On May 17, the FDIC and the CFPB took parallel actions to combat the misuse of  the name or logo of the FDIC and deceptive representations about deposit insurance.  The FDIC approved a final rule implementing its statutory authority to prohibit any person or organization from making misrepresentations about FDIC deposit insurance or misusing the FDIC’s name or logo.  The CFPB followed suit by releasing Consumer Financial Protection Circular 2022-02 providing that company’s likely violate the CFPA’s prohibition on deception acts or practices if they misuse the name or logo of the FDIC or engage in false advertising or make…
Continue Reading FDIC and CFPB Take Action to Protect Against Misrepresentations about FDIC Insured Status and Misuse of Name and Logo

On May 9, the CFPB released an advisory opinion affirming that ECOA and its implementing rule, Regulation B, protect not only those persons actively seeking credit, but also those who have sought and received credit.  The CFPB stated in the opinion that “[d]espite this well-established interpretation, the Bureau is aware that some creditors fail to acknowledge that ECOA and Regulation B plainly apply to circumstances that take place after an extension of credit has been granted, including a revocation of credit or an unfavorable change in the terms of a credit arrangement.”  In addition, the Bureau states that it is…
Continue Reading CFPB Affirms that ECOA Protects Consumers After Receiving Credit

In March, U.S. Department of Treasury issued its annual General Explanations of the Administration’s Revenue Proposals, commonly known as the “Green Book.”  Among other revenue proposals, the Treasury addressed the treatment of on-demand pay arrangements or earned wage access (EWA) programs, which have risen in popularity in recent years (previously discussed in our Labor and Employment Blog).  EWA programs generally allow employees to access accrued wages before the end of their regular pay cycle.
Continue Reading Treasury Department Proposes Non-Loan Status for Earned Wage Access

On April 29, the CFPB filed a proposed order in federal court seeking final judgment against three California-based defendants for engaging in unlawful fee-charging practices and deceptive telemarketing. According to the complaint, the defendants, a student loan debt relief business and a general debt-settlement company, along with their owner and CEO charged illegal upfront fees and deceived customers into paying for debt relief services in violation of the Consumer Financial Protection Act (CFPA) and Telemarking Sales Rule (TSR).  The CFPB alleges that defendants wrongfully charged more than 9,000 consumers with federal student-loan debt a total of approximately $10.5 million in…
Continue Reading No Relief in Sight: CFPB and FTC Continue to Take Action Against Debt Settlement Companies

On May 2, the CFPB released its Spring 2022 Supervisory Highlights. The findings of the report, which generally cover examinations completed between July and December 2021, are issued to help institutions and the general public better understand how we examine institutions for compliance with Federal consumer financial laws.  Highlights include the following findings:…
Continue Reading CFPB Issues Spring 2022 Supervisory Highlights

On May 2, the CFPB published a blog post demonstrating its commitment to “a fair, transparent, and competitive auto lending market” by calling attention to add-on products for which auto dealers and finance companies “often charge consumers all payments for any add-on products as a lump sum at origination of the auto loan, and they generally include the lump sum cost as part of the total vehicle financing agreement.”  CFPB examiners have focused on how servicers manage these add-on product charges when the loan ends prior to when the add-on product’s potential benefits end.
Continue Reading CFPB Blog: Stop Overcharging for Auto Loan Add-on Products

In an apparent follow up to President Biden’s March Executive Order on Digital Assets (which we previously discussed here), this week, California Governor Gavin Newsom signed a similar executive order aiming to foster responsible innovation, bolster California’s innovation economy, and strengthen consumer protection through creating a transparent regulatory and business environment for Web3 companies.  Newsom’s executive order credits Biden’s executive order as paving the way for the assessment of key issues raised by crypto-assets and sets California on a path to harmonize its nascent crypto regulatory framework with forthcoming federal rules and guidelines and, hopefully, create regulatory clarity for…
Continue Reading Governor Newsom Signs Blockchain Executive Order

On April 28, the FTC proposed updating the Telemarketing Sales Rule (TSR) to extend protections against telemarketing tricks and traps to small businesses and to strengthen defenses against other telemarketing schemes that negatively impact consumers. The agency is seeking public comments on the proposed changes to the rule.
Continue Reading FTC Proposes Updates to Telemarketing Sales Rule, Business to Business Exemption in Order To Protect Small Businesses

On April 28, Governor Newsom signed Senate Bill 577 which will, among other things, bring back the California Financing Laws (CFL) licensing exemption which permits a lender to make a single commercial loan within a 12-month period without first obtaining a license.  The previous law, which contained this exemption, had expired by its terms on December 31, 2021.  The California Department of Financial Protection and Innovation has seen an uptick in California finance lender license applications this year, and speculation is that one of the reasons for that was the loss of this exemption.  The new law takes effect immediately…
Continue Reading California Reinstates Licensing Exemption for Single Commercial Loan Made During 12-month Period

In April, we continued to see a steady pace in the seriousness and frequency of crypto enforcement actions by state and federal law enforcement.  (See our March 2022 Crypto Enforcement Actions Roundup blog here where we discuss the regulatory guidance and jurisdiction of federal and state agencies to enforce these matters.)…
Continue Reading April 2022 Crypto Enforcement Actions And Regulatory Guidance Roundup

On April 28, the New York Department of Financial Services (NYDFS) provided a “Virtual Currency Guidance” update.  The guidance is directed towards all virtual currency businesses licensed under 23 NYCRR Part 200 (the New York BitLicense) or limited purpose trust companies chartered under the New York Banking Law (collectively, “VC Entities”).”  The guidance mandates VC Entities to employ blockchain analytics to design and implement effective BSA/AML policies, processes, and procedures, including, for example, those relating to customer due diligence, transaction monitoring, and sanctions screening.
Continue Reading NYDFS Provides Guidance on the Use of Blockchain Analytics to Maintain Compliance

On April 26, the DOJ filed a federal complaint on behalf of the FTC against a Voice over Internet Protocol (VoIP) service, a related company, and its owner for allegedly facilitating the transmission of illegal telemarketing robocalls.
Continue Reading FTC, DOJ Seek to Enjoin Internet Provider From Facilitating Illegal Robocalls

On April 8, the California Department of Financial Protection and Innovation (DFPI) filed a cross-complaint against a Chicago-based FinTech company alleging that as the “true lender” of consumer installment loans, it is subject to and also violated the Californian Financing Laws (CFL) by making loans in excess of the CFL 36% rate cap and that the FinTech violated the California Consumer Financial Protection Law (CCFPL) by offering and collecting on loans with rates exceeding the rate cap.  The cross-complaint was filed in response to a complaint filed by the Fintech company in March to prevent the DFPI from applying California…
Continue Reading California Strikes Back: Filing Cross-Complaint Alleging FinTech is “True Lender,” Seeks $100M Penalty