Firm News

In response to a written request by the Small Business Finance Association, the Consumer Financial Protection Bureau published a notice of intent to make a preemption determination regarding whether the Truth in Lending Act preempts the New York Commercial Finance Disclosure Law with respect to certain provisions. See our Alerts dated Sept. 29, 2022 and Dec. 14, 2020 for our discussion of the New York law. The CFPB also provided notice that it is considering whether to make a preemption determination regarding state laws in California, Utah and Virginia that are potentially similar to the New York law. See our ALERTS dated June 15, 2022 (California) and May 6, 2022 (Utah and Virginia) for our discussion of these laws. The CFPB is soliciting public comment on the preemption issue. Comments must be received on
or before January 20, 2023. Read More

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. TILA establishes special appraisal requirements for “higher-priced mortgage loans.” The regulations implementing these requirements exempted transactions of $25,000 or less and required that this loan amount be adjusted annually based on any annual percentage increase in the CPI-W. Read More

The Federal Trade Commission (“FTC”) issued a notice of advanced public rulemaking on so-called “junk fees.” The notice is an early step in the administrative process for drafting a regulation. The FTC is seeking public comments on twenty-one separate questions on various practices relating to the advertisement and disclosure of fees, competition on fees, the extent the fees cover a value-added, consumer perception of fees and how to best write a precise rule governing fees. Read More

Members of Alloy Labs Alliance, a consortium of midsized and community banks, released its “playbook” for “Banking as a Service” (“BaaS”) relationships between depositary institutions and non-bank financial technology firms. Drafted in partnership with leading technology providers, the Alloy Labs Playbook seeks to establish industry standards and a common vocabulary of buzzwords and common terms. The BaaS business model focuses primarily on banking services other than lending and has been around for over a decade. However, the BaaS industry is still evolving rapidly.
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The California Department of Financial Protection and Innovation (“DFPI”) plans to start issuing conditional licenses on January 1, 2023 to debt collectors that have applied under the state’s Debt Collection Licensing Act (“DCLA”). The DFPI also plans to end the regulatory safe harbor allowing debt collectors that have applied for a license to continue to collect consumer debt in California at the same time.
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On October 18, 2022, the New York Department of Financialb Services (the “Department”) announced that it entered into a consent order with EyeMed Vision Care LLC for alleged violations of New York’s Cybersecurity Regulation related to a cybersecurity event. EyeMed is licensed to sell life, accident and health insurance in New York by the Department and subject to oversight by the Department.
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On December 9, 2022, certain provisions of the updated FTC Safeguards Rule will take effect. The provisions of the updated Safeguards Rule mentioned below were adopted in December of 2021 but are not effective until December 9, 2022, to allow time for compliance. The Safeguards Rule is applicable to “financial institutions,” which include non-bank financial institutions like non-bank lenders and companies acting as a finder along with other entities engaged in activities financial in nature or incidental to such financial activities.
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The New York Department of Financial Services released revised regulations implementing the Commercial Finance Disclosure Law. These regulations set forth the precise formatting and calculation methods providers must use to make commercial financing offers in amounts under $2.5 million. This version was released after 18 comments were submitted to the Department during the public comment period. The revised regulations propose several key changes and clarifications. Read More

On August 29, 2022, Blue Ridge Bank (“Bank”), which has $2.8 billion in assets, entered into a formal written agreement with the Office of the Comptroller of the Currency (“OCC”) regarding the Bank’s oversight of its fintech partners. The OCC found unsafe and unsound practices relating to Bank oversight of third-party risk, Bank Secrecy Act/Anti-Money Laundering risk management, suspicious activity reporting and information technology control and risk
governance.

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The OCC enforcement action agreement requires the Bank to take certain steps to improve third-party oversight and risk management, including the establishment of a majority-independent Compliance Committee, which must be approved by the Assistant Deputy Comptroller. Additionally, the Bank must adopt and implement a written program to assess and manage the risks posed by fintech partnerships, taking into consideration previous OCC guidance on community bank partnerships with fintechs. The Bank must also obtain OCC non-objection prior to onboarding new fintech partners or offering new products or services with existing fintech partners. Read More

The entire Eleventh Circuit Court of Appeals reheard Hunstein v. Preferred Collection and Management Services and reversed the previous panel holding. The entire Eleventh Circuit now holds (8 to 4) that plaintiff Hunstein failed to allege a concrete harm that would provide Article III standing to pursue his claims in federal court. Previously, a three-judge panel of the Eleventh Circuit previously found Hunstein had standing to sue, which spawned thousands of
copycat cases across the country. See our ALERT dated Nov. 18, 2021.

This case does not address the underlying substantive question of whether the use of a third party letter vendor violates the Fair Debt Collection Practices Act (“FDCPA”), however. The case only addresses whether Hunstein has standing to sue in federal court. The majority opinion takes care to state that its holding is that Hunstein himself did not have standing to sue because there was no public disclosure of his private debt information. The district court proceedings did not go beyond a motion to dismiss so the factual record is limited and the court’s discussion is limited solely to the issue of standing based on the pleadings. Read More