On June 28, the CFPB issued an interpretive rule affirming states’ abilities to police credit reporting markets through the issuance of their own fair credit report laws. The interpretive rule clarifies that the Fair Credit Reporting Act (FCRA) does not prevent states from enacting their own fair credit reporting laws that are stricter and more protective of consumers. The FCRA defines the permissible use of credit reports, and establishes the guidelines of the information that can and should be included in those reports. However, the FCRA leaves to the states the flexibility to consider local challenges affecting consumers and economies,
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CFPB Advisory Opinion: Pay-to-Pay, “Convenience” Fees Prohibited by FDCPA
On June 29, the CFPB issued an advisory opinion affirming that the Fair Debt Collection Practices Act (FDCPA) and Regulation F prohibit debt collectors from collecting pay-to-pay or “convenience fees” imposed for making a payment in a particular way, such as by phone or online, when such fees are not expressly authorized by the underlying agreement or otherwise permitted by law. In interpreting FDCPA Section 808, the Bureau’s advisory opinion explains that:…
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Industry Groups to CFPB: Take Back UDAAP Anti-Discrimination Policy
On June 28, the American Bankers Association, Consumer Bankers Association, Independent Community Bankers of America, and the U.S. Chamber of Commerce affirmed in a letter to CFPB Director Rohit Chopra that the CFPB should rescind its recent updates to the exam manual allowing for the examination of financial institutions unfair, deceptive, and abusive acts or practices or UDAAPs. The group conveyed to Director Chopra that “Congress did not authorize or intend for the CFPB to “fill gaps” between the clearly articulated boundaries of antidiscrimination statutes with its UDAAP authority.” (We discussed this exam manual update in a previous blog post…
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CFPB Discusses Consumer Finance Data, Sets Priorities
On June 15, CFPB Deputy Director Zixta Martinez delivered a keynote address to the Consumer Federation of America’s 2022 Consumer Assembly. The Deputy Director focused on four key areas of consumer protection during her address:…
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CFPB Examines Credit Card Late Fees
In 2009, Congress enacted the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act). Among other things, the CARD Act curtailed a range of junk fees, coercive contract clauses, and other suspicious practices. In 2010, the Federal Reserve Board of Governors’ (Fed) voted to implement provisions of the CARD Act that required penalties to be “reasonable and proportional to the omission or violation.” While the Fed prohibited collecting excessive late fee penalties, the Fed also included a provision that allowed credit card issuers to escape enforcement scrutiny if they set fees at or below a particular level, which…
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FTC Targets Junk Fees, Bait-and-Switch Advertising by Auto Dealers
On June 23, the FTC proposed a rule that would prohibit junk fees, bait-and-switch advertising, and other deceptive practices by auto dealers to protect consumers and honest dealers in the car-buying process. The proposed measures would:…
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CFPB Rescinds Special Regulatory Treatment for EWA Company
On June 30, the CFPB issued an order terminating an EWA provider’s Sandbox Approval Order relating to its earned wage access products. In December 2020, the CFPB provided the company special regulatory treatment, including a temporary safe harbor from liability under TILA/Reg. Z because, in part, the EWA program did not involve the offering or extension of “credit” as defined by Reg. Z. In its press release, the CFPB note that the “temporary safe harbor is for offering and providing certain earned wage access products, subject to good faith compliance with the terms of the approval order.”…
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DFPI Issues Proposed Rules for Commercial Financing
On June 24, the California Department of Financial Protection and Innovation (DFPI) issued proposed regulations implementing certain provisions of the California Consumer Financial Protection Law (CFPL) related to commercial financial products and services. Written comments on the proposed regulations are due by August 8.
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CFTC: Agency Prepared to Regulate Crypto
On June 14, CFTC Commissioner Christy Goldsmith Romero discussed cryptocurrency regulation, rejecting suggestions that the agency would take a relaxed approach toward regulating cryptocurrency and affirming that the CFTC is positioned to protect consumers if given more authority. Romero said she welcomed efforts to close regulatory gaps through the recent Responsible Financial Innovation Act (RFIA) that was introduced in the Senate earlier this month and another similar bill that will be introduced by Senators Stabenow (D-MI) and Bozeman (R-AR) that would designate the CFTC as crypto’s top regulator. When asked about the possibility of regulation slowing the crypto market, Romero…
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CFPB Aims to Simplify Rules and Guidance
On June 17, CFPB Director Rohit Chopra published a blog post summarizing the Bureau’s new efforts to more clearly communicate its expectations to the public, which would ultimately bolster consumer protection overall.
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CFPB Blogs About Need for Standardized Credit Reporting
On June 15, the CFPB posted a blog, titled “Buy Now, Pay Later and Credit Reporting” discussing the Bureau’s viewpoint on the importance of standardized data furnishing by buy now, pay later (BNPL) firms to consumer reporting companies for inclusion in consumer credit reports. BNPL products provide consumers with a short-term, no-interest credit option and are widely used for online purchases and, increasingly, brick-and-mortar stores. The CFPB has recently expressed concerns about the fast-growing BNPL credit industry, noting the potential for consumers to accumulate debt by making multiple BNPL purchases across several different BNPL firms. (See our previous posts about…
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CFPB Targets Student Loan Debt Relief Scam Reboot
On June 9, the CFPB filed a complaint and proposed order in California federal district court seeking final judgment against the owner of a student loan debt relief company for allegedly withdrawing more than $240,000 from the bank accounts of student borrowers without authorization.
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New York Releases Stablecoin Guidance
On June 8, the New York State Department of Financial Services (DFS) released its Guidance on the Issuance of U.S. Dollar-Backed Stablecoins meant to set foundational criteria for USD-backed stablecoins issued by DFS-regulated entities on the issues of redeemability, assets reserves and attestations about such reserves. Here are some of the highlights from the guidance.
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California Approves Commercial Financing Disclosure Regulations
On June 9, the California Office of Administrative Law (OAL) approved the Department of Financial Protection and Innovation’s (DFPI) proposed commercial financing disclosure regulations issued pursuant to SB 1235. The regulations will become effective on December 9, 2022, and the final regulatory text can be found here.
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FTC Captures $2.7 Million in Restitution from Small Business Financer
On June 2, the FTC was granted a federal court order permanently barring a merchant cash advance operation and its owner from engaging in further deceptive practices and granting restitution to the customers the company harmed. The defendants offered alternative small business financing by purportedly providing funds to businesses in exchange for a percentage of future revenue. According to the FTC, however, the defendants frequently deceived small businesses and their owners, lying about terms and fees for their financing. The websites falsely claimed that cash advanced required no personal guaranties of collateral while the contracts did include such requirements. The…
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California Regulator Seeks Comment on Reworking Consumer Complaint Rules
On May 20, the California DFPI released a Notice of Proposed Rulemaking seeking comment on implementing new rules to the California Consumer Financial Protection Law (CCFPL).
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