On August 10, the CFPB issued a consent order against a FinTech company for a faulty algorithm utilized in its personal finance management app that caused consumer accounts to overdraft and incur overdraft penalties. According to the CFPB, although the San Francisco-based fintech company promoted the app as a savings tool for consumers, it engaged in deceptive acts or practices in violation of the CFPA by:

Continue Reading CFPB Targets FinTech for Faulty Automated Savings Algorithm

On July 27, the CFPB and DOJ proposed a settlement with a nonbank mortgage lender for its discriminatory “redlining” lending practices against minority families living in the greater Philadelphia area. If approved by the court, the mortgage lender would be required to pay more than $22 million in civil penalties, and would be the CFPB’s first nonbank mortgage redlining settlement.

Continue Reading CFPB, DOJ Propose $22 Million Penalty Against Nonbank Mortgage Lender for Illegal Redlining

On July 27, CFPB Director Chopra was interviewed in multiple publications, here and here, about, among other topics, how the CFPB could seek to help mortgage borrowers strained by the Federal Reserve’s battle against inflation and how the agency is looking at cryptocurrency. Below are some of the more important updates from the interviews.

Continue Reading CFPB’s Chopra Has Payments and Crypto In Focus

On July 11, CFPB Director Rohit Chopra drafted a blog post detailing the Bureau’s efforts to comply with President Biden’s Executive Order on Promoting Competition in the American Economy aimed, in part, to address the Administration’s concerns about pressing antitrust and competition issues affecting consumers. The CFPB was directed by the Order to explore ways to make it easier for consumers to switch financial institutions and to aggressively enforce the prohibition of UDAAPs in consumer financial products and services pursuant to the Dodd-Frank Act.

Continue Reading CFPB Continues Efforts to Promote Competition in Financial Markets

On June 28, the CFPB issued an interpretive rule affirming states’ abilities to police credit reporting markets through the issuance of their own fair credit report laws. The interpretive rule clarifies that the Fair Credit Reporting Act (FCRA) does not prevent states from enacting their own fair credit reporting laws that are stricter and more protective of consumers. The FCRA defines the permissible use of credit reports, and establishes the guidelines of the information that can and should be included in those reports. However, the FCRA leaves to the states the flexibility to consider local challenges affecting consumers and economies, and enact laws to protect consumers by further regulating credit report guidelines and uses. State fair credit reporting laws are not preempted by the FCRA unless they directly conflict with the FCRA or fall within the narrow preemption categories directly enumerated in the statute, according to the interpretive rule.

Continue Reading CFPB Issues Rule Clarifying States’ Rights to Protect Consumers Through Fair Credit Reporting Laws

On June 29, the CFPB issued an advisory opinion affirming that the Fair Debt Collection Practices Act (FDCPA) and Regulation F prohibit debt collectors from collecting pay-to-pay or “convenience fees” imposed for making a payment in a particular way, such as by phone or online, when such fees are not expressly authorized by the underlying agreement or otherwise permitted by law. In interpreting FDCPA Section 808, the Bureau’s advisory opinion explains that:

Continue Reading CFPB Advisory Opinion: Pay-to-Pay, “Convenience” Fees Prohibited by FDCPA

On June 28, the American Bankers Association, Consumer Bankers Association, Independent Community Bankers of America, and the U.S. Chamber of Commerce affirmed in a letter to CFPB Director Rohit Chopra that the CFPB should rescind its recent updates to the exam manual allowing for the examination of financial institutions unfair, deceptive, and abusive acts or practices or UDAAPs. The group conveyed to Director Chopra that “Congress did not authorize or intend for the CFPB to “fill gaps” between the clearly articulated boundaries of antidiscrimination statutes with its UDAAP authority.” (We discussed this exam manual update in a previous blog post here).

Continue Reading Industry Groups to CFPB: Take Back UDAAP Anti-Discrimination Policy

In 2009, Congress enacted the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act). Among other things, the CARD Act curtailed a range of junk fees, coercive contract clauses, and other suspicious practices. In 2010, the Federal Reserve Board of Governors’ (Fed) voted to implement provisions of the CARD Act that required penalties to be “reasonable and proportional to the omission or violation.” While the Fed prohibited collecting excessive late fee penalties, the Fed also included a provision that allowed credit card issuers to escape enforcement scrutiny if they set fees at or below a particular level, which may be adjusted annually for inflation (immunity provision). Currently, Regulation Z, which implements the CARD Act, sets forth a safe harbor of $30 for fees generally, with exceptions and alternatives for specific scenarios.

Continue Reading CFPB Examines Credit Card Late Fees

On June 30, the CFPB issued an order terminating an EWA provider’s Sandbox Approval Order relating to its earned wage access products. In December 2020, the CFPB provided the company special regulatory treatment, including a temporary safe harbor from liability under TILA/Reg. Z because, in part, the EWA program did not involve the offering or extension of “credit” as defined by Reg. Z. In its press release, the CFPB note that the “temporary safe harbor is for offering and providing certain earned wage access products, subject to good faith compliance with the terms of the approval order.”

Continue Reading CFPB Rescinds Special Regulatory Treatment for EWA Company