Agency Rule-Making & Guidance

Many residential mortgage lenders currently have loan compensation plans that provide for a payment to loan originators of one commission amount for loans funded by the lender, and a smaller commission amount for loans that are brokered out to other lenders. While the CFPB never directly endorsed this result, they did not reject it either. In its Loan Originator Compensation Rule Resource Guide, the Mortgage Bankers Association provided the following illustration and comment when discussing the Loan Originator Compensation Rule’s prohibition against compensation based on a proxy for a term of a transaction:

Continue Reading CFPB Adjusts Long Time Position Relating to Loan Originator Compensation

The Federal Reserve Board recently issued two Supervision and Regulation Letters that provide guidance on the agency’s supervision of novel activities and the process such as fintech partnerships, crypto-related activities, and activities using distributed ledger or blockchain technology. 

Continue Reading Federal Reserve Issues Guidance on Supervision of “Novel Activities” by Banks, Impacts Bank-Fintech Partnerships

On August 18, the FTC published guidance for third party sellers detailing how the INFORM Consumers Act, which took effect on June 27, may impact their businesses. The INFORM Act provides that online marketplaces where high-volume third party sellers offer new or unused consumer products must collect, verify, and disclose certain information about those sellers. Online marketplaces must also offer a clear mechanism for consumers to report suspicious activity.

Continue Reading FTC Publishes INFORM Act Guidance for Third Party Sellers

On August 15, CFPB Director Rohit Chopra announced plans for new CFPB rules that would strictly limit the types of consumer data that can be sold by businesses and ensure that data brokers comply with the Fair Credit Reporting Act (“FCRA”). The announcement came during a White House roundtable event focused on protecting individuals’ data privacy and as part of a broader federal crackdown on third-party data brokers. Director Chopra highlighted two proposals in particular that the CFPB is considering.

Continue Reading CFPB Forecasts New Rule Cracking Down on Consumer Data Sales

On July 31, the U.S. District Court for the Southern District of Texas enjoined the CFPB from implementing and enforcing the small business lending rule (Section 1071) requirements pending the Supreme Court’s decision in Community Financial Services Association of America Ltd. v. CFPB, a challenge to the constitutionality of the CFPB’s funding structure (we previously discussed Section 1071 rulemaking in prior blog posts here and here, and the Texas lawsuit here). In particular, the court enjoined the CFPB from implementing and enforcing the final rule against the plaintiffs and their members, but denied the plaintiffs’ request for a nationwide injunction. 

Continue Reading Texas Court Enjoins CFPB’s Enforcement of Small Business Lending Rule

On July 26, the CFPB released its Summer 2023 Supervisory Highlights reporting unfair, deceptive, and abusive acts or practices (UDAAPs) across a number of consumer financial products, including auto origination, auto servicing, consumer reporting, debt collection, deposits, fair lending, information technology, mortgage origination, mortgage servicing, payday and small dollar lending, and remittances, in violation of the CFPA. Below we focus on some key areas in particular.

Continue Reading Latest CFPB Supervisory Highlights Detail UDAAPs Across Range of Areas

On July 7, the CFPB, HHS, and Treasury announced a joint inquiry into high-cost specialty financial products which are being offered to patients as alternate forms of payment for routine medical care. Traditionally, these financial products were used to pay for medical care not covered by traditional health insurance such as dental, vision, fertility services, and cosmetic surgery, but are now being offered to pay for a broader set of services. This inquiry is the next step in an ongoing effort to expand research into medical payment products and medical billing and collections procedures to finer tune actions aimed at relieving the burden these products and procedures place on consumers. To this end, the CFPB is seeking public input into the experiences of consumers, financial service providers, and health care providers alike. The CFPB press release noted the following as the primary concerns driving this inquiry:

Continue Reading CFPB, other Federal Agencies Seek Public Comment about Medical Debt

On June 16, Michael Hsu, the Acting Comptroller of the Currency gave remarks at the American Bankers Association’s Risk and Compliance Conference about the risks of tokenization and AI on the banking industry. While reiterating his skepticism of cryptocurrency (see our previous blog post here), Hsu cautions that the decentralization and “trustlessness” associated with public blockchains will impose severe limitations on the scalability of tokenization, and its associated benefits. Rather, Hsu advocates for the development of centralized and regulated “trusted blockchains” that, due to the security and safety they offer, are better positioned to facilitate the growth of tokenization at scale in a safe, sound, and fair manner.

Continue Reading Hsu Suggests Caution in Rollout of AI and Tokenization in Banking

On June 20, the CFPB published a blog discussing its response to public concerns about workers’ privacy and the risks associated with automated workplace surveillance technology. Automated workplace surveillance technology are used by many employers according to the CFPB.

Continue Reading CFPB Warns of Privacy Risks Arising from Automated Workplace Surveillance Technology

On the June 20, the CFPB released its Office of Servicemember “(“OSA”) Affairs Annual Report. This year’s report focuses on the challenges faced by servicemembers and their families when using digital payment apps. As further discussed in a prior post, these digital payment platforms are gaining widespread popularity as substitutes for traditional banking services despite their lack of deposit insurance and lack of information in platform user agreements. The report presented the following findings with respect to servicemember use of digital payment apps:

Continue Reading CFPB Report Identifies Issues with Increased Servicemember Use of Digital Payment Apps

On June 20, the FTC announced that it has sent letters to 50 online marketplaces nationwide notifying them about their obligations to comply with the new Integrity, Notification, and Fairness in Online Retail Marketplaces (“INFORM”) for Consumers Act, which is set to take effect on June 27, 2023. A template sample of the FTC’s letter can be accessed here.

Continue Reading FTC Notifies Online Marketplaces of Obligations Under INFORM Act