Consumer Finance and Fintech Blog

Timely Updates and Analysis on Consumer Finance and Fintech

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On September 7, Acting Comptroller of the Currency, Michael Hsu, discussed the long-term threats to trust in banking in remarks at the TCH + BPI Annual Conference. Hsu provided updates on key priorities at the OCC, including the impact of “fintechs and big techs” over their digitalization of banking through the advancement of crypto (we discussed Hsu’s previous remarks on crypto here and here). Hsu highlighted the OCC’s position of a “careful and cautious” approach to crypto. In doing so, he referred to Interpretive Letter 1179, which clarifies that national banks and federal savings associations should not engage in
Continue Reading OCC Highlights Focus on Crypto and Bank-FinTech Partnerships, Anticipates Stricter Scrutiny Going Forward

On September 1, the FTC issued an administrative complaint and consent order alleging that a credit services company harmed consumers by making false claims of “pre-approved” credit offers, enticing many consumers to apply for offers they ultimately did not qualify for and unnecessary credit checks.
Continue Reading FTC Targets Credit Services Company For False “Pre-Approved” Credit Offers

On July 29, the New York Department of Financial Services (NYDFS) released Draft Amendments to its Part 500 Cybersecurity Rules that would impose new obligations on financial institutions on reporting, governance, testing, access management, risk assessment, business continuity plans, among others.
Continue Reading New York Proposes Cybersecurity Rules for Financial Institutions

On August 9, the US District Court of Georgia ruled that the FTC had provided “broad and detailed evidence” for its allegations that a tech company and its CEO engaged in deceptive advertising and unfair fee practices in violation of Section 5 of the FTC Act. The FTC’s 2019 complaint alleged the defendants made deceptive representations to customers and charged hidden, unauthorized fees in connection with the company’s “fuel card” products, including by:
Continue Reading Court Orders Injunctive Relief Against Tech Company for Deceptive Advertising, Unfair Fee Practices

On August 10, the CFPB issued an interpretive rule stating that digital marketing providers that are involved in the identification or selection of prospective customers or the selection or placement of content to affect consumer engagement including purchase or adoption behavior, are subject to the CFPB’s jurisdiction. The rule ostensibly clarifies the scope of companies that are “service providers” under the CFPA to include digital marketing providers, and thereby subjecting them to the CFPB’s authority to prohibit UDAAPs.
Continue Reading CFPB’s New Interpretive Rule Sets Sights on Digital Marketing Vendors

On August 11, the CFPB published a circular clarifying liability under consumer financial protection law for bank and nonbank financial companies that fail to safeguard consumer data. The circular describes how firms may be violating the CFPA’s prohibition on unfair acts or practices with respect to the handling of consumer data by not implementing adequate measures to protect against data security incidents. These data security incidents may lead to significant harm to a few consumers—who, for example, become victims of targeted identify theft after a breach—or may lead to harm of many consumers in the event of large scale, customer-base-wide
Continue Reading CFPB Circular: Safeguard Consumer Data or Face Liability

On August 10, the CFPB issued a consent order against a FinTech company for a faulty algorithm utilized in its personal finance management app that caused consumer accounts to overdraft and incur overdraft penalties. According to the CFPB, although the San Francisco-based fintech company promoted the app as a savings tool for consumers, it engaged in deceptive acts or practices in violation of the CFPA by:
Continue Reading CFPB Targets FinTech for Faulty Automated Savings Algorithm

On July 29, a payment processor company and its two sales affiliates (defendants) agreed to a stipulated order with the FTC to settle charges that they imposed hidden terms, surprise exit fees, and “zombie charges” on small businesses.
Continue Reading Payment Processor Agrees to Refund Customers After FTC Alleges Surprise Exit Fees and Zombie Charges On Small Businesses

On July 29, the CFPB and DOJ issued a joint letter to the auto lending and leasing industry reminding auto companies of their obligations under the Servicemembers Civil Relief Act (SCRA). The SCRA affords special protections to servicemembers and their dependents against unfair or predatory practices by auto lenders, including:
Continue Reading Regulators Remind Auto Industry of Servicemember Protections

On July 27, the CFPB and DOJ proposed a settlement with a nonbank mortgage lender for its discriminatory “redlining” lending practices against minority families living in the greater Philadelphia area. If approved by the court, the mortgage lender would be required to pay more than $22 million in civil penalties, and would be the CFPB’s first nonbank mortgage redlining settlement.
Continue Reading CFPB, DOJ Propose $22 Million Penalty Against Nonbank Mortgage Lender for Illegal Redlining

Recently, the United States Court of Appeals for the 4th Circuit held that a mortgage servicer’s failure to provide a required disclosure informing borrowers of their three-day right to rescind the loan under the Truth in Lending Act (TILA) does not relieve borrowers of their obligation to return disbursed loan proceeds upon an effective rescission. The ruling reversed a West Virginia District Court’s ruling against the mortgage servicer in a purported class action.
Continue Reading 4th Circuit: Borrower Must Return Loan Proceeds After Rescission Despite Lender’s Failure to Meet TILA Requirements

On July 27, CFPB Director Chopra was interviewed in multiple publications, here and here, about, among other topics, how the CFPB could seek to help mortgage borrowers strained by the Federal Reserve’s battle against inflation and how the agency is looking at cryptocurrency. Below are some of the more important updates from the interviews.
Continue Reading CFPB’s Chopra Has Payments and Crypto In Focus