Circular 2022-06, the Bureau stated that overdraft fees assessed by financial institutions on transactions that a consumer would not reasonably anticipate likely violate the CFPA. The CFPB further highlighted two particular categories of so-called “junk fees” that likely qualify as unfair and unlawful under the CFPA (we covered the CFPB’s focus on junk fees in previous blogs here and here):
Continue Reading CFPB Issues Latest Crack Down on Junk Fees

On October 19, in Community Financial Services Association of America, Limited v. Consumer Financial Protection Bureau, a three-judge panel in the Fifth Circuit unanimously found the CFPB’s funding structure to be unconstitutional, holding that it violates the U.S. Constitution’s Appropriations Clause. This decision followed a challenge by the CFSA to the CFPB’s “payday rule,” which prohibits lenders from withdrawing loan payments from consumer accounts after multiple failed attempts due to insufficient funds.
Continue Reading Fifth Circuit Rules CFPB Funding Structure Unconstitutional in Next Turn of Litigation

On September 29, the CFPB released its annual report on residential mortgage lending activity and trends for 2021. Notably, the report shows a shift from refinance loans in 2020 to home purchase loans in 2021—with a greater share of home purchase loans going to Asian, Black, and Hispanic white borrowers relative to the share of home purchase loans for non-Hispanic white borrowers. Additionally, the top 25 closed-end lenders by loan volume held nearly half of the market share of residential mortgage lending; continuing a trend that has risen each year since 2018. Key findings from this year’s report includes:
Continue Reading CFPB Annual Report: End to Mortgage Refinancing Boom, Increase in Home Purchase Loans

On October 18, 2022, the CFPB sued a software company that manages online payment platforms claiming that it utilized unlawful enrollment practices to cause unknowing consumers to automatically enroll in annual subscriptions. According to the CFPB, the software company generated over $300 million in fees from approximately three million consumers through engagement in deceptive acts and “dark pattern” techniques in violation of the CFPA and EFTA by:
Continue Reading CFPB Sues Payment Platform as the Crack Down on Dark Patterns Continues

On September 29, the CFPB released a special edition of Supervisory Highlights on student loan servicing practices of loan servicers and schools lending to students directly. The report highlights three notable findings related to transcript-withholding practices: Federal Student Loan transfers, and Federal Student Loan payment relief and cancellation programs:
Continue Reading CFPB Supervisory Examinations Find Violations by Student Loan Servicers and University-Owned Lenders

On September 15, the FTC released a report, Bringing Dark Patterns to Light, that shows an increase in the use of sophisticated “dark pattern” design practices by retailers intended to manipulate consumers into making decisions that benefit the retailers at the consumers’ expense. The report examined the use of dark patterns across a variety of industries and contexts, including e-commerce, cookie consent banners, children’s applications, and subscription sales. The report highlighted four common tactics:
Continue Reading FTC Reports Rise in “Dark Pattern” Tactics in Consumer Markets

On September 22, the CFPB released its annual report providing an overview of the residential mortgage trends and activity in 2021 based on data collected from thousands of U.S. lending institutions under the Home Mortgage Disclosure Act (HMDA). Some of the key findings in the report include:
Continue Reading 2021 CFPB Annual Report Shows Increase in Home Purchase Loans, Decrease in Refinancing

On September 14, the New York Department of Financial Services (NYDFS) published a notice of proposed rules under New York’s Commercial Financing Disclosure Law (CFDL) (we discussed this previous rulemaking in a blog post here). Under the CFDL, commercial finance companies are required to give consumer-style loan disclosures to potential recipients when a specific offering of finance is extended for certain commercial transactions of $2.5 million or less. We note some items in particular from the latest proposed rule:
Continue Reading New York Publishes Proposed Rules on Commercial Financing Disclosures

On September 8, the U.S. Court of Appeals for the Eleventh Circuit issued an order in Hunstein v. Preferred Collection and Management Services, Inc. dismissing the case after determining that plaintiff failed to allege a concrete harm, and thus lacked standing to sue the debt collector for its use of a third-party mail vendor in connection with its debt collection activities (we discussed this case in a previous blog post here).
Continue Reading Eleventh Circuit Dismisses Debt Collection Letter Case For Lack of Standing

On August 30, the Commissioner of the California DFPI issued a notice of rulemaking proposing new regulations and amendments to current regulations implementing the state’s student loan servicing laws. The proposed regulations aim to implement the provisions of the Student Loan Servicing Act and the Student Loans: Borrower Rights law by:
Continue Reading California Regulator Proposes Changes to Student Loan Servicing Laws

Recently, the CFPB released a report outlining the challenges and risks inherent in the rapid evolution of the payment ecosystem, with a particular focus on emerging uses cases involving “super apps,” buy now, pay later (BNPL), and embedded payments, as well as their implications for consumers. The report notes that these changes create more opportunities for companies to aggregate and monetize consumer financial data, and for large players to dominate consumers’ financial and commercial lives.
Continue Reading CFPB Warns of Consumer Risk Over New Payment Products, Foreshadows Supervision of BNPLs