Firm News

The Consumer Financial Protection Bureau has issued an advisory opinion interpreting the federal Fair Debt Collection Practices Act to prohibit a debt collector from charging a convenience fee to consumers unless either the agreement creating the debt or applicable law expressly authorize the fee. The advisory opinion interprets 15 U.S.C. § 1692f(1)’s prohibition on collecting “any amount (including any interest, fee, charge or expense incidental to the principal obligation) unless such amount is expressly authorize by the agreement creating the debt or permitted by law.” The CFPB now interprets the provision to prohibit “any amount collected . . . including, but not limited to, any interest, fee charge or expense that is incidental to the principal obligation.” The CFPB also interprets the phrase “permitted by law” to mean “expressly permitted by law.” To the CFPB, for a debt collector to collect a fee, that fee must be either (i) expressly permitted in the underlying agreement for the debt (and the fee is not prohibited by other law) or (ii) expressly authorized by a statute or regulation. The CFPB uses this interpretation to prohibit collectors from charging a fee to make debt collection payments through a particular channel—commonly referred to as “convenience fees” or “pay to pay fees”—unless the fee fits into either option (i) or (ii) above. Read More

In a blog post, Rohit Chopra, Director of the Consumer Financial Protection Bureau (“CFPB”), announced the CFPB’s intent to re-examine and update a broad range of consumer financial regulations. The goal of this re-examination, according to Director Chopra, is the simplification of what he brands an “overly complicated” regulatory landscape. Consequently, the CFPB plans to re-examine landmark rules inherited from other agencies or promulgated in the first decade of the CFPB’s existence, as well as the regulatory implementation of longstanding Congressional directives.

The CFPB argues that regulators have historically issued “overly complicated and tailored rules for the existing regulatory landscape.” The CFPB plans to issue instead “bright-line” rules and guidance that “more clearly communicate[s] the agency’s expectations in simple and straight-forward terms.” The CFPB anticipates that such bright-line rules will decrease compliance costs, close loopholes and promote consistency among enforcement agencies, incentivizing entities to direct innovation toward “better serving consumer,” as distinct from innovating for “regulatory evasion”. Read More

The Consumer Financial Protection Bureau (“CFPB”) issued an Advance Notice of Proposed Rulemaking (“ANPR”) on credit card late payment fees, returned payment fees and the fee safe harbor under Truth in Lending Act, the CARD Act and Regulation Z. The notice asks for comment from credit card issuers, consumer groups and the public, regarding credit card late fees, late payments and card issuers’ revenue and expenses.

he request for comment is part of the CFPB’s larger “Junk Fee Initiative.” The CFPB trumpets the request for information as “the first step toward addressing credit card company penalty policies costing consumers $12 billion each year, starting by looking at excessive late fees.” CFPB Director Rohit Chopra has testified before Congress that the CPB intends to revisit and update the Regulation Z provisions governing credit card fees. Read More

The Consumer Financial Protection Bureau (“CFPB”) has taken two actions to encourage state governments to bring enforcement actions for alleged violations of any federal consumer financial laws enforced by the CFPB. First, the CFPB issued an interpretive rule delineating state governments’ authority to enforce federal consumer protection laws. Second, the CFPB began issuing Consumer Financial Protection Circulars, guidance directed at state attorneys general and regulators.

The CFPB issued an interpretive rule delineating states’ authority to bring civil suit against alleged (i) unfair, deceptive or abusive acts or practices; (ii) violations the Truth in Lending Act and Regulation Z and (iii) the federal Fair Debt Collection Practices Act and Regulation F. The rule further clarifies that states may bring or continue enforcement actions under federal law even if the CFPB is pursing the same action against the same entity. The interpretive rule is silent on whether states can pursue remedies potentially unavailable to them under federal consumer protection law or their own state laws, such as civil monetary penalties. Read More

On June 3, 2022, a bipartisan group of legislators from the House and Senate announced a data privacy bill titled the American Data Privacy and Protection Act (“ADPPA”). While there are many hurdles the bill must overcome before it is enacted, the bipartisan group of legislators hope this announcement will be the first step towards improving United States privacy laws.

The ADPPA contains similar provisions to those in currently enacted state privacy laws. The ADPPA applies to covered entities, meaning (i) any entity that collects, processes or transfers covered data and (a) is subject to the Federal Trade Commission Act; (b) is a common carrier subject to title II of the Communications Act of 1934; or (c) is an organization not organized to carry on business for their own profit or that of their members; and (ii) includes any entity or person that controls, is controlled by, is under common control with or shares common branding with another covered entity. Read More

The California Department of Financial Protection and Innovation (“DFPI”) recently released a statement to those applying for a debt collection license under the Debt Collection Licensing Act that application approvals will be delayed. The delay is due at least in part to the Federal Bureau of Investigation informing the DFPI that certain protocols need to be changed with respect to requesting federal background checks.

The DFPI encourages those needing a debt collection license to apply through the Nationwide Multistate Licensing System. In a change to its enforcement policy, the DFPI indicated that it will not take action for unlicensed activity against those who apply after December 31, 2021. The DFPI urged applicants to check the DFPI website for updates regarding DFPI’s approval timeline. The DFPI earlier noted that some applications submitted before the end of 2021 would not be fully processed until 2023. Read More

On May 27, 2022, the California Consumer Protection Agency (“CCPA”) released a draft of proposed revisions to the California Consumer Privacy Act regulations. While the draft regulations are 66 pages long, the draft does not change the overall regulatory structure.

The draft regulations create additional requirements and principles that a business must incorporate in obtaining consumer consent including (i) using a method that is easy to understand, (ii) creating symmetry in choice between more privacy protected and less privacy protected options, (iii) avoiding language or interactive elements that could confuse a consumer, (iv) avoiding manipulative language (guilty or shaming language) and choice architecture, and (v) making the consent easy to execute. Read More

In a recent blog post, the Consumer Financial Protection Bureau (“CFPB”) returned to the topic of Buy Now, Pay Later (“BNPL”) to encourage standardized credit reporting of BNPL lines. BNPL programs typically involve short-term, no-interest consumer credit offered at the point of sale, online and occasionally in brick-and-mortar stores. In December 2021, the CFPB announced an inquiry into BNPL, issuing orders to five major BNPL companies requesting information regarding the risks and benefits of their programs. See our ALERT of Dec. 17, 2021. The inquiry named the accumulation of debt as an area of focus, targeting a concern that lack of credit reporting heightens the potential for people to accumulate debt by making multiple BNPL purchases with multiple companies. Read More

The California Department of Financial Protection and Innovation (“DFPI”) released the final regulations implementing the Commercial Financing Disclosure Act. The regulations are a culmination of a long regulatory process. See our prior ALERTS dated Apr. 8, 2021, Oct. 14, 2021 and Nov. 16, 2021. These regulations set forth the precise formatting and calculation methods to make the required commercial disclosures. While similar to the most recent iteration of the regulations, the finalized regulations have been substantially revised from the initial proposed regulations.. Read More

On May 10, 2022, Connecticut joined several other states in enacting a consumer privacy law, the Connecticut Personal Data Privacy and Online Monitoring Act (“Act”). The Act creates rights for consumer’s to correct, access, delete and obtain personal data. The Act also gives consumers the right to opt-out of personal data processing related to (i) targeted advertising, (ii) certain sales of personal data or (iii) certain profiling.

Furthermore, the Act requires controllers, defined as those who determine the purpose and means of processing personal data, to limit the collection of data to what is relevant and adequate and provide consumer’s a reasonably accessible and clear privacy notice, among other requirements. Read More