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A.J. Dhaliwal

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A.J. is a special counsel in the Finance and Bankruptcy Practice Group in the firm's Washington, D.C. office.

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On January 4, the Colorado Attorney General announced that his office entered into assurances of discontinuance (available here and here) with two credit unions that will result in $4 million being refunded to Colorado borrowers who were entitled to refunds of guaranteed automobile protection (“GAP”) fees. These settlements follow an investigation by the Consumer Protection Section of the Colorado Department of Law, which found that the credit unions historically failed to refund unearned GAP fees owed to consumers.…

Continue Reading Colorado AG Secures Latest Settlement over Unearned GAP Fees

On January 12, the CFPB released a report that identified an uptick in identity theft reported by servicemembers. The report found that military consumers (defined as active duty servicemembers, veterans, and military family members) reported almost 50,000 cases of identity theft to the FTC in 2021. Additionally, military consumer complaints to the CFPB for debts resulting from identity theft increased from about 200 in 2014 to more than 1,000 in 2022.…

Continue Reading CFPB Report: ID Theft Among Servicemembers Increasing

On January 19, the CFPB issued Circular 2023-01 to affirm that companies offering “negative option” subscription services are required to comply with federal consumer financial protection laws. According to the Circular, “negative option” refers to a term or condition under which a seller may interpret a consumer’s silence, failure to take an affirmative action to reject a product or service, or failure to cancel an agreement as acceptance or continued acceptance of the offer (see our previous blog posts on negative option marketing here and here). The CFPB warns that negative option marketing practices may violate the prohibition on unfair, deceptive, or abusive acts or practices in the CFPA where a seller:…

Continue Reading CFPB: Negative Option Marketing Practices May Violate CFPA

On January 11, the CFPB proposed a rule requiring nonbanks subject to its supervisory authority, with limited exceptions, to annually register with the CFPB regarding their use of certain terms and conditions in form contracts for products and services that pose risks to consumers. Nonbanks would be required to register if they use specific terms and conditions defined in the proposed rule that attempt to waive consumers’ legal protections, to limit how consumers enforce their rights, or to restrict consumers’ ability to file complaints or post reviews. Key parts of the rule do the following:…

Continue Reading CFPB Proposes Registry of Terms and Conditions for Nonbanks

In December, a Utah-based bank and its service provider entered into an assurance of discontinuance with the Iowa Attorney General and the Iowa Division of Banking, settling an investigation into allegedly usurious installment loans that the bank made to Iowa consumers. The Iowa AG alleges that, between March 2020 and April 2022, the bank made more than 1,600 installment loans to Iowa residents that imposed excessive finance charges in violation of state and federal law. Some of these loans, according to the Iowa AG, carried interest rates of nearly 200 percent, far in excess of the maximum allowable finance charge of 21 percent under the Iowa Consumer Credit Code and the limits established by Section 521 of the federal Depository Institutions and Deregulation Monetary Control Act.…

Continue Reading Iowa AG Usury Investigation into Bank Partnership Ends in Settlement

On January 11, the CFPB and a debt-collection law firm it sued in 2019 for illegal debt-collection practices reached settlement. The CFPB included in its initial complaint against the defendant allegations that the law firm falsely represented to consumers that attorneys were actively engaged in overseeing and filing lawsuits, while in a two year period, such law firm employed less than a dozen attorneys and filed more than 99,000 debt-collection lawsuits with minimal supporting documentation. The CFPB alleged this was a violation of the CFPA and FDCPA, which prohibits collecting debts by using false, deceptive, or misleading representations. If the proposed settlement order is entered by the court, it would require that the law firm to:…

Continue Reading CFPB Settles with “Debt Collection Mill”

On January 4, the CFPB and the New York State Office of the Attorney General filed a complaint against a prominent subprime auto lender in the Southern District of New York. The complaint alleges that the auto lender misrepresented costs in loan agreements and tricked customers into high-cost loans on used cars in violation of the CFPA and New York usury limits. Specifically, the complaint alleges that the auto lender harmed consumers in the following ways:…

Continue Reading CFPB and New York AG File Suit Against “Predatory” Auto Lender

On December 18, the Arizona Attorney General issued an opinion on earned wage access (EWA), which determined that fully non-recourse EWA products do not constitute consumer loans subject to consumer loan regulations, and correspondingly, that providers of non-recourse EWA products would not be considered consumer lenders subject to licensure under Arizona law. The opinion found that an EWA product could be identified as fully non-recourse when the provider:…

Continue Reading AZ Attorney General Concludes Non-Recourse EWA Not a Loan

Recently, the CFPB filed an amicus brief in the U.S. Court of Appeals for the Fourth Circuit arguing that the court should reinstate a borrower’s putative class action claim against a national bank. The CFPB argued that the district court erred by improperly narrowing a provision in Regulation Z of the Truth in Lending Act (TILA) that prohibits lenders from withdrawing from deposit accounts to cover debts caused by credit card plans.…

Continue Reading CFPB Files Amicus Brief in TILA Suit, Impacts How Banks Collect on HELOCs

On November 29, the OCC released a revised Policies and Procedures Manual relating to the assessment of civil money penalties (“CMP Matrix”), which will be effective as of January 1, 2023. The CMP Matrix is a reference guide for the OCC’s decision making process in evaluating penalties in response to violations of laws, regulations, and conditions imposed in writing. It replaces the prior version released in November 2018, and revises or expands certain guidelines, including:
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Continue Reading OCC Revises Policies and Procedures for Civil Money Penalties

Last month, the CFPB released new Supervisory Highlights identifying examinations findings in the areas of auto servicing, consumer reporting, credit card account management, debt collection, deposits, mortgage origination, mortgage servicing and payday lending completed between January 1, 2022, and June 31, 2022. Among other highlights, the findings including the following:
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Continue Reading CFPB Fall Supervisory Highlights Find Credit Reporting Failures, Junk Fees, Mishandling of Covid-19 Protections