Starting in February 2025, providers of (1) debt settlement services, (2) student debt relief services, (3) private postsecondary education financing, and (4) income-based advances (a/k/a earned wage access (EWA) products) must begin registering and conform to annual reporting requirements in order to operate in California. We previously discussed this rule here.
Continue Reading California DFPI Poised to Fill Potential Regulatory Gap Amid Anticipated CFPB Leadership Shift
On October 22, the California DFPI announced the state’s approval of registration regulations enacted under the CCFPL, which will require providers of (1) debt settlement services, (2) education financing, (3) income-based advances (including earned wage access products), and (4) student debt relief services to register with the state and comply with data submission requirements. Financial service providers covered by the new regulations must file an application to register by February 15, 2025, to continue operating legally in the state.
Continue Reading California DFPI Rolls Out Registration Requirements for Debt Settlement, EWA, and Student Loan Relief Providers
On August 13, the CFPB announced an advisory opinion on the applicability of the Truth in Lending Act (TILA) and Regulation Z to “contracts for deed.” A contract for deed is an arrangement in which a consumer purchases a home from a seller subject to the purchaser paying for the home over time. The purchaser moves into the home and assumes responsibility for taxes, insurance, home maintenance and repairs, but does not take title to the home until all payments due are made to the seller. The arrangement is also known by other names, such as “land sales contract,” “land installment contract,” and “agreement for deed.” The arrangement is very similar in many respects to an installment sales contract for the purchase of goods.
Continue Reading CFPB Announces Advisory Opinion on Applicability of TILA and Regulation Z To Contracts for Deed
On August 12, the National Consumer Law Center (NCLC), a prominent consumer advocacy group, petitioned the CFPB to open rulemaking under the Equal Credit Opportunity Act (ECOA) to expand the definition of “credit” to include housing and apartment rental leases, and “creditors” to include landlords. While acknowledging that landlords are already banned from discriminating against prospective tenants under the federal Fair Housing Act, the petition aims to secure two additional protections.
Continue Reading Advocacy Group Petitions CFPB to Categorize Housing Rental Leases as “Credit”
In June, the Nevada governor signed SB 290 into law, making Nevada the first state to enact legislation creating a comprehensive statutory framework that specifically defines and regulates the provision of earned wage access (EWA) products. EWA products allow consumers to access their earned wages before their regularly scheduled pay date. While other states and federal agencies have made preliminary efforts to regulate EWA products, Nevada is the first state to impose certain substantive requirements on providers of EWA products, such as implementation of policies for responding to consumer complaints and mandatory disclosure to consumers of their rights, such rights including the ability to cancel EWA agreements at any time without being charged fees.
Continue Reading Nevada EWA Legislation Creates Novel Regulatory Framework
On December 18, the Arizona Attorney General issued an opinion on earned wage access (EWA), which determined that fully non-recourse EWA products do not constitute consumer loans subject to consumer loan regulations, and correspondingly, that providers of non-recourse EWA products would not be considered consumer lenders subject to licensure under Arizona law. The opinion found that an EWA product could be identified as fully non-recourse when the provider:
Continue Reading AZ Attorney General Concludes Non-Recourse EWA Not a Loan
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
Ahead of an upcoming merger between a digital banking platform and a special purpose acquisition company, both parties disclosed in a regulatory filing last week that the platform received a Civil Investigative Demand (“CID”) in June 2020 related to its “cash paycheck advance business in compliance with the prohibition against UDAAPs, the EFTA, and, to the extent it applies, the Truth in Lending Act.” According to the filing, the platform provided the CFPB with all information and documents required by the CID, and on September 27, 2021, the CFPB staff notified the company that it currently did not intend to recommend that the CFPB take any enforcement action.
Continue Reading CFPB Opts Not to Take Action Against Banking App
On August 5, California’s Department of Financial Protection and Innovation (DFPI) announced that it entered into a consent order with a New York-based FinTech company that offers student Income Share Agreements (ISAs) to finance post-secondary education and training. According to the DFPI, it is the first agreement to subject an ISA provider to state licensing and regulation. The agreement reflects the DFPI’s decision to treat these private financing products as student loans for the purpose of the California Student Loan Servicing Act (SLSA). Below are significant highlights from the agreement:
On May 15, the CFPB withdrew three Biden-era rulemaking proposals, including a December 2024 proposal to regulate data brokers as consumer reporting agencies under the Fair Credit Reporting Act (FCRA), a January proposal to extend Regulation E to emerging payment systems such as those used in video games and esports betting, and a proposed interpretive rule targeting restrictive and potentially unlawful terms in consumer contracts.
Continue Reading CFPB Withdraws Guidance and Proposed Rules on Data Broker, Video Game Payments, and Contract Clauses