Year: 2023

The Dodd-Frank Act amended The Truth in Lending Act (TILA) by requiring that the dollar threshold for exempt consumer credit transactions be adjusted annually by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If there is no annual percentage increase in the CPI-W, the exemption threshold from the prior year is not adjusted. The Dodd-Frank Act requires similar adjustments in the Consumer Leasing Act’s threshold for exempt consumer leases. Read More

While traditional artificial intelligence (“AI”) has been used by the financial services industry for years, the use of generative AI has become a hot topic. Generative AI is a newer form of AI that has the ability to produce original content, including text, images or other media. Many companies utilize and implement AI, both traditional and generative, in their business practices, including financial services and payment services companies like Stripe, Block (formerly known as Square), Brex, Klarna and the Commonwealth Bank of Australia. Read More

The Consumer Financial Protection Bureau (“CFPB”) released a proposed rule to define a market for general-use digital consumer payment applications under its authority to supervise “larger participants” of a market for consumer financial products or services as defined by rule. Under the Proposed Rule the proposed market would cover providers of funds transfer and wallet functionalities through digital applications for consumers’ general use in making payments to other persons for personal, family or household purposes. Read More

In response to Industry feedback, the Consumer Financial Protection Bureau debt collection rules released in 2020 and comments on the prior Notice of Proposed Rulemaking in 2022, the New York City (“NYC”) Department of Consumer and Worker Protection (“DCWP”) has proposed new amendments to the city’s Debt Collector Rules. Read More

On October 24, 2023, the Supreme Court of Indiana ruled on a case involving a consumer’s acceptance of a credit union’s (“CU”) arbitration addendum. Land v. IU Credit Union, ___ N.E.3d ___, 2023 WL 6985790 (Ind., Oct. 24, 2023). The case focused on two key facts: (i) whether notice to the consumer of an arbitration addendum was reasonable and valid and (ii) whether the consumer’s silence and inaction amounted to assent to the arbitration addendum. The subject of the lawsuit is a proposed 2019 addendum to an agreement between a CU and its consumer. The addendum was provided to the consumer via email and U.S. postal mail, proposing the following amendments: (i) that either party may require arbitration for disputes regardless of the other party’s consent and (ii) that the consumer is prohibited from initiating or joining in a class action lawsuit. Read More

The Federal Trade Commission (“FTC”) has announced new amendments to the Safeguards Rule to go into effect 180 days after publication in the Federal Register. Over the last few years we have reported on amendments to the Safeguards Rule. See, e.g. our Alerts dated Nov. 17, 2021 and Oct. 5, 2022. Notably in 2021 the FTC amended the Safeguards Rule to, among other things, expand the definition of “financial institution” to include entities engaged in activities the Federal Reserve Board determines to be incidental to financial activities, which adds “finders”—companies that bring together buyers and sellers of a product or service—within the scope of the Rule. The 2021 amendments also added provisions to provide more guidance on how to develop and implement aspects of an information security program, such as access controls, authentication and encryption. Most of the 2021 amendments went into effect in December 2022. Read More

The United States Supreme Court has agreed to hear a case involving the National Bank Act and the preemption of state laws that require lenders and holders to pay interest on residential mortgage escrow accounts, known as “escrow-interest statutes.” Federal circuit courts are currently split on whether these laws are preempted by the National Bank Act. Thirteen states have escrow-interest statutes, which generally require lenders engaged in the business of making residential mortgage loans to pay interest on escrow accounts that are required for the payment of a mortgage borrower’s property taxes and insurance premiums. Read More

On Wednesday, the U.S. District Court for the Southern District of Texas expanded the injunction it previously placed on the CFPB’s Section 1071 rule (“Rule”) so that it covers all banks, credit unions, fintechs and other lenders subject to the CFPB’s authority nationwide pending a decision in the Supreme Court case challenging the constitutionality of the CFPB’s funding mechanism. The original injunction, which was granted in July, applied only to members of the American Bankers Association, the Texas Bankers Association and Rio Bank of McAllen, Texas. Read More

On October 13, 2024 the California Governor signed A.B. 666, a bill prohibiting a broker or provider of commercial financing from charging certain fees in connection with a commercial financing transaction with a small business or small business owner. The prohibited fees are as follows:

1. A fee for accepting or processing a payment required by the terms of the commercial financing contract as an ACH transfer debit;

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A recent trend in consumer lawsuits has furnishers of credit reports under fire for Metro 2 code usage. The trend sees a consumer with a creative consumer advocate start by disputing a debt with a creditor or debt collector; the creditor or debt collector, as the furnisher, will then report an “XB” to the credit reporting agencies to indicate that the consumer has disputed the account information with the furnisher directly. Next, the creditor or debt collector will proceed with an investigation and report a code of “XH” at the conclusion of the investigation. The “XH” indicates that the account was previously in dispute and the furnisher has concluded the investigation. Read More