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On March 28, the CFPB issued a preemption determination that that TILA does not preempt commercial lending disclosure regulations enacted in California, New York, Utah, and Virginia (we discussed state commercial financing disclosure laws in previous posts here, here, and here). After analyzing public comments on its preliminary determination about whether New York’s commercial financing disclosure law is not preempted by TILA, the CFPB reiterated there is no preemption because the states’ statute require lenders to include disclosures in their commercial financing transactions with businesses, and commercial financing transactions are not covered by TILA.

The CFPB narrowly construed TILA purposes and ruled that preemption only exists when there is an inconsistency between state and federal law. According to the CFPB, states have “broad authority” to legislate additional protections and this supports this narrow interpretation. CFPB also considered regulations on commercial financing transactions to be outside the scope of TILA. 

Putting It Into Practice: The CFPB’s latest determination will likewise apply to commercial finance disclosure bills introduced recently in Connecticut, Florida, Georgia, Illinois, Kansas, Maryland, Mississippi, Missouri, New Jersey, Texas, and North Carolina.