Consumer Finance and Fintech Blog

Timely Updates and Analysis on Consumer Finance and Fintech

On November 16, the California DFPI released Version 2.0 of its Annual Report of Finance Lenders, Brokers and PACE Administrators Licensed under the California Financing Law (CFL).  The Annual Report examined unaudited data gathered from finance lenders, brokers, and Property Assessed Clean Energy (PACE) administrators licensed under the CFL, as well as new data from the “buy now, pay later” or BNPL industry.
Continue Reading DFPI Reports Increase in Consumer Loans Under $2,500, Decrease in Consumer Loans Between $2,500 and $10,000

On November 18, the Chief Counsel of the Office of the Comptroller of the Currency (OCC) issued a fourth interpretive letter (Letter 1179) regarding whether it is permissible for national banks and federal savings associations to engage in certain cryptocurrency, distributed ledger, and stablecoin activities.  The letter clarifies ambiguities in the previous three letter including  the authority of a bank to engage in certain cryptocurrency activities and the authority of the OCC to charter a national trust bank.
Continue Reading OCC Chief Counsel Clarifies Bank Authority to Engage in Crypto

On November 23, the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency (“banking agencies”) released a joint statement recognizing that the emerging crypto-asset sector presents potential opportunities and risks for banking organizations, their customers, and the overall financial system.
Continue Reading Banking Agencies Provide Crypto-Asset Roadmap as a Result of Interagency “Policy Sprints”

On November 17, a majority of the active judges of the U.S. Court of Appeals for the Eleventh Circuit issued an order sua sponte to rehear Hunstein v. Preferred Collection and Management Services, Inc., en banc.  The order also vacates the October 28 opinion, meaning that the opinion is no longer binding precedent in the Eleventh Circuit.  The Eleventh Circuit will next state the specific issues on which it requests briefing and establish the timing for rehearing en banc.
Continue Reading Eleventh Circuit orders en banc rehearing in 𝘏𝘶𝘯𝘴𝘵𝘦𝘪𝘯

On November 8, New York Governor Kathy Hochul signed into law the Consumer Credit Fairness Act (Act) (S.153/A.2382).  The Act contains a series of amendments to New York’s Civil Practice Law and Rules (CPLR) that significantly impact debt collection lawsuits filed in New York state courts by creditors and third-party debt collectors.  The key amendments to the CPLR include the following:
Continue Reading New York Enacts Consumer Credit Fairness Act, Impacting Debt Collection Actions

Building on his remarks to the Blockchain Association and the American Fintech Council earlier this month, the Acting Comptroller of the Currency, Michael J. Hsu, issued a statement on November 16 before the Federal Reserve Bank of Philadelphia Fifth Annual Fintech Conference (we discussed Hsu’s previous remarks in an earlier Consumer Finance & FinTech Blog post here).  As in his prior statement, Hsu points to concerns that the rapidly growing FinTech industry and crypto firms, which currently sit outside of the so-called bank regulatory perimeter, ought to be proactively regulated and supervised in order to avert another 2008-like financial
Continue Reading OCC: Modernize the Bank Regulatory Perimeter on Bank-Fintech Partnerships

The CFPB, OCC, FDIC, NCUA, and state financial regulators issued a statement this week ending the temporary supervisory and enforcement flexibility provided to mortgage servicers due to the COVID-19 pandemic by the agencies.  In April 2020, the banking agencies issued an interagency statement that relaxed supervision and enforcement of mortgage servicers’ compliance with certain requirements because of constraints caused by the pandemic.  For instance, the banking agencies indicated that they would not intend to take supervisory or enforcement action against mortgage servicers for delays in sending certain early intervention and loss mitigation notices and taking certain actions relating to loss
Continue Reading Banking Agencies: Mortgage Servicers Should Prepare For Increased Scrutiny

California Governor Newsom announced the appointment of Clothilde “Cloey” Hewlett as the next Commissioner of the Department of Financial Protection and Innovation (DFPI).  She will start after Thanksgiving, when she will take over for the Acting Commissioner, Christopher Shultz.  Hewlett is the current Executive Director and Chief Legal Officer for the Cal Alumni Association, and previously served as Undersecretary of the State and Consumer Services Agency and Interim Director of the Department of General Services.  She also has extensive enforcement experience, previously serving as an Assistant District Attorney for the San Francisco District Attorney’s Office, Criminal Investigator with the City
Continue Reading New Commissioner Appointed to lead CA DFPI: Cloey Hewlett

New York’s chief law enforcement agency appears to have squandered an opportunity to bring much needed guidance to the digital assets space.  On October 18, the Office of New York Attorney General Letitia James (“NYAG”) issued a press release warning New York businesses offering interest-bearing accounts to customers who deposit virtual currency with them without having registered under General Business Law § 352, et seq. (the “Martin Act”) that they are breaking the law.
Continue Reading NYAG’s Warning to Crypto Businesses Muddies Regulatory Waters

On November 3, Acting Comptroller of the Currency, Michael J. Hsu, remarked at the American Fintech Council’s Fintech Policy Summit 2021 about the growth in the digitalization of banking including the trend and attendant risks associated with keeping cryptocurrency outside of the bank regulatory system (we discussed Hsu’s previous remarks on crypto trends and risks in an earlier Consumer Finance & FinTech Blog post here).  Hsu noted that the cryptocurrency space includes “synthetic banking providers” (SBPs) who “operate out of the reach of bank regulators and free of bank rules.”  Hsu explained that “[m]any of these universal crypto firms
Continue Reading OCC Calls for Regulation of Crypto Banking

On November 1, the President’s Working Group on Financial Markets (PWG), the FDIC, and the OCC announced the release of a report on stablecoins — virtual currencies that, unlike Bitcoin, are backed by assets like gold or fiat currency. Stablecoins aim to eliminate the hesitation many consumers have about mainstream cryptocurrencies, namely their unpredictable volatility.
Continue Reading President’s Working Group Releases Report on Stablecoins

On October 28, the FTC issued a new enforcement policy statement warning companies against deploying “illegal dark patterns” that trick or trap consumers into subscription services, and often making websites difficult to navigate to find cancellation or refund options.  The statement is intended to assist marketers by providing specific guidance on the FTC’s interpretation of existing law as it applies to “negative option marketing” through deceptive sign up tactics, including unauthorized charges or ongoing billing that is impossible to cancel.  The policy statement notes that “[n]egative option offers come in a variety of forms, but all share a central feature: each
Continue Reading FTC to Increase Enforcement Against “Dark Patterns” Directed at Consumers

On October 27, the FTC announced a final rule amending the Standards for Safeguarding Customer Information, known as “the Safeguards Rule,” under the Gramm-Leach-Bliley Act, which is applicable to a broad range of non-banking financial institutions, such as check-cashing businesses, payday lenders, mortgage brokers, nonbank lenders, personal property or real estate appraisers, professional tax preparers, courier services, and credit reporting agencies to develop, implement, and maintain a comprehensive security system to keep their customers’ information secure.
Continue Reading FTC Finalizes Safeguard Rules for Non-Bank Financial Institutions

On October 28, newly approved CFPB director, Rohit Chopra, made his first appearance before the House Financial Services Committee since his narrow approval by the Senate.  Director Chopra focused on topics with bipartisan appeal:  the Bureau’s enforcement efforts aimed at large companies, ways it may try to help small businesses (including small financial companies) and the importance of strong relationships between banks and customers.
Continue Reading CFPB Director Chopra Appears at First House Hearing Since Approval as Director

The CFPB and DOJ, in cooperation with the OCC, filed a complaint and proposed consent order last week in the Western District of Tennessee against a national bank alleging that the bank violated the Fair Housing Act (FHA), the Equal Credit Opportunity Act (ECOA) and its implementing regulation, Regulation B, and the Consumer Financial Protection Act of 2010 (CFPA).  Specifically, the joint complaint alleges that the bank:
Continue Reading CFPB, DOJ and OCC Take Action Against National Bank for Alleged Redlining