The Federal Trade Commission (FTC) announced a settled action on April 22 with Canadian company RevenueWire (the Company) and its CEO to resolve allegations that the Company assisted and facilitated two tech-support scams that the FTC had previously targeted. Under the alleged scheme, consumers were marketed tech support services to “fix” nonexistent computer problems, leading to hundreds of millions of dollars of consumer injury. The FTC’s complaint and consent judgment maintain that, in addition to serving as a lead generator for the alleged fraudsters, the Company processed consumer credit card charges on their behalf.
The Consumer Financial Protection Bureau (CFPB or Bureau) announced on March 6 three steps designed to advance its strategy on one of its key priorities: preventing consumer harm. The CFPB is (i) implementing an advisory opinion program to provide additional guidance to assist companies in better understanding their legal and regulatory obligations; (ii) amending and reissuing its responsible business conduct bulletin; and (iii) engaging with Congress to advance proposed legislation that would authorize the CFPB to establish a whistleblower program with respect to reporting violations of federal consumer financial law.
Taken together, the first and second of these steps further the Bureau’s stated goal of clarifying in a meaningful way the regulatory requirements applicable to covered businesses. At the same time, the proposed whistleblower program would bring the Bureau in line with other federal enforcement agencies, e.g., the US Securities and Exchange Commission, that have launched similar programs in part to enhance the detection of violations in an era of leaner agency staffing.
At a meeting with a group of state attorneys general in Washington, DC, earlier this week, Consumer Financial Protection Bureau (CFPB or Bureau) Director Kathy Kraninger expressed her strong desire to provide more consistent interpretation of statutes and rules enforced by the Bureau and to further work with state counterparts to make that consistency even broader.
A recent legal conference in Washington, DC, highlighted newly proposed and ongoing regulatory changes in California concerning consumer and commercial lending. In short, one of the conference’s messages was that lending enforcement is increasing and the California Department of Business Oversight (DBO) is becoming much more aggressive in its enforcement posture (including with respect to treating retail installment sales contracts and merchant cash-advance products as loans).
The DBO Commissioner, Manuel Alvarez, was installed last spring and is a former Consumer Financial Protection Bureau (CFPB) enforcement attorney. He has already made some noticeable changes in the DBO’s enforcement posture, and we expect to see more enforcement actions brought in the months and years to come under his leadership.
In an effort to promote compliance and certainty, the Consumer Financial Protection Bureau (CFPB or Bureau) on January 24 issued an often promised and much anticipated policy statement regarding how it intends to apply the “abusiveness” standard in supervision and enforcement matters. The Dodd-Frank Act (Act) is the first federal law to broadly prohibit “abusive” acts or practices in connection with the provision of consumer financial products or services. The Act deems an act or practice to be abusive when it “(1) materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service; or (2) takes unreasonable advantage of (A) a lack of understanding on the part of the consumer of the material risks, costs, or conditions of the product or service; (B) the inability of the consumer to protect the interests of the consumer in selecting or using a consumer financial product or service; or (C) the reasonable reliance by the consumer on a covered person to act in the interests of the consumer.”
California Governor Gavin Newsom submitted his $222 billion budget proposal for the 2020-2021 fiscal year on January 10. Among other priorities identified, the budget earmarks tens of millions of dollars for the creation and administration of the California Consumer Protection Law (CCPL). The governor’s budget proposal specifically notes the need for this expanded consumer protection law as arising from “[t]he federal government’s rollback of the CFPB [which] leaves Californians vulnerable to predatory businesses and leaves companies without the clarity they need to innovate.” Under the proposal, California’s Department of Business Oversight (DBO) would dramatically expand its consumer protection role to define the contours of, and to administer, the CCPL. The stated aim of this move is to enhance consumer protection in California and “foster the responsible development of new financial products.”
Should California’s lawmakers adopt this proposal, the DBO would be renamed the Department of Financial Protection and Innovation (DFPI). In an expansion of the DBO’s current role, which includes consumer protection in financial transactions and oversight of state-licensed financial institutions, the renamed agency would gain greater authority to “pursue unlicensed financial service providers not currently subject to regulatory oversight such as debt collectors, credit reporting agencies, and financial technology (fintech) companies, among others.”
The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the US Department of the Treasury’s Financial Crimes Enforcement Network, in conjunction with the Conference of State Bank Supervisors, issued a joint statement on December 3 to provide more clarity regarding Bank Secrecy Act (BSA) compliance for banks that service customers with hemp-related businesses.
As a global team, we pay attention to financial regulatory and fintech events happening around the world. In that spirit, we are reporting on some intriguing new regulatory initiatives that were announced at the Singapore FinTech Festival in relation to artificial intelligence (AI) and the intersection of sustainability, finance, and technology. Regulation will underpin many of these initiatives and it will be key for government to work with business and lawyers to ensure the law is robust, is fit for purpose, and can keep pace with the raft of proposals.
Singapore Deputy Prime Minister and Minister for Finance Heng Swee Keat announced several new projects to help his nation remain current with technology as a way to assist the economy and improve Singapore citizens’ lives. The projects—all part of Singapore’s new “National AI Strategy”—include the development of a chatbot to allow Singaporeans to report municipal issues, including subject matter details, and receive identification of the appropriate government agency to resolve the matter. The Monetary Authority of Singapore (MAS) reported improving linkage and collaboration with French and Canadian markets.
In addition to releasing a finalized No-Action Letter (NAL) Policy, the Consumer Financial Protection Bureau (CFPB) also issued a revised Trial Disclosure Policy and Compliance Assistance Sandbox Policy on September 10.
Trial Disclosure Policy
Through its revised Trial Disclosure Policy, the CFPB has created the CFPB Disclosure Sandbox. Now, entities seeking to improve consumer disclosures may conduct in-market testing of alternative disclosures for a limited time upon permission by the CFPB. The Dodd-Frank Act gives the CFPB the authority to provide certain legal protections for entities to conduct trial disclosure programs. The new policy largely streamlines the application and review process, provides greater protection from liability (which also extends to agents of the waiver recipient), and allows for a time-limited extension for successful disclosure tests.
The Consumer Financial Protection Bureau (CFPB) finalized its revised No-Action Letter (NAL) Policy and issued its first NAL under the revised policy on September 10, in response to a request by the US Department of Housing and Urban Development (HUD) on behalf of more than 1,600 housing counseling agencies (HCAs) that participate in HUD’s housing counseling program.