Consumer FinSights

Regulatory, enforcement and litigation insights on consumer financial and fintech issues

We expect the U.S. Senate to confirm, as soon as this afternoon, President Trump’s nominee to lead the CFPB as its Director, Kathy Kraninger. A positive, though razor-thin and highly contested, outcome for Kraninger appears inevitable based on the Senate’s vote just a few days ago, strictly along party lines, to invoke “cloture” on the nomination by a margin of 50-49 (with one Republican absent), thereby prohibiting a Democratic filibuster on the confirmation. If Kraninger…
A recent FDIC request for information (RFI) suggests the FDIC is interested in enabling banks to offer small, short-term loans to consumers. Over the coming weeks the FDIC will be taking comments on the matter. After analyzing the comments received, the FDIC may issue guidance or regulations encouraging banks to offer these products. FDIC data suggests that 13% of U.S. households have unmet demand for small loans from banks, representing 14.8 million potential financial consumers.…
This Post is a “Part II” to our recent blog post describing the CFPB’s current plans to consider new rules that may narrow lenders’ exposure to “disparate-impact” liability under the Equal Credit Opportunity Act (“ECOA”), as well as other federal developments along the same lines, particularly with respect to auto lending. Today, we report on important countervailing developments at the state level, which indicate a more aggressive fair lending enforcement posture. Particularly because state laws…
On November 13, 2018, the Supreme Court agreed to review the Fourth Circuit’s decision in Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC, 883 F.3d 459, 462 (4th Cir. 2018), addressing whether the Hobbs Act requires district courts to accept the Federal Communication Commission’s interpretation of the Telephone Consumer Protection Act. The case could affect the judiciary’s power to interpret agency rules. A split Fourth Circuit panel held that the Hobbs Act, 28 U.S.C.…
In light of Veterans Day, there are some recent notable developments regarding the Military Lending Act (MLA) worth discussing. Enacted in 2006, the MLA caps the annual interest rate for an extension of consumer credit to a servicemember and/or their dependents at thirty six percent, among other protections. The MLA initially applied to a narrow range of payday, auto title, and tax refund anticipation loans, but was expanded in 2015 to include credit cards, installment…
In its recently published Fall 2018 Rulemaking Agenda, the Bureau of Consumer Financial Protection announced that it is considering future rulemaking activity regarding the requirements of the Equal Credit Opportunity Act (“ECOA”) – specifically, “concerning the disparate impact doctrine in light of recent Supreme Court case law and the Congressional disapproval of a prior Bureau bulletin concerning indirect auto lender compliance with ECOA and its implementing regulations.” In May, President Trump signed a joint
On October 25, 2018, the Conference of State Bank Supervisors (CSBS) renewed its lawsuit against the Office of the Comptroller of the Currency (OCC) seeking to prevent the OCC from issuing its long awaited special-purpose bank charters to fintech companies. The OCC recently announced that it would begin accepting applications for the special-purpose charter, a move that would allow the OCC to regulate fintech companies similar to their supervision of national banks. The lawsuit, filed…
On September 30, 2018, California enacted the nation’s first small business truth-in-lending law when Governor Jerry Brown signed into law SB 1235. The law aims to protect small businesses from predatory lending practices by requiring increased transparency of certain business-purpose loans marketed to small businesses. SB 1235 draws comparisons to the federal Truth in Lending Act, which imposes disclosure requirements for consumer-purpose, but not business-purpose loans.  SB 1235 covers “commercial financing,” defined to include…
In the latest sign of regulatory scrutiny of asset-advance companies offering consumers what regulators believe are in fact regulated “credit” under federal law and “loans” under state law, the Bureau of Consumer Financial Protection (BCFP) filed its first new lawsuit under Acting Director Mulvaney last Thursday. The complaint, filed in the Central District of California, alleges that a so-called pension-advance company, Future Income Payments, LLC, its President and affiliates falsely marketed high-interest loans as mere…
On Tuesday, the U.S. Department of the Treasury issued its “Nonbank Financials, Fintech, and Innovation” Report, the fourth in a series of reports outlining the Trump administration’s financial regulatory agenda.  In the report, Treasury presents a new approach to regulation designed to promote “critical” innovation in fintech. The report outlines four broad areas of focus: (1) adapting regulatory approaches to data sharing, (2) battling “regulatory fragmentation” and directly addressing new business models, (3) updating…