Firm Alerts

A federal judge has delivered a split-decision on the Ripple Labs XRP token, providing some mixed clarity on the question of whether digital tokens are or can be securities. SEC v. Ripple Labs, Inc., No. 1:20-cv-10832-AT-SN (S.D. N.Y., filed July 13, 2023). Judge Torres concluded that an XRP token is a security when sold by Ripple directly to sophisticated institutional investors capable of understanding that such tokens are “speculative value propositions,” meeting the test for an “investment contract,” but not a security when sold to “programmatic investors” (the broader public) on...

On June 26, 2023, Florida Governor Ron DeSantis vetoed HB 1267, which would have amended the Consumer Finance Act to allow licensed lenders to charge a greater rate of interest on consumer loans, among other changes. See our ALERT of May 26, 2023. In his veto transmittal letter, Governor DeSantis stated that while the bill included provisions modernizing the licensing process and increasing transparency requirements, the increase in the interest rate for loans of $25,000 or less caused him concern, as he believes the increase in rates “may result in additional consumer indebtedness and could...

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency issued guidance on managing risks associated with third-party relationships on June 6, 2023. The new guidance replaces prior guidance by the banking agencies on thirdparty relationships identified in the release. The agencies describe the guidance as a broad, principles-based approach in response to comments on the prior draft guidance released in July of 2021 requesting that the guidance address specific topics or types of relationships. Read More

Indiana, Montana and Tennessee joined six other states in enacting consumer data privacy laws. The other states with consumer data privacy laws are California (effective Jan. 1, 2020), Virginia (effective Jan. 1, 2023), Colorado (effective July 1, 2023), Connecticut (effective July 1, 2023), Utah (effective Dec. 31, 2023) and Iowa (effective Jan. 1, 2025). With the exception of the California consumer data privacy law, all the recently enacted privacy data laws are very similar. Importantly, all the state consumer date privacy laws except California include an exemption for financial...

Compliance with the New York Commercial Finance Disclosure Law (“CFDL”) is required by August 1, 2023. The CFDL applies to multiple types of commercial financing products and requires providers to deliver disclosures when “extending a specific offer” for commercial financing in amounts of $2.5 million or less to a “recipient,” defined as a person who applies for commercial financing and is made a specific offer of commercial financing by a provider. See our ALERTS dated Feb. 10, 2023, Sept. 29, 2022 and Sept. 27, 2021. Read More

On May 1, 2023, both chambers of the Florida legislature passed HB 1267, amending the Consumer Finance Act, Florida’s licensed lender statute. Most notably, the proposed amendments would modify the interest rate provision for loans up to $25,000 from the current tiered rate caps to a flat maximum rate of 36% per annum for all loans up to $25,000. The interest rate cap for loans greater than $25,000 was not affected. The bill also proposes to increase the statutorily mandated grace period on delinquency charges to 12 days (up from the current 10 day grace period). Read More

On May 4, the Consumer Financial Protection Bureau (“CFPB”) published a report on medical credit cards and installment loans, highlighting the Bureau’s continued interest in the effect of medical debt on consumers. See our ALERTS of Feb. 15, 2022 and March 22, 2022. The report briefly details the history of medical credit cards and loans and highlights the problems and consumer risks the CFPB believes to be inherent in such specialty financing products, such as the expanded uses of medical credit cards and “confusing” product structures and advertising. Read More

Turning away industry commentators, the Consumer Financial Protection Bureau (“CFPB”) has declared merchant cash advances “credit” for purposes of small business data collection under the Equal Credit Opportunity Act, 15 U.S.C. §§ 1691 et seq. (“ECOA”), with potentially important further compliance implications for merchant cash advance providers, many of whom take the position that their merchant cash advances are true “sales” of future accounts receivable, not “credit” per se. See Small Business Lending Data Collection under the Equal Credit Opportunity Act (Regulation B)...

TEXAS BANKERS ASSOCIATION CHALLENGES CFPB SMALL BUSINESS LENDING DATA RULE The Texas Banker’s Association (“TBA”) filed suit against the Consumer Financial Protection Bureau (“CFPB”) in the U.S. District Court for the Southern District of Texas challenging the CFPB’s final rule implementing Section 1071 of the Consumer Financial Protection Act which will require banks collect and report information about small business credit applications. Texas Bankers Association vs. CFPB, No. 7:23-cv-00144 (S.D. Tex. Filed Apr. 26, 2023); see our Alert of March 28, 2023. Read More

Add Connecticut, Minnesota and South Carolina to your scorecard of states proposing broad anti-evasion provisions for licensing statutes. See Connecticut SB 1033: SB1033 | Connecticut 2023 | AN ACT CONCERNING VARIOUS REVISIONS TO THE BANKING STATUTES. | TrackBill; Minnesota SF 1635: S1635-1 (mn.gov); South Carolina S 518: Bill Text: SC S0518 | 2023-2024 | 125th General Assembly | Introduced | LegiScan. These states follow Illinois, Hawaii, New Mexico and Maine, which have already adopted versions of such provisions. See, e.g., our Alert of July 20, 2021. These broad provisions are typically...