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Moorari Shah

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Moorari Shah is a partner in the Finance and Bankruptcy Practice Group in the firm's Los Angeles and San Francisco offices.

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Earlier this month, the Colorado legislature voted to approve HB23-1229, which would opt the State out of Section 521 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (“DIDMCA”), a federal law enacted to create competitive equality between state-chartered banks and national banks. Section 521 gives federally insured banks, state credit unions, and state savings institutions the ability to export the interest permitted under their home state laws to borrowers in other states notwithstanding any interest limitations in the borrower’s state.…

Continue Reading Colorado Approves DIDMCA Opt-Out, Raising Concerns for Consumer Credit Access

On May 10, the CFPB announced the release Circular 2023-02 to confirm that reopening closed accounts may violate federal law. Based on its review of consumer complaints, the CFPB observed that after customers closed their bank accounts, some accounts were reopened without customer consent and then assessed overdraft/nonsufficient funds fees and monthly maintenance fees. The Bureau warned that such practices may violate the CFPA’s prohibition on unfair acts or practices. “When a bank unilaterally chooses to open an account in someone’s name after they have already closed it, this is a fake account,” CFPB Director Rohit Chopra said in the announcement. “The CFPB is acting on all fronts to halt the harvesting of illegal junk fees.”…

Continue Reading New CFPB Circular: Reopening Closed Accounts May Violate CFPA 

On May 5, the CFPB announced that it has sent payments totaling more than $22 million to approximately 6,500 individuals who were harmed by a Maryland-based debt-relief and credit-repair company that marketed and sold debt-relief and credit-repair services nationwide from 2016 to 2020. In 2021, a federal court entered a stipulated final judgement and order against the company and its executives for allegedly deceiving consumers into hiring the company with false promises to lower or eliminate their credit-card debts and to improve their credit scores in violation of consumer financial protection laws.…

Continue Reading CFPB, FTC Continue Crack Down on Debt Relief Schemes

On May 1, NYDFS settled with a cryptocurrency trading platform over the company’s cybersecurity deficiencies, resulting in a consent order and $1.2 million fine for the crypto company. NYDFS alleged “multiple deficiencies in the Company’s cybersecurity program” discovered during NYDFS examinations in 2018 and 2020. The examinations prompted an investigation, ultimately leading to the consent order and the fine.…

Continue Reading New York Settles with Crypto Company, Proposes Crypto Legislation

On April 26, 2023, the CFPB issued an advisory opinion, which reiterated that the FDCPA and Regulation F prohibit certain debt collectors from suing to collect on debt or threatening to foreclose on homes with mortgages past the statute of limitations, or “time-barred” debt. Such guidance is a result of actions by certain debt collectors to foreclose on silent second mortgages, referred to as “zombie mortgages,” that consumers thought had been satisfied and that are likely not enforceable in court.…

Continue Reading CFPB Issues Guidance to Protect Homeowners from Zombie Mortgages

On April 26, an association of Texas state banking organizations and a Texas minority depository institution filed a joint complaint against the CFPB in Texas federal court seeking to invalidate a recently finalized agency rule requiring lenders to gather and report data on loan applications from minority, LGBTQ+, and women-owned small businesses (see previous blog post detailing this rule here). The CFPB rule requires that small business lenders must collect and report on the following data points:…

Continue Reading Lawsuit Challenges CFPB Reporting Rule for Small Business Lending

On April 14, the CFPB filed a statement of interest in a case currently pending before the United States District Court for the Southern District of Florida in an attempt “to help protect consumers from discriminatory targeting.” In a press release announcing the filing of the statement of interest, the CFPB explained that “discriminatory targeting” is the act of directing predatory or otherwise harmful products or practices at certain groups, neighborhoods, or parts of a community.…

Continue Reading CFPB Statement of Interest Highlights Focus on Discriminatory Access to Credit

On April 25, the CFPB, FTC, EEOC, and Civil Rights Division of the DOJ issued a joint statement outlining the agencies’ collective commitment to monitor the development and use of automated systems and artificial intelligence and enforce their respective authorities where such systems produce outcomes that result in unlawful discrimination. The joint statement explains that potential discrimination in automated systems can come from different sources, including:…

Continue Reading Federal Regulators Remain Focused on AI-based Discrimination

On March 8, the CFPB released a special edition of its Supervisory Highlights reporting on unlawful junk fees that were uncovered in a variety of servicing markets, including bank account deposits, auto loan servicing, mortgage loan servicing, payday lending, and student loan servicing during examinations between July 1, 2022, and February 1, 2023. Specific discoveries during such time period include:…

Continue Reading Junk Fees Continue to be Focus of CFPB, Biden Administration

On April 4, CFPB Director Rohit Chopra delivered remarks at the International Association of Privacy Professionals’ Global Policy Summit on the importance of reigning in repeat violators of consumer finance and privacy laws. According to the Director, the CFPB is to enhance penalties against repeat offenders of consumer protection laws. Such penalties could involve a broader range of agency remedies, including naming executives in enforcement actions and placing meaningful limitations on future business practices, in addition to simple fines.…

Continue Reading CFPB Director Elevates Priorities for Data Privacy & Repeat Offenders