Recently, the United States Court of Appeals for the 4th Circuit held that a mortgage servicer’s failure to provide a required disclosure informing borrowers of their three-day right to rescind the loan under the Truth in Lending Act (TILA) does not relieve borrowers of their obligation to return disbursed loan proceeds upon an effective rescission. The ruling reversed a West Virginia District Court’s ruling against the mortgage servicer in a purported class action.

Continue Reading 4th Circuit: Borrower Must Return Loan Proceeds After Rescission Despite Lender’s Failure to Meet TILA Requirements

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

In March, U.S. Department of Treasury issued its annual General Explanations of the Administration’s Revenue Proposals, commonly known as the “Green Book.”  Among other revenue proposals, the Treasury addressed the treatment of on-demand pay arrangements or earned wage access (EWA) programs, which have risen in popularity in recent years (previously discussed in our Labor and Employment Blog).  EWA programs generally allow employees to access accrued wages before the end of their regular pay cycle.
Continue Reading Treasury Department Proposes Non-Loan Status for Earned Wage Access

On April 29, the CFPB filed a proposed order in federal court seeking final judgment against three California-based defendants for engaging in unlawful fee-charging practices and deceptive telemarketing. According to the complaint, the defendants, a student loan debt relief business and a general debt-settlement company, along with their owner and CEO charged illegal upfront fees and deceived customers into paying for debt relief services in violation of the Consumer Financial Protection Act (CFPA) and Telemarking Sales Rule (TSR).  The CFPB alleges that defendants wrongfully charged more than 9,000 consumers with federal student-loan debt a total of approximately $10.5 million in illegal upfront fees, and used deceptive sales tactics to lure consumers into signing up for certain debt-relief services.  If approved by the court, defendants would be banned from performing debt relief and settlement activities.  The CEO would also be require to pay a civil monetary penalty of $30,000.
Continue Reading No Relief in Sight: CFPB and FTC Continue to Take Action Against Debt Settlement Companies

On April 12, the CFPB filed a complaint against a credit reporting agency (CRA), two of its subsidiaries, and a former senior executive for violating a 2017 consent order issued to the company related to alleged deceptive marketing regarding its credit scores and other credit-related products.  The CFPB alleges that the CRA continued its unlawful behavior and employed deceitful digital “dark patterns” to profit from customers and also alleges violations of the CFPA, EFTA/ Regulation E, and the FCRA/Regulation V.  The order seeks a permanent injunction, damages, civil penalties, consumer refunds, restitution, disgorgement and the CFPB’s costs.
Continue Reading CFPB Sues Credit Reporting Agency and Former Senior Executive

On March 22, HUD announced the delivery of the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) Action Plan to President Biden.  The PAVE Action Plan outlines actions that are intended to substantially reduce racial bias in home appraisals, and to promote generational wealth creation through home ownership.  According to the Task Force’s executive summary, “[o]n average, homes in majority-Black neighborhoods are valued at less than half of those in neighborhoods with few or no Black residents.”  The PAVE Task Force is composed of thirteen federal agencies and offices.
Continue Reading Interagency Task Force Unveils Action Plan to Address Racial Discrimination in Home Appraisals

On March 8, the FTC settled with the operators of an online stock trading platform over allegations that the operators fraudulently marketed investment-related services that they claimed would enable consumers to make consistent profits and beat the market.  FTC alleged that the consumers were misled and those who subscribed to the operators’ stock and option trading services were trapped into hard-to-cancel subscription plans with costly charges.
Continue Reading Online Investment Site Settles with FTC, $2.4M Fine

On February 28, the CFPB issued Bulletin 2022-4 regarding repossession of vehicles, and the potential for violations of the Dodd-Frank Act’s prohibition on engaging in unfair, deceptive, or abusive acts or practices (UDAAPs) when repossessing vehicles.  The CFPB has promised to use all appropriate tools to hold auto lenders and servicers accountable if they engage in UDAAPs in connection with their activities.  Based on recent examinations and enforcement actions, the CFPB has observed the following activity in the auto finance industry:  illegally seizing cars, sloppy record keeping, unreliable balance inquiries, and ransom for personal property.
Continue Reading CFPB: Auto Loan Servicers Must Ensure Lawful Repossessions

On February 23, the CFPB outlined a proposal for upcoming joint rulemaking to prevent algorithmic bias in automated home valuation models (AVMs).  Here, the CFPB is specifically focused on the potential for AVMs to pose fair lending risks to homebuyers and homeowners.  The CFPB issued the outline pursuant to a requirement under the Small Business Regulatory Enforcement Fairness Act that includes “collecting small entities’ advice and recommendations on the potential impacts of the proposals under consideration and feedback on regulatory alternatives to minimize these impacts.”
Continue Reading CFPB Seeks to Prevent Algorithmic Bias in Automated Home Valuation Models