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In a significant ruling on March 19, the Third Circuit Court of Appeals held that the CFPB can proceed with its lawsuit against a group of Delaware student loan trusts rejecting their claims that they are just passive financing entities outside the reach of the Bureau’s authority. 
Continue Reading Third Circuit Ruling Gives CFPB Green Light to Enforce Against Student Loan Trusts

In its latest campaign against “junk fees,” the CFPB announced that it was requesting consumer feedback on fees incurred as part of the residential home loan closing process, such as title insurance, credit reporting, and origination fees, as well as appraisal costs. 
Continue Reading CFPB Renews Push on “Junk Fees” with Closing Costs in its Sights

On March 7, the FTC announced it had finalized substantial revisions to the Telemarketing Sales Rule (the proposed rule was discussed here). Since promulgated in 1995, the TSR has been amended four times, most recently in 2015. This latest revision to the TSR significantly expands its reach by bringing business to business (B2B) telemarketing calls within its scope. Moreover, the revisions substantially enhanced the TSR’s recordkeeping requirements which will likely have a major impact on telemarketers’ compliance efforts. Key revisions to the TSR include:
Continue Reading FTC Announces Major Expansion of Telemarketing Sales Rule

On March 1, the Louisiana Senate introduced SB 335, a bill that would place certain disclosure requirements on providers of commercial financing transactions. Specifically, “providers” (defined as persons who consummate more than five commercial financing transactions per year with businesses in Louisiana) would be required to disclose the following in connection with each commercial financing transaction they engage in:
Continue Reading Louisiana Becomes Latest State to Introduce Commercial Financing Disclosure Legislation

On March 6, the CFPB finalized its credit card late fee rule (previously discussed here) aimed at ensuring that late fees charged on consumer credit card accounts are “reasonable and proportional.” The rule amends Regulation Z, which implements the Truth in Lending Act, in two key ways:
Continue Reading The CFPB Finalizes Credit Card Late Fee Rulemaking

On March 5, the New York Attorney General filed a lawsuit against a network of over 30 lending companies and their officers alleging their involvement in a predatory “merchant cash advance” lending scheme that exploited New York businesses through fraudulent loans at “sky-high interest rates.” 
Continue Reading New York Attorney General Brings $1.4 Billion Lawsuit Against Merchant Cash Advance Lenders

In the latest development to challenges to the CFPB’s 1071 rulemaking, plaintiff trade associations, including the American Bankers Association and the Texas Bankers Association, have filed a motion for summary judgment requesting the court bar enforcement of the Bureau’s Small Business Lending Rule.
Continue Reading Trade Groups Continue Fight Against CFPB’s 1071 Small Business Rulemaking

On February 21, the Minnesota Attorney General settled an action against executives of a Montana-based tribal lender for alleged predatory lending practices. In its complaint, filed in October 2023, the AG alleged the company engaged in, among other things, unfair, deceptive and abusive trade practices, unfair collections practices (resulting in a federal RICO charge), unlawful usury practices, and violations of Minnesota’s short-term lending statute, in making small dollar installment loans to consumers bearing interest rates between 474% and 795%. The company allegedly led many Minnesotans to believe that the tribal entity was immune from state laws guarding against interest rate limits
Continue Reading Minnesota AG Bans Tribal Lender from Doing Business within the State

On January 30, a Tennessee-based community bank entered into a consent order with the Federal Deposit Insurance Corp. following the agency’s allegations that the Bank engaged in unsafe or unsound banking practices relating to its third-party risk management practices with its fintech partners. While the order does not list the FDIC’s concerns with the bank’s third-party partnerships, the order requires it to come up with a plan within 60 days to end its relationship with its “significant third-party fintech partners.” In addition, the bank must implement a program to evaluate and manage the risks associated with the fintechs it directly works with,
Continue Reading FDIC Issues Consent Order Against Tennessee Bank

On February 22, Attorney General Merrick B. Garland appointed Jonathan Mayer as the Justice Department’s inaugural Chief Science and Technology Advisor and Chief Artificial Intelligence Officer. Mayer will sit in the Justice Department’s Office of Legal Policy and lead the Department’s newly established Emerging Technologies Board which coordinates and governs AI and other emerging technologies across the Department. Mayer will also build a team of technical and policy experts in cybersecurity and AI. The Chief AI Officer position is a role required by President Biden’s Executive Order on AI. Mayer is an assistant professor of computer science and public affairs at
Continue Reading Justice Department Hire’s First Chief AI Officer

On February 21, a proposed class action lawsuit was filed against an auto finance company in the U.S. District Court for the Northern District of Georgia alleging various violations of the Military Lending Act (“MLA”). The named plaintiff is a “Covered Borrower” under the MLA, which includes active-duty military servicemembers and their dependents.
Continue Reading Auto Finance Company Faces Class Action Lawsuit for Targeting Military Families

On February 29, the CFPB issued a circular warning digital comparison-shopping websites and lead generators that practices that steer customers to certain financial products or services based on compensation received from companies that sell such financial products or services can be an abusive act or practice in violation of the Consumer Financial Protection Act. The Bureau’s guidance will have a major impact on comparison-shopping websites for mortgage, credit cards, and short-term installment lending, among others.
Continue Reading The CFPB Takes Aim at Digital Comparison Shopping Websites and Lead Generators

On February 22, California Attorney General Rob Bonta sent letters to 197 state-charted banks and credit unions warning them that certain fees they charge may constitute “unfair” business practices under California’s Unfair Competition Law and the federal Consumer Financial Protection Act. Bonta encouraged the financial institutions to review their policies and procedures to ensure consumers were not being assessed these fees.
Continue Reading California AG Warns State-Chartered Banks and Credit Unions on Fees

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