On June 3, a federal court filing in the Southern District of Florida by an Atlanta-based FinTech company revealed that the small business lender is under DOJ investigation for alleged PPP loan approval practices. According to the FinTech, by August 2020, it processed over $7 billion in PPP loans to at least 300,000 small businesses.

Continue Reading DOJ Investigating FinTech Over PPP Loans

On May 4, the Connecticut Department of Banking issued a temporary cease and desist order directing a peer-to-peer lending platform that connected borrowers with third-party lenders to cease its lending-related activities on grounds that it was operating as an unlicensed small loan company.  The FinTech company was also cited for operating as an unlicensed consumer collection agency, and for engaging in deceptive acts or practices under consumer protection laws.
Continue Reading Connecticut Stops FinTech from Unlicensed Lending Activities

On May 17, the FDIC and the CFPB took parallel actions to combat the misuse of  the name or logo of the FDIC and deceptive representations about deposit insurance.  The FDIC approved a final rule implementing its statutory authority to prohibit any person or organization from making misrepresentations about FDIC deposit insurance or misusing the FDIC’s name or logo.  The CFPB followed suit by releasing Consumer Financial Protection Circular 2022-02 providing that company’s likely violate the CFPA’s prohibition on deception acts or practices if they misuse the name or logo of the FDIC or engage in false advertising or make misrepresentations to consumers about deposit insurance, regardless of whether such conduct (including the misrepresentation of insured status) is engaged in knowingly.
Continue Reading FDIC and CFPB Take Action to Protect Against Misrepresentations about FDIC Insured Status and Misuse of Name and Logo

On April 25, the CFPB announced that it is using its “dormant authority” in order to conduct examinations of nonbanks posing risks to consumers.  The Bureau has direct supervisory authority over banks and credit unions, certain nonbanks, in addition to large depository institutions with more than $10 billion in assets, and their service providers.  With this announcement, the CFPB intends invoke its authority under the Dodd-Frank Act to examine nonbanks “whose activities the CFPB has reasonable cause to determine pose risks to consumers. This authority is not specific to any particular consumer financial product or service.”
Continue Reading FinTechs in Crosshairs as CFPB Invokes Dormant Authority to Examine Nonbanks

On April 7, the FDIC issued a Financial Institution Letter (FIL-16-2022) calling on all FDIC-supervised intuitions that intend to engage in, or that are currently engaged in, any activities involving or related to crypto assets to notify the FDIC.
Continue Reading FDIC Warns Insured Institutions Engaging in Crypto Activities About Risks

On April 8, the acting comptroller of the currency, Michael J. Hsu, discussed many aspects of stablecoins (we previously discussed the President’s Working Group report on stablecoins and Hsu’s comments here). In his speech at the Georgetown University Law Center, Hsu remarked that stablecoins are a “hot topic” among policymakers and posed three considerations that speak to the architecture of stablecoins.
Continue Reading Acting Comptroller Discusses Architecture of Stablecoins

On March 7, a Chicago-based FinTech company  filed a Complaint for Declaratory and Injunctive Relief in Los Angeles County Superior Court against the Commissioner of the California Department of Financial Protection and Innovation (DFPI), Clothilde Hewlett.
Continue Reading Fintech Flips Script, Sues California Regulator Over 36% Rate Cap Law

On February 8, the U.S. District Court for the Northern District of California ruled against three states – California, Illinois, and New York – challenging the OCC’s rule on the “valid when made” doctrine.  In 2020, the OCC issued a final rule codifying the “valid when made” principle by clarifying that the determination of whether interest on a loan is permissible is determined when the loan is made and that a bank’s transfer of a loan to a third party does not impact the validity or enforceability of that interest.
Continue Reading OCC Prevails in Challenge to “Valid When Made” Rule

On February 8, the District of Columbia attorney general announced a settlement with a FinTech company for alleged violations of the District of Columbia Consumer Protection Procedures Act (CPPA) by marketing high-costs loans carrying interest rates exceeding D.C.’s interest rate caps. The complaint, filed in June 2020, alleged that the company offered two loan products to D.C. residents with APRs ranging from 99 to 251 percent, exceeding D.C.’s rate cap limit of  24 percent.
Continue Reading DC OAG Reaches $4 Million Settlement with FinTech Over Claims of Predatory Lending

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 September 21, 2021, the FinTech task force of the U.S. House Committee on Financial Services held a hearing on consumer privacy. The hearing was live-streamed and the archived webcast is available on the Committee website.

Continue Reading More Regulatory Clarity on the Horizon for FinTech