Consumer FinSights

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

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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…
Earlier this week, Acting Director Mulvaney announced the creation of a new “Office of Financial Innovation,” and appointed Paul Watkins, an official who led the Arizona Attorney General’s fintech initiatives, to lead the Office.  The new Office, which will now do the work formerly done under the Bureau’s Project Catalyst, “will focus on creating policies to facilitate innovation, engaging with entrepreneurs and regulators, and reviewing outdated or unnecessary regulations.”  The Bureau’s announcement also described the…
Thursday’s Senate confirmation hearing for Kathy Kraninger, President Trump’s nominee to lead the Consumer Financial Protection Bureau (“CFPB”), produced a number of testy exchanges with Democrats but no obvious obstacles to the Senate confirming her ultimately. Kraninger, now an Associate Director of the Office of Management and Budget (“OMB”), would if confirmed replace the Bureau’s Acting Director, Mick Mulvaney.  In addition, as the law now stands, Kraninger would then be removable only “for cause” during…
In a statement on Thursday, April 26, a key House Republican on CFPB issues effectively admitted that despite his own efforts and those of the Trump Administration including Acting CFPB Director, Mick Mulvaney, Congress will almost certainly make no changes to the structure of the CFPB this year.  As a result, there will probably be no change from a single-Director to a Commission, nor will changes be made to the way in which the CFPB…
On Wednesday, the U.S. Senate voted almost entirely along party lines to invalidate, under the Congressional Review Act, the Consumer Financial Protection Bureau’s (CFPB) (in)famous 2013 Bulletin on lending discrimination in the indirect auto market via discretionary mark-ups and dealer compensation policies.  The 2013 Bulletin, construing the Equal Credit Opportunity Act and its implementing rule, Regulation B, had served as the basis for a number of substantial CFPB enforcement actions against indirect auto lenders, with…
Case Developments In this week’s edition of the Mortgage Litigation Update, we summarize (i) a decision from the Northern District of California finding that a loan servicer’s solicitation and review of a borrower’s loan modification does not give rise to a duty of care, and (ii) a decision from the Middle District of Pennsylvania finding that a loan servicer’s status as holder of a mortgage note does not itself, absent other factors, exclude it from…
Case Developments January 23, 2018 – February 20, 2018 In this edition of our Vehicle Finance Litigation report, we summarize (i) a decision from the Northern District of California striking a class definition as a “fail-safe” in a lending discrimination case, (ii) a decision out of the Eastern District of California denying class certification on adequacy and typicality grounds because of a defense unique to the class representative’s claims, and (iii) a decision out of…
Case Developments April 12, 2018 – May 1, 2018  In this edition of our Credit Card Litigation update, we summarize a decision out of the Seventh Circuit where the court granted a credit card issuer’s motion to compel arbitration and a decision out of the Sixth Circuit where the Court granted a judgment creditor’s motion to dismiss plaintiff’s claims for violation of the Fair Debt Collection Practices Act. Fuller v. Frontline Asset Strategies, LLC et