Troutman Pepper Weekly Consumer Financial Services COVID-19 Newsletter

By Ethan G. Ostroff, Robyn Lin, Graham Dean, Elizabeth Briones, Ronald I. Raether, Jr., Dan Stillman, Jed Komisin, Edgar Vargas & Alan D. Wingfield on April 18, 2022

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:

Federal Activities

State Activities

Privacy and Cybersecurity Activities

Federal Activities:

On April 14, the Consumer Financial Protection Bureau (CFPB or Bureau) published a report titled, “Student Loan Borrowers Potentially At-Risk when Payment Suspension Ends.” The publication uses data from the CFPB’s Consumer Credit Panel to identify which types of borrowers may struggle to make their scheduled loan payments based on five potential risk factors:

1. Pre-pandemic delinquencies on student loans.
2. Pre-pandemic payment assistance on student loans.
3. Multiple student loan servicers.
4. Delinquencies on other credit products since the start of the pandemic.
5. New third-party collections during the pandemic.

The CFPB finds that about 15 million borrowers have at least one of the potential risk factors considered in this report, and over five million have at least two. For more information, click here.

On April 12, the Consumer Financial Protection Bureau (CFPB) released a blog post titled, “Busting myths about bankruptcy and private student loans.” In the post, the CFPB argues that certain private education loans can be discharged in bankruptcy. The CFPB then relies on its own prior research to argue that consumers rely on servicers to provide information about private student loans, citing specific consumer complaints as evidence that student loan owners, lenders, servicers, and collectors unlawfully collect on private student loans that should have been discharged. For more information, click here.
On April 11, the White House published a fact sheet, outlining the Biden administration’s actions to lessen the burden of medical debt and increase consumer protection. The plan focuses on four areas: (1) holding providers and collectors accountable; (2) eliminating medical debt as a factor for underwriting in credit programs; (3) supporting veterans in financial hardship; and (4) helping consumers better know their rights. For more information, click here.
On April 7, in front of American University’s Kogod School of Business Center for Innovation, 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.
On April 6, Senator Pat Toomey (R-PA) released a draft of his Stablecoin Transparency of Reserves and Uniform Safe Transactions Act, or Stablecoin TRUST Act. The draft bill contemplates a “payment stablecoin,” which is convertible directly to fiat currency by the issuer. Only an insured depositary institution, a money transmitting business (authorized by its respective state authority), or a new “national limited payment stablecoin issuer” would be eligible to issue payment stablecoins. Additionally, payment stablecoins would be exempt from the federal securities requirements, including the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Company Act of 1940. For more information, click here.

State Activities:

On April 11, Virginia Governor Glen Youngkin vetoed Virginia House Bill 573, which would lower the statute of limitations for collecting medical debt from five to three years. The bill also would provide that the accrual date for actions is 30 days after the later of (1) issuance of the initial invoice or the due date stated in such invoice to the patient or person legally responsible for payment or (2) if the patient voluntarily enters into a payment plan with the provider, 30 days after the default date contained in such payment plan. The Virginia General Assembly can override any veto by a vote of two-thirds. For more information, click here.
On April 11, Virginia enacted a new law (HB 263) that goes into effect on July 1, permitting “banks” to provide customers with “virtual currency custody services so long as the bank has adequate protocols in place to effectively manage risks and comply with applicable laws.” The law, in a first for Virginia, defines “virtual currency” as “an electronic representation of value intended to be used as a medium of exchange, unit of value, or store of value,” which “does not exist in a physical form; it is intangible and exists only on the blockchain or distributed ledger associated with a particular virtual currency.” For more information, click here.
On April 9, New York Governor Kathy Hochul signed legislation, requiring the New York Department of Financial Services (NYDFS) to charge a new “assessment” to all virtual currency businesses licensed in New York to “defray operating expenses.” Section 206 of the New York financial services law will be amended to add a new subsection (d-1) to read: “The expenses of every examination of the affairs of any person regulated pursuant to this chapter that engages in virtual currency business activity shall be borne and paid by the regulated person so examined, but the superintendent, with the approval of the comptroller, may in the superintendent’s discretion for good cause shown remit such charges.” For more information, click here.
On April 11, Massachusetts Governor Charlie Baker testified before the Joint Committee on Health Care Financing about the comprehensive health care legislation, “An Act Investing in the Future of Our Health” (Act), he introduced last month. The Act comes on the heels of an earlier health care reform law passed in 2021, which increased insurance coverage for telehealth services; expanded the scope of practice for nurse practitioners, other specialized nurses, and optometrists; and addressed steps to protect consumers from surprise medical bills. The act demonstrates state government tensions of grappling with addressing traditional health care concerns, while simultaneously addressing the lasting impacts of the pandemic. For more information, click here.
On April 7, Colorado Governor Jared Polis signed Senate Bill 86 into law as Chapter 74 of the Laws of 2022. Taking effect the day it was signed, the law establishes a $2,500 exemption for garnishments on bank accounts and increases the homestead exemption from $75,000 to $250,000 for the general public and from $105,000 to $350,000 for the elderly and disabled. For more information, click here.

Privacy and Cybersecurity Activities:

On April 11, Connecticut’s Senate Judiciary Committee voted 25-14 in favor of passing S.B. 6, a comprehensive privacy bill that most closely resembles the Colorado Privacy Act (CPA). This legislation includes a lower scoping threshold (set at 75,000 residents for businesses not engaged in the sale of data) than all other recently enacted state privacy laws; however, the practical impact of this lower threshold is offset in part by Connecticut’s relatively small total population size. Notably, S.B. 6 includes specific provisions related to “dark patterns” and a 60-day right to cure that expires in 2024. The full state Senate may consider this legislation as soon as this week, with Connecticut’s 2022 legislative session set to adjourn on May 4. For more information, click here.

On April 12, Colorado’s Attorney General published a document titled, “Pre-Rulemaking Considerations for the Colorado Privacy Act.” In this document, the attorney general states that the following five principles guide the rulemaking for this law: (1) promotion of consumer rights, (2) clarification of ambiguities, (3) efficiency, (4) harmony, and (5) innovation. Colorado’s attorney general also issued an invitation for public comments on numerous topics, including, but not limited to, data protection assessments, dark patterns, and offline data collection. The formal notice-and-comment rulemaking for the CPA will begin this fall, and the CPA is set to take effect on July 1, 2023. For more information, click here.