Agency Rule-Making & Guidance

On May 21, the Massachusetts Attorney General entered into an Assurance of Discontinuance (“AOD”) with a California-based fintech alleging that it was the “true lender” of its consumer installment loans. Under the terms of the settlement, the fintech is required to pay $625,000 in restitution, request deletion of tradelines on credit reports for loans reported to credit bureaus, and cease doing business in the state. Continue Reading Massachusetts AG Forces Fintech from State as Part of “True Lender” Settlement

The CFPB is continuing its crusade against so called “junk fees,” and now is looking at credit reporting fees. In a May 20 speech to the Mortgage Bankers Association, Director Rohit Chopra highlighted the rising costs of obtaining credit reports which he stated affects both lenders and consumers. Chopra criticized FICO’s recent move to a flat fee pricing model for credit scores, stating that it led to a 400% increase in costs for many lenders. He also complained about FICO’s policy of charging the same fee for both soft and hard credit inquiries, despite the fact that there are significant differences in the amount of information provided.Continue Reading CFPB Director Targets Credit Reporting Fees

On May 22, the CFPB announced an interpretive rule confirming that Buy Now, Pay Later (BNPL) lenders qualify as credit card providers under the Truth in Lending Act, Regulation Z and are required to provide consumers legal protections and rights that apply to credit cards, including the ability to dispute charges, secure refunds for returned products and receive billing statements.Continue Reading CFPB Interpretive Rule Holds That BNPL Lenders Are Credit Card Providers

On April 24, the CFPB released its latest edition of Supervisory Highlights detailing the agency’s actions taken to combat “junk fees” it alleges are charged by mortgage servicers. This spotlight on fees in mortgage servicing marks a continuation of previous CFPB exam work on the agency’s ongoing efforts to combat excessive fees affecting consumers in personal banking, student and auto loans in addition to mortgage servicing.Continue Reading CFPB Announces Update in Continued War on Mortgage Servicing Junk Fees

On April 4, Kentucky enacted HB 88, which will amend laws related to unlawful trade practices, and prohibit entities that are not banks or trust companies from:Continue Reading Kentucky Restricts Marketing for Non-Bank Entities and Provides Clarity in Residential Real Estate Transactions

On April 8, the CFPB published its Spring 2024 Supervisory Highlights detailing key findings from the CFPB’s recent examinations into perceived accuracy problems in the credit reporting system. Notably the report focused solely on institutions’ credit reporting violations, and not on violations of other federal consumer financial laws. Among the report’s more significant findings:Continue Reading Latest CFPB Supervisory Highlights Keys in on Accuracy in Consumer Credit Reports

On March 25, Washington State became the latest in a growing list of jurisdictions to introduce a “true lender” law with the passing of bill SB 6025. The legislation, similar to laws in other states would characterize a person as the “lender” of a loan if the person makes a loan in excess of the state’s rate cap and if the person:Continue Reading Washington State Passes New “True Lender” Legislation

On March 21, the FDICFed, and OCC jointly issued an interim final rule to extend the applicability date of certain provisions of the Community Reinvestment Act (CRA) final rule and requested comments on the extension. The CRA, was enacted to encourage banks to help meet the credit needs of low- and moderate-income communities. The new rules, adopted in October 2023, are an effort by federal regulators to increase the CRA’s scope and rigor as well as modernize it for the digital age by better accounting for banks’ internet and mobile banking services. While previous CRA exams focused on the low- and moderate-income lending that banks do around their physical branches, the new rules add the possibility of new assessments in places where banks have online customers. Continue Reading Persisting Regulatory Uncertainty: Federal Regulators Delay New Community Lending Rules

On March 27, the CFPB issued Circular 2024-02, which warns that remittance providers may be liable under the CFPA for certain deceptive marketing practices related to the speed or cost of sending a remittance transfer. Under EFTA’s “Remittance Rule,” (Subpart B of Regulation E), the term “remittance transfer” includes most electronic transfers of funds sent by consumers in the United States to recipients in other countries. Alarmingly, the Bureau notes that providers may be liable irrespective of whether they are in compliance with the Remittance Rule’s disclosure requirements. The Bureau’s circular singles out the following advertising practices by remittance providers as potentially deceptive in violation of the CFPA:Continue Reading CFPB Issues Guidance on Deceptive Practices by Remittance Transfer Providers