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On March 25, a coalition of trade groups filed suit in the United States District Court for the District of Colorado, challenging a Colorado law which would have opted the state Section 521 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (“DIDMCA”), a federal law enacted to create competitive equality between state-chartered banks and national banks. The law, set to take effect on July 1, 2024, would have subject out-of-state lenders to the state’s rate cap. Continue Reading Lenders Sue to Block Colorado’s Interest Rate ‘Opt-Out’ Law

On January 12, South Dakota’s Division of Banking issued a mandate setting March 31, 2024 as the deadline for all South Dakota licensed money lenders and non-residential mortgage brokers to comply with their Bank Secrecy Act/Anti-Money Laundering (BSA/AML) requirements under a 2020 Final Rule published by the Financial Crimes Enforcement Network (FinCEN). FinCEN’s 2020 Final Rule notably closed a regulatory loophole, extending BSA/AML requirements to banks that lack a federal functional regulator. A “federal functional regulator” is any one of the following: Federal Reserve Board, FDIC, NCUA, OCC, OTS, SEC, or CFTC. There are over 550 banks that currently lack a federal functional regulator, consisting of state-chartered, non-depository trust companies, non-federally insured credit unions, and some international banking entities.Continue Reading South Dakota Lenders on Tight Deadline for BSA/AML Compliance

On January 29, a Missouri-based bank and its Kansas-based fintech loan servicer filed a joint motion to dismiss a purported class action filed against them alleging violations of the Georgia Installment Loan Act (GILA) and state RICO law, arising out of a consumer installment loan. Continue Reading Bank Partnership Moves to Dismiss Class Action Asserting Violations of Georgia Rate Cap Law

On November 30, Washington D.C. introduced District of Columbia Council Bill B 25-0609, which would opt the state out of Section 521 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (“DIDMCA”) with respect to loans made in the District of Columbia, and would add “anti-evasion” and territorial application provisions to the D.C. Official Code (we discussed similar DIDMCA opt-out legislation in Colorado in a blog post here). Continue Reading Washington D.C. Introduced Rate Exportation Opt-Out and “Anti-Evasion” Bill

On October 9, Florida introduced SB 146, which amends the Florida Consumer Finance Act (CFA), and joins other states that have passed laws characterizing certain nonbanks as the “true lender” of loans made through a bank partnership and treats all payments incident to the loan as interest, even if voluntary.Continue Reading Florida Introduces “True Lender” Legislation

On November 21, a Washington-based bank confirmed through a public filing that it entered into a consent order with the FDIC alleging that the bank engaged in unsafe or unsound banking practices, primarily related to products offered through a fintech partner. In particular, the FDIC determined that in connection with the bank’s relationship with the fintech, the bank engaged in, among other things, deceptive and unfair acts and practices in or affecting commerce by making implied claims that credit products with non-optional debt cancellation features were unemployment insurance, approving consumers who did not qualify for the debt cancellation feature, and misrepresenting the fees and benefits for those products.Continue Reading FDIC Issues Order Against Bank Over Fintech Partnership

On November 15, the CFPB issued an order requiring an Illinois-based fintech lender to pay $15 million in fines. The order additionally prohibits the company from operating in certain lines of business and requires revision of its executive compensation policies.Continue Reading CFPB Files Action Against Fintech for Allegedly Violating Previous Order, Deceiving Customers, Withdrawing Funds Without Consent

On November 2, the FTC entered into a settlement agreement with a Manhattan-based fintech company for $18 million over alleged deceptively marketed cash advances to consumers and impeding customers’ ability to cancel memberships. The FTC alleged that the fintech company violated the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA).Continue Reading FTC Settles with Fintech for $18M over Deceptive Cash Transfers and Difficult-to-Cancel Memberships