The FTC’s Safeguards Rule compliance deadline is right around the corner – June 9. The Safeguards Rule requires non-banking financial institutions 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).
Continue Reading Reminder: The FTC “Safeguards Rule” Compliance Date is June 9
On May 10, the CFPB announced the release Circular 2023-02 to confirm that reopening closed accounts may violate federal law. Based on its review of consumer complaints, the CFPB observed that after customers closed their bank accounts, some accounts were reopened without customer consent and then assessed overdraft/nonsufficient funds fees and monthly maintenance fees. The Bureau warned that such practices may violate the CFPA’s prohibition on unfair acts or practices. “When a bank unilaterally chooses to open an account in someone’s name after they have already closed it, this is a fake account,” CFPB Director Rohit Chopra said in the announcement. “The CFPB is acting on all fronts to halt the harvesting of illegal junk fees.”
Continue Reading New CFPB Circular: Reopening Closed Accounts May Violate CFPA
On April 14, the CFPB filed a statement of interest in a case currently pending before the United States District Court for the Southern District of Florida in an attempt “to help protect consumers from discriminatory targeting.” In a press release announcing the filing of the statement of interest, the CFPB explained that “discriminatory targeting” is the act of directing predatory or otherwise harmful products or practices at certain groups, neighborhoods, or parts of a community.
Continue Reading CFPB Statement of Interest Highlights Focus on Discriminatory Access to Credit
On March 8, the CFPB released a special edition of its Supervisory Highlights reporting on unlawful junk fees that were uncovered in a variety of servicing markets, including bank account deposits, auto loan servicing, mortgage loan servicing, payday lending, and student loan servicing during examinations between July 1, 2022, and February 1, 2023. Specific discoveries during such time period include:
Continue Reading Junk Fees Continue to be Focus of CFPB, Biden Administration
On April 4, CFPB Director Rohit Chopra delivered remarks at the International Association of Privacy Professionals’ Global Policy Summit on the importance of reigning in repeat violators of consumer finance and privacy laws. According to the Director, the CFPB is to enhance penalties against repeat offenders of consumer protection laws. Such penalties could involve a broader range of agency remedies, including naming executives in enforcement actions and placing meaningful limitations on future business practices, in addition to simple fines.
Continue Reading CFPB Director Elevates Priorities for Data Privacy & Repeat Offenders
On April 3, the CFPB issued a policy statement explaining the legal prohibition on “abusive” conduct in consumer financial markets provided in the Consumer Financial Protection Act (CFPA) and provided a summary past enforcement where these provisions have been applied.
Continue Reading CFPB Issues Guidance on “Abusive” Conduct in Financial Markets
On March 28, the CFPB issued a preemption determination that that TILA does not preempt commercial lending disclosure regulations enacted in California, New York, Utah, and Virginia (we discussed state commercial financing disclosure laws in previous posts here, here, and here). After analyzing public comments on its preliminary determination about whether New York’s commercial financing disclosure law is not preempted by TILA, the CFPB reiterated there is no preemption because the states’ statute require lenders to include disclosures in their commercial financing transactions with businesses, and commercial financing transactions are not covered by TILA.
Continue Reading CFPB: TILA Does Not Preempt State Commercial Financial Disclosures
Today, the CFPB has issued the small business lending final rule to implement changes to the Equal Credit Opportunity Act made by Section 1071 of the Dodd-Frank Act to require financial institutions to compile data regarding certain business credit applications and report that data to the CFPB (we previously discussed Section 1071 rulemaking in prior blog posts here and here). According to the CFPB, Section 1071’s purposes are “facilitating enforcement of fair lending laws and enabling the identification of business and community development needs and opportunities for women-owned, minority-owned, and small businesses.” While the final rule includes almost 900 pages of rulemaking, highlights include the following:
On March 2, the CFPB published a report analyzing the financial profiles of consumers who borrow through buy now, pay later (BNPL) lending products. The report found that BNPL borrowers on average are more likely to be active users of other credit products such as credit cards and alternative financial services such as payday loans. The report also found that BNPL borrowers are more likely to exhibit signs of financial distress, for example, high levels of indebtedness and revolving balances or delinquencies on their credit cards. In announcing the report’s publication, the CFPB highlighted several other noteworthy findings:
Continue Reading CFPB Report Details Financial Profiles of BNPL Borrowers
On March 7, the CFPB and the NLRB announced that they entered into an information sharing agreement to better protect consumers and address practices that harm workers in specific labor markets. The agreement further supports both agencies’ collaborated efforts to protect consumers and worders under both consumer financial protection laws and the NLRA. This follows upon the CFPB’s prior efforts to investigate consumer risks in the workforce, specifically from employers. These efforts unveiled specific issues consumers could face in the work force, including:
Continue Reading CFPB and NLRB Enter Information Sharing Agreement
On February 23, the CFPB issued market-monitoring orders to nine large auto lenders to provide information about their auto lending portfolios. According to the CFPB, auto finance market has seen significant change in recent years, resulting in larger loan amounts and higher monthly payments for consumers. As part of monitoring the auto loan market for consumer risks, the CFPB is collecting auto lending data, and issued these orders to the auto lenders to provide certain information about their lending portfolios as part of collecting such data.
Continue Reading CFPB Provides Guidance on Auto Finance Data Pilot