The U.S. District Court for the Northern District of Illinois recently used Section 19 of the FTC Act to impose a $5 million restitution award after the original restitution award under Section 13(b) was vacated by the Seventh Circuit based on its ruling that monetary relief was not available under Section 13(b).

Continue Reading Court Agrees with FTC: Can Seek Relief under Section 19

On September 20, the CFPB filed a lawsuit in federal district court against a California-based software company and its owner for allegedly violating the Telemarketing Sales Rule (TSR) and the Consumer Financial Protection Act of 2010 (CFPA) by providing substantial assistance or support to credit-repair businesses that use telemarketing and charge unlawful advance fees to consumers.

Continue Reading CFPB Alleges that Service Provider Helped Credit-Repair Businesses Charge Illegal Fees

The CFPB recently filed a complaint against an online installment and single-payment lender alleging that it violated the terms of a 2016 consent order that previously required the company to pay millions in consumer redress and a civil penalty and to stop misleading consumers with false claims about the cost of loans and the benefits of repeated borrowing.

Continue Reading CFPB Sues Online Lender for Alleged Violations 2016 Consent Order

Last month we wrote a blog relating to a consent order entered into by the California Department of Financial Protection and Innovation (DFPI) with a servicer of income share agreements.  The DFPI determined that, despite claims by the provider to the contrary, the income share agreements are student loans that subject the provider to California’s licensing requirements.  It did not take long for the CFPB to enter the fray.  On September 7, the CFPB entered into a consent order with Better Future Forward, Inc. and various affiliates (collectively BFF) in which the CFPB determined that the company:

Continue Reading Are Income Share Agreements Loans? The CFPB Says Yes

On September 8, the FTC approved final revisions that would bring several rules implementing parts of the Fair Credit Reporting Act (FCRA) in line with the Dodd-Frank Act, which transferred rulemaking authority related to parts of the FCRA to the CFPB, and thereby narrowed the FTC’s FCRA rulemaking authority for these rules.  As such, the FTC approved changes that clarify that in some cases these FCRA rules enforced by the FTC apply only to motor vehicle dealers, which were specifically excluded from the scope of Dodd-Frank’s requirements.  The FTC previously sought comment on the proposed rule changes last year.
Continue Reading FTC Approves Changes to FCRA Rules; Clarifies Application to Motor Vehicle Dealers

On September 1, the CFPB issued a Notice of Proposed Rulemaking (NPRM) to implement Section 1071 of the Dodd-Frank Act, which amended the Equal Credit Opportunity Act (ECOA) to require financial institutions to collect and report data regarding credit applications made by women-owned, minority-owned, and small businesses (we previously discussed the proposed rule in an earlier Consumer Finance & FinTech Blog post here).  The proposed rulemaking is an expansive 918 pages and the CFPB provides both a summary and table of contents to assist industry participants in their review and comments.

Continue Reading CFPB Issues Proposed Rule Under Section 1071 of Dodd-Frank to Collect Small Business Lending Data

On August 11, the Federal Financial Institutions Examinations Council (FFIEC) issued new guidance, providing examples of effective authentication and access risk management principles and practices for financial institutions.  The principles and practices relate to access to digital banking services and information systems by customers, employees, and third parties accessing digital banking services and financial institution information systems.  The FFIEC — whose voting members include representatives from the FDIC, the NCUA, the OCC, the CFPB, the Federal Reserve Board, and the State Liaison Committee — issued the guidance as an update to prior submissions from 2005 and 2011.

Continue Reading FFIEC Issues Updated Guidance on Authentication and Access to Financial Institution Services and Systems

The U.S. District Court for the Northern District of California recently issued an order setting September 30 as the deadline for the CFPB to issue a notice of proposed rulemaking (NPRM) on small business lending data based on Section 1071 of the Dodd-Frank Act.  Section 1071 amended the Equal Credit Opportunity Act to require financial institutions to collect, maintain, and report to the CFPB data on credit applications made by women-owned, minority-owned, and small businesses.  Such data includes the race, sex, and ethnicity of the principal owners of the business, and would be used to facilitate enforcement of fair lending laws and to help better identify the business and community development needs of these types of entities.  The order follows a complaint that was filed in 2019 alleging the wrongful delay by the CFPB in adopting regulations to implement Section 1071.  The deadline comes as a result of a stipulated settlement agreement reached in 2020, which established a timetable for the CFPB to engage in Section 1071 rulemaking.
Continue Reading CFPB To Issue Data Collection Regulations for Small Business Lenders in September

The CFPB recently announced that its two final debt collection rules implementing the Fair Debt Collection Practices Act (FDCPA) will take effect as planned on November 30.  The CFPB had previously proposed extending the final rules’ effective date by 60 days to allow for additional comments and time for implementation for those affected by COVID-19 (a recent Sheppard Mullin article discussing the COVID-related impact on debt collection was recently covered here).  Based on industry feedback, however, the Bureau determined that an extension is unnecessary, explaining that while “consumer advocate commenters generally supported extending the effective date, they did not focus on whether additional time is needed to implement the rules.”

Continue Reading CFPB Confirms November 30 Effective Date for Debt Collection Final Rules

When President Biden signed the bill on June 17 which made Juneteenth (June 19) a federal legal holiday immediately, it impacted certain Regulation Z timing requirements related to rescission of closed-end mortgage loans and the TILA-RESPA Integrated Disclosures (TRID), particularly with respect to transactions that either (i) closed on or before June 17, 2021 but for which consumers’ rescission periods had not yet expired or (ii) were close to the planned closing date on June 17, 2021 and subject to certain disclosure timing requirements of the TRID provisions.  Since the CFPB did not publish immediate guidance, mortgage lenders were forced to make educated guesses as to how to treat Friday, June 18 and Saturday, June 19, particularly with respect to measurement periods that had already commenced before or on the date the new law became effective.  On August 5 the CFPB published an interpretive rule on how to deal with these issues, and the Bureau consistently reached a result which permitted mortgage lenders to treat June 19 as either a business day or a federal holiday for the purposes of these provisions, as set forth immediately below in more detail.

Continue Reading CFPB Reaches Correct Resolution On Juneteenth Disclosure Issues

On July 12, the CFPB issued a consent order against a FinTech company for facilitating point of sale financing activities without authorization from consumers.  The consent order requires the company to pay up to approximately $9 million in redress to impacted consumers and a $2.5 million civil money penalty.

Continue Reading CFPB Takes Action Against FinTech Company for Originating Unauthorized Loans