Like most industries today, Consumer Finance Services businesses are being significantly impacted by the novel coronavirus (COVID-19). Troutman Pepper has developed a dedicated COVID-19 Resource Center to guide clients through this unprecedented global health challenge. We regularly update this site with COVID-19 news and developments, recommendations from leading health organizations, and tools that businesses can use free of charge.
To help you keep abreast of relevant activities, below find a breakdown of some of the biggest COVID-19 driven events at the federal and state levels to impact the Consumer Finance Services industry this past week:
Privacy and Cybersecurity Activities
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On April 8, Acting Comptroller of the Currency Michael Hsu discussed the architecture of a U.S. dollar-based stablecoin system and policy considerations regarding stablecoin stability, interoperability, and separability. For more information, click here.
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On April 7, the Consumer Financial Protection Bureau (CFPB) announced that it is using its rulemaking authority to propose that consumer reporting agencies (CRAs) do not prevent human trafficking survivors from achieving financial independence. The proposed rule would protect human trafficking survivors by preventing CRAs from including negative information resulting from abuse. Congress required the CFPB to issue rules as part of the recently enacted Debt Bondage Repair Act. For more information, click here.
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On April 7, Secretary of the Treasury Janet Yellen addressed the Biden administration’s forthcoming legislative approach to digital assets, as we discussed here, as well as the digitization of the American economy, which Yellen assessed through the lens of five lessons she suggests are often implicated by emerging technologies generally: (1) responsible innovation; (2) appropriate guardrails; (3) monetary sovereignty; (4) technological neutrality; and (5) interagency and international collaboration. For more information, click here.
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On April 6, the U.S. Department of Education announced an extension of its pause on student loan repayment, interest, and collections through August 31, 2022. For more information, click here.
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On April 6, the CFPB published a report, showing that few payday loan borrowers benefit from no-cost extended payment plans, which must be offered to borrowers in the majority of states that do not prohibit payday lending. Instead of using the payment plans, borrowers continue to pay for costly loan rollovers. While no-cost extended payment plans are meant to help borrowers exit the cycle of rollovers and fees, the payday business model continues to depend on high rollover rates and fees. For more information, click here.
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On April 6, the Federal Housing Finance Agency announced that Fannie Mae and Freddie Mac will require servicers to suspend foreclosure activities for up to 60 days if the servicer has been notified that a borrower has applied for assistance from the Treasury Department’s Homeowner Assistance Fund. For more information, click here.
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On April 6, Senator Pat Toomey (R-PA) released a draft of the Stablecoin Transparency of Reserves and Uniformed Safe Transactions Act, also called the Stablecoin TRUST Act of 2022. The bill includes a definition of “payment stablecoin,” which must be convertible directly to fiat currency and its backing must be with assets “with a market value equal to not less than 100 percent of the par value of the payment stablecoins outstanding” and “that are cash and cash equivalents or level 1 high-quality liquid assets denominated in United States dollars.” For more information, click here.
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On April 5, the Federal Reserve Board announced that it had prohibited six former bank employees from future employment in the banking industry for fraudulently obtaining loans and grants administered under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. For more information, click here.
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On April 7, the New York Department of Financial Services issued guidance “to address potential confusion” about how to comply with a new statute of limitations requirement that went into effect last week. The new requirement would lower the statute of limitations period to three years, while also disallowing a partial payment to restart the statute of limitations and requiring additional disclosures to be made. For more information, click here.
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On April 6, New York Attorney General Letitia James announced a lawsuit against a law firm and its partners for “engaging in deceptive rent collection practices and initiating frivolous lawsuits against New York tenants.” The lawsuit was filed after the attorney general’s office investigated the firm and found it “did not conduct any meaningful reviews of their non-payment eviction cases before filing litigation, resulting in the distribution of deceptive rent collection letters, unnecessary legal actions against tenants, and improper evictions without cause.” Attorney General James’ office claims the conduct “violates New York Executive Law, the Federal Debt Collection Practices Act, and the New York General Business Law.” For more information, click here.
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On April 6, California Attorney General Rob Bonta, as part of a multistate coalition of 17 attorneys general, urged the nation’s largest banks to eliminate overdraft fees. According to the press release, “U.S. consumers paid an estimated $11 billion in overdraft fees in 2019, with the financial burden disproportionately falling on low-income consumers and consumers of color.” In support of the request, Attorney General Bonta stated, “For banks, overdraft fees are easy way to pad their profits, but for struggling consumers, these fees can seriously derail their financial plans.” For more information, click here.
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On March 24, Utah’s governor signed the Commercial Financing Registration and Disclosure Act (CFRDA) into law. Under the CFRDA, beginning January 1, 2023, commercial financing providers must register with the Utah Department of Financial Institutions and provide certain disclosures. These disclosures include the amount of funds provided to the business, the total amount to be paid to the provider, and information about the costs or discounts associated with the prepayment. For more information, click here.
Privacy and Cybersecurity Activities:
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On April 6, the Department of Human Health and Services (HHS) issued a request for information, seeking input on two requirements of the Health Information Technology for Economic and Clinical Health Act of 2009 (HITEACH Act), as amended in 2021. Specifically, HHS seeks comment on Section 13412 and Section 13410(c)(3). Section 13412 requires the HHS to consider certain recognized security practices of covered entities and business associates when determining potential fines, audit remedies, or other remedies for resolving potential violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Section 13410(c)(3) requires the HHS to establish a methodology to determine potential civil monetary penalties and settlement sharing for individuals harmed by a potential violation of the HIPAA Privacy, Security, and/or Breach Notification Rules. For more information, click here.
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On April 7, California Attorney General Rob Bonta announced a new partnership with the Federal Communications Commission (FCC) on robocall investigations to protect consumers and businesses from scams and financial loss. This partnership establishes critical information sharing and cooperation structures to investigate spoofing and robocalls scam campaigns. For more information, click here.