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In August, a New York federal district court denied a motion to dismiss a CFPB lawsuit against three affiliated companies engaged in the business of purchasing distressed consumer debt and several of the companies’ owners and officers. The CFPB’s lawsuit involves claims against the defendants for violations of the Consumer Financial Protection Act (“CFPA”) and Fair Debt Collection Practices Act (“FDCPA”) based on a theory of vicarious liability as a result of conduct of the companies’ third-party debt collection vendors.Continue Reading NY Federal Court Rules CFPB Vicarious Liability Suit Can Proceed

On May 1, NYDFS settled with a cryptocurrency trading platform over the company’s cybersecurity deficiencies, resulting in a consent order and $1.2 million fine for the crypto company. NYDFS alleged “multiple deficiencies in the Company’s cybersecurity program” discovered during NYDFS examinations in 2018 and 2020. The examinations prompted an investigation, ultimately leading to the consent order and the fine.Continue Reading New York Settles with Crypto Company, Proposes Crypto Legislation

On March 16, NYDFS entered a consent order resolving an examination of a payment service provider that allows merchants to accept Bitcoin payments from customers in exchange for the equivalent value in local currency credited to the merchant’s bank account. The company is licensed by the NYDFS to engage in virtual currency business activity pursuant to 23 NYCRR Part 200. Licensees under Part 200 are required to, among other things, adhere to federal and state laws mandating effective controls to guard against money laundering and certain other illegal activities.Continue Reading NYDFS Examination of Crypto Payment Service Provider Ends in Settlement

On February 1, NY DFS announced the adoption of the final regulation implementing the New York State Commercial Finance Disclosure Law (CFDL) (N.Y. Fin. Serv. Law §§ 801 to 812). The regulations require companies that offer commercial financing less than or equal to $2.5 million (providers) to make standardized disclosures about the commercial financing’s credit terms to recipients of the commercial financing (recipients). The final regulations were effective February 1, 2023, and the compliance date for the final regulation is August 1, 2023 (see our previous post on the regulations here).Continue Reading New York Adopts Final Commercial Financing Disclosure Regulations

On January 23, the NY DFS released updated guidance with regard to better protecting consumers in the event of virtual currency insolvency. This updated guidance applies to entities that DFS has licensed or chartered to hold or maintain virtual currency assets on behalf of their customers. The guidance reiterates that as custodians, such entities must have practices in place to maintain custody and control of virtual currency similar to that of traditional financial service providers. DFS’ previous guidance already required certain practices, such as maintaining books and records, disclosure of certain terms, and protections in place for the assets held. The new guidance sets forth additional requirements and most pertinently, custodians must:Continue Reading NY DFS Releases Custodial Guidance on Crypto Insolvency

On January 4, the CFPB and the New York State Office of the Attorney General filed a complaint against a prominent subprime auto lender in the Southern District of New York. The complaint alleges that the auto lender misrepresented costs in loan agreements and tricked customers into high-cost loans on used cars in violation of the CFPA and New York usury limits. Specifically, the complaint alleges that the auto lender harmed consumers in the following ways:Continue Reading CFPB and New York AG File Suit Against “Predatory” Auto Lender

On September 14, the New York Department of Financial Services (NYDFS) published a notice of proposed rules under New York’s Commercial Financing Disclosure Law (CFDL) (we discussed this previous rulemaking in a blog post here). Under the CFDL, commercial finance companies are required to give consumer-style loan disclosures to potential recipients when a specific offering of finance is extended for certain commercial transactions of $2.5 million or less. We note some items in particular from the latest proposed rule:
Continue Reading New York Publishes Proposed Rules on Commercial Financing Disclosures

On July 29, the New York Department of Financial Services (NYDFS) released Draft Amendments to its Part 500 Cybersecurity Rules that would impose new obligations on financial institutions on reporting, governance, testing, access management, risk assessment, business continuity plans, among others.
Continue Reading New York Proposes Cybersecurity Rules for Financial Institutions

On June 8, the New York State Department of Financial Services (DFS) released its Guidance on the Issuance of U.S. Dollar-Backed Stablecoins meant to set foundational criteria for USD-backed stablecoins issued by DFS-regulated entities on the issues of redeemability, assets reserves and attestations about such reserves. Here are some of the highlights from the guidance.
Continue Reading New York Releases Stablecoin Guidance

On May 23, the CFPB and the New York Attorney General’s office filed a proposed stipulated judgment in federal district court against a debt collection operation, including several companies and individuals, to resolve allegations that the operation engaged in deceptive tactics to induce consumer payments. The complaint, filed in 2020, alleged that the defendants violated the CFPA, FDCPA, and various New York laws to induce consumer payments by (i) falsely claiming arrest and imprisonment for failure to pay, (ii) falsely threatening legal action, (iii) inflating debt amounts owed, (iv) harassing debt collection victims by contacting family members, coworkers, employers, and friends, (v) placing harassing phone calls to debtors, and (vi) failing to provide statutorily required notices.
Continue Reading CFPB, NY Reach $4M Settlement with Debt Collection Operation

In April, we continued to see a steady pace in the seriousness and frequency of crypto enforcement actions by state and federal law enforcement.  (See our March 2022 Crypto Enforcement Actions Roundup blog here where we discuss the regulatory guidance and jurisdiction of federal and state agencies to enforce these matters.)
Continue Reading April 2022 Crypto Enforcement Actions And Regulatory Guidance Roundup