On November 22, the CFPB denied a crypto lending institution’s petition for an order modifying a pending civil investigative demand (“CID”) that the Bureau issued to the institution in December of 2021. The CFPB issued the CID as part of an investigation into the institution’s advertisement of certain product offerings, including lines of credit and its “Earn Interest Product” (“EIP”).

Continue Reading CFPB and State Regulators Hone in on Interest-Bearing Crypto Accounts

On December 1, the CFPB and a financial services company filed a stipulated proposed court order seeking the resolution of a CFPB suit alleging that the financial services company made false, misleading, and inaccurate marketing representations to consumers regarding its “high yield” savings account offering. In its original complaint, the CFPB alleged that the financial services company engaged in four separate false representations to consumers in violation of the CFPA:

Continue Reading CFPB Targets Financial Services Company for Deceptive Advertising

The U.S. Department of the Treasury recently released a report titled “Assessing Impacts of New Entrant Non-bank Firms on Competition in Consumer Finance Markets,” a product of the Biden administration’s effort to assess competition in different aspects of the economy. The report focuses primarily on FinTechs and other new entrant non-bank firms, including the consequences of their participation with insured depository institutions in core consumer finance markets (e.g., credit, deposits, and payments) and recommendations to enhance oversight of non-bank financial institutions.

Continue Reading Treasury Report Sets Guidelines For Oversight on FinTech Participation in Core Finance Markets

On November 15, the FTC announced a six month extension to the deadline for companies to comply with the Safeguards Rule. The Safeguards Rule requires non-banking financial institutions, such as mortgage brokers, motor vehicle dealers, and payday lenders, to develop, implement, and maintain a comprehensive security program to keep their customers’ information safe (we discussed the Safeguards Rule in a previous blog post here). The deadline for complying with some of the updated requirements of the Safeguards Rule is now June 9, 2023.

Continue Reading FTC Extends Deadline for Safeguards Rule Compliance to June 9, 2023

On November 3, the FTC and a software company operating internet-based telephone services filed an agreed upon proposed court order, which includes a $100 million fine, following an FTC suit alleging that the software company participated in illegal dark patterns and charged junk fees. In its original complaint, the FTC alleged that the software company provided simple ways to sign up for their phone plans, but made it difficult to cancel those plans, and harmed consumers by:

Continue Reading FTC Action Alleging Dark Patterns Forces Software Company to Pay Damages and Adopt New Practices

Recently, the FTC and California Department of Financial Protection (DFPI) sued several companies and owners for allegedly operating an illegal mortgage relief operation. This action alleges that the defendants’ conduct violated the California Consumer Financial Protection Law (CCFPL), the FTC Act, the FTC’s Mortgage Assistance Relief Services Rule (the MARS Rule or Regulation O), the Telemarketing Sales Rule, and the Covid-19 Consumer Protection Act.

Continue Reading FTC, DFPI Shut Down Mortgage Relief Operation

Recently, the CFPB released an outline of proposed measures related to the Bureau’s Dodd-Frank Section 1033 rulemaking efforts that would allow consumers the rights over their personal financial data. The outline discusses proposed regulations that would require covered data providers to make consumer financial data available directly to a consumer and to any third parties authorized by the consumer. Under these proposed regulations, consumers would be able to easily switch financial providers and transfer their account history to a new provider. In a high-level summary of the proposed regulations, the CFPB discusses the regulatory provisions it is considering proposing, including the following:

Continue Reading CFPB Issues Proposed Rulemaking on Data Access and Portability

On October 26, the CFPB issued guidance to help banks avoid charging illegal overdraft fees on consumer deposit accounts. In its Circular 2022-06, the Bureau stated that overdraft fees assessed by financial institutions on transactions that a consumer would not reasonably anticipate likely violate the CFPA. The CFPB further highlighted two particular categories of so-called “junk fees” that likely qualify as unfair and unlawful under the CFPA (we covered the CFPB’s focus on junk fees in previous blogs here and here):

Continue Reading CFPB Issues Latest Crack Down on Junk Fees

On October 19, in Community Financial Services Association of America, Limited v. Consumer Financial Protection Bureau, a three-judge panel in the Fifth Circuit unanimously found the CFPB’s funding structure to be unconstitutional, holding that it violates the U.S. Constitution’s Appropriations Clause. This decision followed a challenge by the CFSA to the CFPB’s “payday rule,” which prohibits lenders from withdrawing loan payments from consumer accounts after multiple failed attempts due to insufficient funds.

Continue Reading Fifth Circuit Rules CFPB Funding Structure Unconstitutional in Next Turn of Litigation

On September 29, the CFPB released its annual report on residential mortgage lending activity and trends for 2021. Notably, the report shows a shift from refinance loans in 2020 to home purchase loans in 2021—with a greater share of home purchase loans going to Asian, Black, and Hispanic white borrowers relative to the share of home purchase loans for non-Hispanic white borrowers. Additionally, the top 25 closed-end lenders by loan volume held nearly half of the market share of residential mortgage lending; continuing a trend that has risen each year since 2018. Key findings from this year’s report includes:

Continue Reading CFPB Annual Report: End to Mortgage Refinancing Boom, Increase in Home Purchase Loans