The CFPB and DOJ, in cooperation with the OCC, filed a complaint and proposed consent order last week in the Western District of Tennessee against a national bank alleging that the bank violated the Fair Housing Act (FHA), the Equal Credit Opportunity Act (ECOA) and its implementing regulation, Regulation B, and the Consumer Financial Protection Act of 2010 (CFPA).  Specifically, the joint complaint alleges that the bank:

Continue Reading CFPB, DOJ and OCC Take Action Against National Bank for Alleged Redlining

Last week, the CFPB issued a series of orders to collect information on the business practices of six large technology companies operating payments systems.  The Bureau claims that the information will help better understand how these firms use personal payments data and manage data access to users so the Bureau can ensure adequate consumer protection.  The orders were issued pursuant to Section 1022(c)(4) of the CFPA, which authorizes the CFPB to order participants in the payments market to turn over information to help the Bureau monitor for risks to consumers and to publish aggregated findings that are in the public interest.  The CFPB notes that the development of new products and business models to meet consumer demands for online commerce and electronic payments during the pandemic “present new risks to consumers and to a fair, transparent, and competitive marketplace.”

Continue Reading CFPB to Tech Companies: Submit Payment System Information

In its first action under newly-appointed Director Rohit Chopra, the CFPB issued an enforcement action against a prison financial services company for violating the Consumer Financial Protection Act (CFPA) by allegedly charging consumers fees to access their own money on prepaid debit cards that consumers were forced to use.  The consent order also claims that the company violated the Electronic Fund Transfer Act (EFTA) when it required consumers to sign up for a debit card as a condition of receiving government benefits – in particular, “gate money,” which is money provided under state law to help people meet their essential needs as they are released from incarceration.

Continue Reading First CFPB Enforcement Action Under New Director: $6 Million Fine Against Prison Financial Services Company

On October 20, the New York Department of Financial Services (NYDFS) issued proposed rules under New York’s Commercial Financing Disclosure Law (CFDL) (See S5470-B, as amended by S898).  Under the CFDL, commercial financing providers will be required to give consumer-style loan disclosures to recipients at the time a specific offering of finance is extended for certain commercial transactions of $2.5 million or less.  The public comment period on the proposed rules are due by December 19, 2021.

Continue Reading NYDFS Issues Proposed Rules to Implement New Commercial Financing Disclosure Law

Hawaii recently enacted HB 1192, which amends the state’s small dollar lending law by setting forth a new licensing requirement for “installment lenders” and specifies various consumer protection requirements.  The amendments, which impact consumer loans of $1,500 or less,  include a broad definition of “installment lender” that would capture loans offered under a bank partnership model:

Continue Reading Hawaii Amends Small Dollar Lending Law

Licensees and applicants under the California Financing Law are reminded of the following:

  • Licensees under the California Financing Law not currently on NMLS must transition onto NMLS by December 31, 2021.
  • New applicants under the California Financing Law may only apply through NMLS.
  • Existing licensees under the California Financing Law on NMLS must convert to an electronic surety bond through NMLS.


Continue Reading NMLS Transition for California Financing Law Licensees: December 31, 2021 Deadline

The CFPB updated its Supervision and Examination Manual by adding a new section titled Compliance Management Review – Information Technology.  The new examination procedures are meant to assist CFPB examiners when assessing an entity’s information technology (IT) controls as part of a Compliance Management System (CMS) review.  Among other things, the new exam procedures outline the following five modules:  (i) Board and Management Oversight; (ii) Compliance Program; (iii) Service Provider Oversight; (iv) Violations of Law and Consumer Harm; and (v) Examiner Conclusions and Wrap-Up.  Each module focuses on the components of a compliance program and the IT function, including policies and procedures, training, monitoring and/or audit, and consumer complaint response.
Continue Reading CFPB Updates Supervision and Examination Manual, Adds IT Examination

Ahead of an upcoming merger between a digital banking platform and a special purpose acquisition company, both parties disclosed in a regulatory filing last week that the platform received a Civil Investigative Demand (“CID”) in June 2020 related to its “cash paycheck advance business in compliance with the prohibition against UDAAPs, the EFTA, and, to the extent it applies, the Truth in Lending Act.”  According to the filing, the platform provided the CFPB with all information and documents required by the CID, and on September 27, 2021, the CFPB staff notified the company that it currently did not intend to recommend that the CFPB take any enforcement action.

Continue Reading CFPB Opts Not to Take Action Against Banking App

Michael Hsu, the acting chief of the Office of the Comptroller of the Currency, recently addressed his remarks to the Blockchain Association drawing similarities between the current growth of cryptocurrencies and decentralized finance (DeFi) and the credit default swaps (CDS) of the early-2000s.  In his remarks, Hsu emphasized that:

Continue Reading OCC: Crypto and DeFi Must Avoid Another Financial Crisis

By a narrow 50-48 vote along party lines, Rohit Chopra was confirmed yesterday by the U.S. Senate to become the Director of the Consumer Financial Protection Bureau.  Chopra previously served as the Bureau’s assistant director and was its first student loan ombudsman.  Most recently, Chopra served as a commissioner of the Federal Trade Commission for the past three years where he conveyed his penchant for aggressive enforcement of larger institutional violators and advocated for monetary relief from violators outside of the authority provided under Section 13(b) of the FTC Act (we previously discussed Section 13(b) in earlier Consumer Finance & FinTech Blogs here, here, and here).

Continue Reading Chopra Confirmed as CFPB Director