To keep you informed of recent activities, below are several of the most significant federal and state events that have influenced the Consumer Finance Services industry over the past week:

Federal Activities

State Activities

Federal Activities:

  • On September 18, the Federal Trade Commission (FTC) warned five tax preparation companies that they could face civil penalties if they use or disclose confidential data collected from consumers for the purpose of preparing their taxes for other unrelated purposes, such as advertising, without first obtaining consumers’ consent. The FTC sent Notices of Penalty Offenses that warn recipients they could incur civil penalties of up to $50,120 per violation if they misuse personal data in ways that run counter to the original purpose for which this information was collected. For more information, click here.
  • On September 15, U.S. Treasury Assistant Secretary for Financial Institutions Graham Steele gave remarks at the Electronic Transaction Association Fintech Policy Forum, where he spoke about the Treasury’s policy portfolio, including developing the Treasury’s policy views on banks, credit unions, and the insurance sector, as well as cybersecurity and critical infrastructure, community development, and consumer protection. For more information, click here.
  • On September 15, the Financial Crimes Enforcement Network (FinCEN) assessed a $15 million civil money penalty against Bancrédito International Bank and Trust Corporation (Bancrédito) for willful violations of the Bank Secrecy Act and its implementing regulations. This was FinCEN’s first enforcement action against a Puerto Rican international banking entity and includes the first violation for failure to implement and maintain an anti-money laundering program under the Gap Rule. For more information, click here.
  • On September 14, the Consumer Financial Protection Bureau (CFPB) updated its FAQs related to the final Small Business Lending Rule (the Rule). The FAQs are a resource issued by the CFPB to help small business lenders and finance companies understand and comply with the Rule, which implements section 1071 of the Dodd-Frank Act. For more information, click here.
  • On September 14, the CFPB released a report on Tuition Payment Plans in Higher Education. Ninety-eight percent of colleges now allow students to pay for their education in installments using tuition payment plans. Tuition payment plans have a wide range of structures and may be managed by the schools or administered by third-party payment processors. Typically, tuition payment plans are interest-free, but, according to the CFPB, many charge enrollment fees, late fees, and returned payment fees. The bureau asserts that these fees can create a high cost of credit. Specifically, the CFPB states that when the amount borrowed is low and the enrollment fee is high, students can face annual percentage rates as high as 237%. For more information, click here.
  • On September 14, the Office of the Comptroller of the Currency (OCC) reported cumulative trading revenue of U.S. commercial banks and savings associations of $13.7 billion in the second quarter of 2023. The second quarter trading revenue was $3.9 billion, or 22.4%, less than in the previous quarter and $3.3 billion, or 31.7%, more than in the second quarter of 2022. For more information, click here.
  • On September 14, Senate Banking Committee Chair Sherrod Brown sent a letter to Secretary Department of the Treasury Janet Yellen, Securities and Exchange Commission (SEC) Chair Gary Gensler, and Commodity Futures Trading Commission Chair Rostin Behnam, urging them to impose tougher disclosure standards for the cryptocurrency companies to protect investors from risks of fraud. The letter stated that regulators “must do more to protect crypto users from this misconduct and begin to improve available data and documentation so that Americans can evaluate tokens based upon reliable information,” and that “[c]omprehensive and regular disclosures must be a cornerstone of any approach to digital assets.” Brown explained that the existing tools available to regulators can be used to “strengthen transparency and hold bad actors accountable.” For more information, click here.
  • On September 13, the SEC charged Stoner Cats 2 LLC (Stoner Cats) with conducting an unregistered offering of crypto asset securities in the form of purported non-fungible tokens (NFTs) that raised approximately $8 million from investors to finance an animated web series called Stoner Cats. The SEC orders alleged that Stoner Cats: (1) offered and sold more than 10,000 NFTs for approximately $800 each to investors, selling out in 35 minutes; (2) both before and after Stoner Cats NFTs were sold to the public, Stoner Cat’s marketing campaign highlighted specific benefits of owning them, including the option for owners to resell their NFTs on the secondary market; (3) as part of the marketing campaign, the Stoner Cats team emphasized its expertise as Hollywood producers, its knowledge of crypto projects, and the well-known actors involved in the web series, leading investors to expect profits because a successful web series could cause the resale value of the Stoner Cats NFTs in the secondary market to rise; and (4) Stoner Cats configured the Stoner Cats NFTs to provide the company with a 2.5%royalty for each secondary market transaction in the NFTs and it encouraged individuals to buy and sell the NFTs, leading purchasers to spend more than $20 million in at least 10,000 transactions. According to the SEC’s order, Stoner Cats violated the Securities Act of 1933 by offering and selling these crypto asset securities to the public in an unregistered offering that was not exempt from registration. For more information, click here.
  • On September 13, the OCC announced it will host a public meeting of the Mutual Savings Association Advisory Committee on Tuesday, October 3. The meeting, which will be hosted in person and virtually, is open to the public. For more information, click here.
  • On September 11, the FTC announced that it will require two background report providers to settle charges that they deceived consumers about whether consumers had criminal records and that the companies violated the Fair Credit Reporting Act (FCRA) by operating as consumer reporting agencies while, among other things, failing to ensure the maximum possible accuracy of their consumer reports. For more information, click here.
  • On September 8, Senior Vice President of the Philadelphia Federal Reserve (the Fed) William Spaniel addressed the Fed’s recent guidance, which requires banks to obtain pre-approval by the Fed before offering stablecoins. Spaniel explained that he does not view this process as a “hurdle” for companies, but instead as a “necessary discussion between the supervisor and the entity” about the entity’s preparedness to offer such a product in a way that is “consistent with safety and soundness or consumer compliance.” For more information, click here.

State Activities:

  • On September 14, a federal district court in the Eastern District of Kentucky became the second court to issue an order granting, in part, a plaintiffs’ motion for a preliminary injunction enjoining the CFPB from enforcing its final rule under § 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Final Rule) against the plaintiffs and their members. (A discussion of the first injunction issued by a Texas federal court can be found here.) The injunction in The Monticello Banking Company v. CFPB will dissolve if the U.S. Supreme Court reverses the Fifth Circuit in the Community Financial Services Association (CFSA) v CFPB case, which found the CFPB’s funding structure unconstitutional and, therefore, rules promulgated by the CFPB invalid. For more information, click here
  • On September 13, New York Attorney General (AG) Letitia James filed a lawsuit against a travel company and its founder, alleging that the company failed to refund canceled trips to more than 100 of the state’s residents, including some tours that were canceled due to the COVID-19 pandemic. The lawsuit alleges that the Massachusetts-based company engaged in unfair and deceptive trade practices by failing to honor the company’s cancellation policy to promptly refund consumers whose trips the company canceled or consumers who canceled their trips for health reasons. The lawsuit also alleges that the company mischaracterized cancellations as “postponements,” rescheduling trips sometimes more than a year after the initial travel date. According to the complaint, in other instances, the company would only offer a credit to consumers who did not wish to have their trips postponed. The AG is seeking full restitution for all impacted consumers within the state, along with civil penalties and disgorgement. For more information, click here.
  • On September 12, Maryland AG Anthony G. Brown announced a $35 million settlement with a specialty consumer finance company, resolving a multistate investigation into the company’s advertising and leasing practices. The investigation, which involved 41 states and the District of Columbia, exposed several of the company’s marketing and sales practices that led consumers to believe they were making purchases pursuant to an installment plan or credit sale, when they were actually entering into a lease agreement. As a result, consumers frequently ended up paying two to three times the purchase price for the product or service. Under the terms of the settlement, the company is permanently banned from engaging in consumer leasing activities. Additionally, all of the company’s existing leases will be canceled, although consumers will be permitted to retain the leased product without making further payments. The company must also refrain from furnishing negative information to any consumer reporting agency regarding the consumers’ accounts. The company is also required to pay $1 million to the states participating in the settlement and $1 million to the CFPB. For more information, click here.
  • On September 11, California AG Rob Bonta sent a letter in response to the jointly issued Request for Information (Request) sent by CFPB, U.S. Department of Health and Human Services, and the U.S. Department of Treasury seeking public comment on medical credit cards, loans, and other financial products used to pay for health care to the agencies specifically addressing the Request’s questions regarding health equity concerns, consumer confusion, best practices for medical providers who offer medical payment products, and consumer protection. According to Bonta, “California is uniquely qualified to comment on the [Request] because it has enacted strong consumer protections to guard against patient harms from these products.” For more information, click here.
Photo of Ethan G. Ostroff Ethan G. Ostroff

Ethan Ostroff’s practice focuses on financial services litigation and consumer law compliance counseling. Ethan is part of the firm’s national practice representing consumer-facing companies of all types in defense of individual and class action claims and counseling them on compliance with federal and

Ethan Ostroff’s practice focuses on financial services litigation and consumer law compliance counseling. Ethan is part of the firm’s national practice representing consumer-facing companies of all types in defense of individual and class action claims and counseling them on compliance with federal and state laws.

Photo of Elizabeth Briones Elizabeth Briones

Elizabeth is an associate in the Consumer Financial Services practice who represents businesses large and small – from corporations to local partnerships. She is an experienced litigator with a background in complex matters ranging from corporate contract disputes, premises liability, negligence, fraud, and…

Elizabeth is an associate in the Consumer Financial Services practice who represents businesses large and small – from corporations to local partnerships. She is an experienced litigator with a background in complex matters ranging from corporate contract disputes, premises liability, negligence, fraud, and other business torts. She has appeared in state, federal, and multidistrict litigation.

Photo of Addison Morgan Addison Morgan

Addison is an associate in the firm’s nationally recognized Consumer Financial Services Practice Group. He has represented several of the nation’s preeminent financial institutions in litigation arising under the Fair Credit Reporting Act (FCRA), the Telephone Consumer Protection Act (TCPA), the Fair Debt…

Addison is an associate in the firm’s nationally recognized Consumer Financial Services Practice Group. He has represented several of the nation’s preeminent financial institutions in litigation arising under the Fair Credit Reporting Act (FCRA), the Telephone Consumer Protection Act (TCPA), the Fair Debt Collection Practices Act (FDCPA), the FTC Holder Rule, and other consumer protection state analogs.

Photo of Thailer Buari Thailer Buari

Thailer is an attorney in the firm’s Consumer Financial Service practice, where he represents clients in consumer law, business disputes, and commercial litigation. Thailer manages cases from inception to trial, focusing on all aspects of the litigation process, including case development, settlement negotiations…

Thailer is an attorney in the firm’s Consumer Financial Service practice, where he represents clients in consumer law, business disputes, and commercial litigation. Thailer manages cases from inception to trial, focusing on all aspects of the litigation process, including case development, settlement negotiations, legal research and analysis, document review, motions hearings, and mediations.

Photo of Jed Komisin Jed Komisin

Jed defends clients engaged in civil litigation. He has significant courtroom experience and works with his clients to find comprehensive solutions to their legal issues.

Photo of Trey Smith Trey Smith

Trey is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice. He focuses his practice on helping financial institutions and consumer facing companies navigate regulatory investigations and resulting litigation. He has experience litigating the Consumer Financial Protection Act, the FTC Act…

Trey is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice. He focuses his practice on helping financial institutions and consumer facing companies navigate regulatory investigations and resulting litigation. He has experience litigating the Consumer Financial Protection Act, the FTC Act, the Truth in Lending Act, state UDAAP statutes, and other consumer protection laws.

Photo of Alan D. Wingfield Alan D. Wingfield

Alan Wingfield helps consumer-facing clients navigate compliance, litigation and regulatory risks posed by the complex web of state and federal consumer protection laws. He is a trusted advisor and tireless advocate, helping clients develop practical compliance and dispute-resolution strategies.