Firm Alerts

Within a month, Virginia and Utah both enacted legislation aimed at controlling merchant cash advance transactions through registration and disclosure requirements. The Virginia statute becomes effective July 1, 2022, with a registration deadline of November 1, 2022. The Utah statute becomes effective January 1, 2023. The Virginia Act adds a new chapter to the Financial Institutions title of the Virginia Code governing Sales-Based Financing Providers. See Va. Code Ann §§ 6.2-2228 et seq. “Sales-based financing” is defined as a transaction that is repaid by the recipient to the provider, over time, as a percentage of sales or revenue, in which the payment amount may increase or decrease according to the volume of sales made or revenue received by the recipient and includes a mechanism...

Digital currencies were once only accepted as payment by outlier businesses in the U.S. With the global rise in popularity of use of digital currency as payment for goods and services, common usage of digital currency for payments is becoming a reality. Uncertain economic times and global turmoil are moving businesses and consumers to use digital currency over fiat currencies because of its flexibility, security and resistance to inflation. Stripe, Inc. (“Stripe”), a global payment processing platform, is leading the way in integrating digital currency as a common form of payment. Stripe now provides point of sale software for businesses to accept digital currencies as payment for goods and services that is converted into fiat currency. Digital currency accepted using Stripe’s software...

On March 7, 2022, Opportunity Financial, LLC (“OppFi”) sued Clothilde Hewlett in her official capacity as Commissioner of the California Department of Financial Protection and Innovation (“DFPI”) seeking declaratory judgement and injunctive relief for threatened enforcement of California’s Fair Access to Credit Act (“AB 539”). Complaint, Opportunity Financial, LLC, v. Hewlett, No. 22STCV08163 (Cal. Super. Ct., March 7, 2022). AB 539 became effective on January 1, 2020, amending the California Financing Law (“CFL”) and imposing an interest rate cap of 36% for covered loans between $2,500 and $10,000 made by “finance lenders” subject to the CFL. The complaint alleges that the Enforcement Division of the DFPI indicated to OppFi that the loan program, a partnership with FinWise Bank, was in...

Equifax, Experian and TransUnion have announced that they will change how they approach medical debt on consumer credit reports. Effective July 1, 2022, Equifax, Experian and TransUnion will no longer consider paid medical collection debt on consumer credit reports. These joint measures are expected to remove nearly 70% of medical debt in collections from consumer credit reports. New unpaid medical debts will not be added to consumer credit reports until a full year after being sent to collections. Reportedly, the three credit bureaus are planning to remove any unpaid medical debt of less than $500 in 2023, with the potential for that threshold to rise. Read More

In a recent complaint, the FTC alleged that Residual Pumpkin Entity, LLC, (formerly doing business as CafePress) and PlanetArt, LLC, failed to take proper security measures to protect consumer’s data. FTC Complaint, File No. 1923209, https://www.ftc.gov/system/files/ftc_gov/pdf/CafePressComplaint_0.pdf. TThe FTC alleged that Residual Pumpkin and PlanetArt stored social security numbers and security answers in clear readable text and created unnecessary risks to personal information by storing it indefinitely on its network without a business need. In February of 2019, hackers exploited security weaknesses and obtained passwords, security questions and social security numbers, among other items of personal information. The FTC further alleged in the complaint that appropriate steps were...

On March 4, 2022, the Utah legislature joined several other states in passing a consumer privacy law, the Utah Consumer Privacy Act (“Act”). Once signed by the governor, as is expected, the Act will become effective December 31, 2023. The Act creates a right for consumers to access and delete personal data maintained by certain businesses and to opt out of the collection and use of personal data for certain purposes. The Act also requires businesses that control and process consumer’s personal data to provide information regarding how a consumer’s data is used and to accept and comply with a consumer’s request to exercise rights under the Act. The Act does not create a private right of action for consumers, only the Utah Attorney General may enforce the Act. The Act applies to...

The California Department of Financial Protection and Innovation 2021 Annual Report for licensees under the California Financing Law (CFL) is due March 15, 2022. Every CFL licensee as of December 31, 2021 must file the report, even if no business was conducted under the license in 2021. Failure to file the report may result in revocation of the CFL license and monetary penalties. Licensees must submit the form online at https://docqnet.dfpi.ca.gov. Please contact us with any questions. Michael Tomkies and Mercedes Ramsey

The FTC proposes to settle the charges against Dun &Bradstreet (D&B) for failing to fix small business credit reporting errors and deceiving small businesses regarding the benefit of D&B’s CreditBuilder product. In the Matter of Dun & Bradstreet, Inc., FTC Complaint File No. 172-3196, 2022 WL 190742. D&B stated that it has fully cooperated with the FTC and is committed to “operating with integrity, transparency, and in compliance with the laws that apply to our business.” The FTC initially alleged that D&B failed to fix small business and consumer credit reporting errors. Other allegations involved D&B’s CreditBuilder product. D&B had alleged promised to “help” businesses by including certain payment history in their credit reports. The FTC alleged that...

Elevate, a fintech, entered into a settlement with the District of Columbia to resolve a suit brought by the District of Columbia in regard to the fintech’s activities related to two bank loan programs facilitated and advertised by the fintech. The banks were not parties to the suit or the settlement. The case and settlement follow a pattern of state regulator’s bypassing the banks and bringing actions against service providers and fintechs. Under the settlement the fintech agreed not to (i) provide or advertise loans or lines of credit to District of Columbia consumers at an interest rate above 24% APR; (ii) act as a service provider to a lender that provides loans or lines of credit to District of Columbia consumers at an interest rate above 24% APR; or (iiii) represent that it is...

Following its ruling upholding the OCC’s Madden-fix rule, the District Court for the Northern District of California has likewise ruled in favor of the Federal Deposit Insurance Corporation’s (“FDIC”) cross-motion for summary judgment, upholding the FDIC’s parallel Madden-fix rule. See Order Resolving Cross-Motions for Summary Judgment, California v. Federal Deposit Insurance Corporation, No. 20-cv-05860-JSW (N.D. Cal. filed Feb. 8, 2022); see also our ALERT of Feb. 10, 2022. In 2020, seven states and the District of Columbia (“Plaintiffs”) sued the FDIC challenging the validity of the FDIC’s rule, titled Federal Interest Rate Authority Rule (“Rule”), that was promulgated in the wake of the U.S. Court of Appeals for the Second Circuit’s ruling in Madden v. Midland Funding, LLC, 786 F.3d...