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

On July 6, the CFPB posted a blog titled, “Should you buy now and pay later?” describing how buy now pay later (BNPL) deferred payment options work, and the benefits and risks that come with BNPL.  Generally, if a consumer selects the BNPL option at an online checkout, “the purchase is . . . split into a payment schedule – typically four fixed payments made bi-weekly or monthly until the balance is paid in full.”  The CFPB points out that transaction approval takes minutes, with no interest, finance charges, or hard credit inquiries.

Continue Reading CFPB Blogs About Buy Now Pay Later

On June 29, the CFPB released its summer 2021 Supervisory Highlights.  The findings of the report, which cover examinations that generally were completed between January 1, 2020 to December 31, 2020, are issued to “help institutions and the general public better understand how the Bureau examines institutions for compliance with Federal consumer financial law.”

Continue Reading CFPB Issues Summer 2020 Supervisory Highlights

On June 16, the CFPB issued an interpretive rule reversing its prior determination that it lacked authority to examine institutions for compliance with the Military Lending Act (MLA).  In 2018, the CFPB discontinued checking for MLA compliance during supervisory examinations on the grounds that Congress had not authorized such examination authority under the Dodd-Frank Act.  As a result, the new interpretive rule sets forth the statutory basis to examine institutions that it supervises for MLA compliance as follows:
Continue Reading CFPB to Resume Examinations Under the Military Lending Act