Consumer FinSights

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

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SEC Increases Activity with Retail Investors: Misappropriation

By Natasha S. Cooper & David Reidy on January 2, 2019

With the SEC prioritizing protection of retail investors, investment advisers are facing increased scrutiny for misappropriation offenses. Adviser representatives are becoming more creative, making it harder for investment advisers to detect misappropriation. It may be easy for investment advisers to rely on software and automated-alerts to safeguard client assets, but the days of solely relying on software or even traditional confirmation letters are gone. On Sept. 25, 2018, the Security and Exchange Commission (SEC) …

Consumer FinSights

CFPB Proposes Changes to No-Action Letter Policy and Creation of Product Sandbox

By Anastasia Cordova & David Reidy on December 19, 2018

The CFPB is proposing revisions to its 2016 no-action letter (“NAL”) policy and is planning to establish “BCFP Product Sandbox,” a regulatory sandbox that would encourage financial institutions to explore innovative products. The revamped policy would address the shortcomings in the 2016 version and streamline the application submission and review process, thus providing banks with increased incentives to seek NALs. Specifically, the revised policy proposes the following key changes: Including language in NALs that the…

Consumer FinSights

Kraninger Expected to be Confirmed Today

By Joseph J. Reilly on December 6, 2018

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…

Consumer FinSights

FDIC Requests Comments on Small-Dollar Lending by Banks

By Brett Barnett, Katie Campbell, Bill Mayberry & Alexander Abramovich on December 3, 2018

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.…

Consumer FinSights

Fair Lending: State Responses to Moves at the CFPB

By Joseph J. Reilly & Paul Atkinson on November 30, 2018

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…

Consumer FinSights

Supreme Court to Consider Chevron Deference in TCPA Case

By Joshua Davey & Anne L. Doherty on November 15, 2018

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.…

Consumer FinSights

A Veterans Day Catch Up on the CFPB’s Surrender of Military Lending Act Supervision

By Jodie Herrmann Lawson, Joseph J. Reilly & Drew Austria on November 13, 2018

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…

Consumer FinSights

CFPB Signals Potential for Fair Lending Rulemaking

By Joshua Davey, Joseph J. Reilly & Karen M. Hinkley on November 9, 2018

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 …

Consumer FinSights

State Regulators Sue to Stop OCC Fintech Charter

By Alexander Gershen & David Reidy on November 1, 2018

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…

Consumer FinSights

California Passes Small Business Truth-in-Lending Law

By David Reidy & Anthony Le on October 24, 2018

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…

Consumer FinSights

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

SEC Increases Activity with Retail Investors: Misappropriation

CFPB Proposes Changes to No-Action Letter Policy and Creation of Product Sandbox

Kraninger Expected to be Confirmed Today

FDIC Requests Comments on Small-Dollar Lending by Banks

Fair Lending: State Responses to Moves at the CFPB

Supreme Court to Consider Chevron Deference in TCPA Case

A Veterans Day Catch Up on the CFPB’s Surrender of Military Lending Act Supervision

CFPB Signals Potential for Fair Lending Rulemaking

State Regulators Sue to Stop OCC Fintech Charter

California Passes Small Business Truth-in-Lending Law

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