Advertising or offering a consumer financial product or service, or are you taking payments, furnishing data to consumer reporting agencies, or collecting debts? Then you’re likely asking, “What’s next on the legal horizon?” With 2016 now upon us, advertisers and marketers are taking a look back and a look forward to plan for the year. Advertisers of consumer financial services are no exception to that, and we’ve got you covered when it comes time to assessing the legal and regulatory landscape, with our firm’s upcoming webinar, Consumer Financial Protection Bureau Outlook 2016, which will be broadcast live on Tuesday, January 12 at 2:00 pm ET. CLE credit will be available for certain jurisdictions. Just click here and follow the onscreen prompts.
The legal and regulatory changes expected in 2016 may affect your business clients and the focus of your internal compliance and audit teams. However, it’s worth noting that the areas that the CFPB and other regulators will be focusing on this year include several that have already been enforcement and supervision priorities that are relevant for all consumer-facing companies. Below are a few recent examples:
- Lead Generation and Advertising – Within the last month alone, in recent lawsuits and settlements the CFPB has targeted lead generators that allegedly resold personal data to small-dollar, short-term lenders and debt collectors, without properly vetting buyers and sellers, and aided the buyers in their violations by providing “substantial assistance.”
- Debt Collection – The CFPB (teaming with the Federal Trade Commission (FTC)) has taken aim at first-party and third-party debt collection activities, including in enforcement settlements with lenders and collectors. In November, federal, state, and local regulators and enforcement agencies announced a national initiative targeting debt collectors, branded Operation Collection Protection. Operation Collection Protection complements recent CFPB enforcement, supervisory, and rulemaking efforts focused on the debt collection industry, including first-party creditors and billing services, and on the intersection of data furnishing and debt collection. In addition, the CFPB continues to work on developing proposed rules for debt collection following publication of its advanced notice of proposed rulemaking in November 2013.
- Data Furnishing – Recent CFPB and FTC activity reflects an increase in scrutiny of companies that supply or “furnish” information to consumer reporting agencies (CRAs) as required by the Fair Credit Reporting Act (FCRA). Data furnishers, including merchants, debt collectors, and lenders,can reduce supervision and enforcement risk by avoiding the common mistakes the FTC and CFPB have identified in their recent enforcement announcements. In November, Venable attorneys conducted a webinar, “Minimizing Legal and Compliance Risk for Credit Furnishers,” that focused on compliance tips and best practices.
- Sweeping Enforcement Actions w/ Service Provider Liability – The CFPB has actively pursued not only active participants in alleged violations of consumer protection law, but also companies that provide services to the companies, including those involved in marketing the services. The CFPB has been using its “substantial assistance” authority, which makes it possible for it to attack any person it believes knowingly or recklessly provided substantial assistance to actors that fall under the CFPB’s jurisdiction.
- Financial Services for Students – The CFPB recently warned colleges about advertising of credit card agreements. Over the past several years, the CFPB and the U.S. Department of Education (DOE) have taken a number of steps to increase regulatory requirements for schools and financial institutions that offer financial products and services to students, such as credit, debit, and prepaid cards, as well specific actions related to student loans, including servicing guidance.
- Recurring Payments – The CFPB issued guidance on how companies obtain consumer authorization for recurring auto debits. Although the CFPB does not have authority over all companies with regard to payments, the guidance provided reflects compliance issues relating to preauthorized electronic funds transfers in CFPB examinations, and is also an area in which the FTC has jurisdiction.
- Mortgage Lending and Advertising – The CFPB unleashed a number of regulatory and enforcement announcements impacting the mortgage industry. For advertisers and marketers, one key takeaway is that the CFPB continued to pressure the industry with regard to marketing services agreements that may be used to avoid compliance with strict requirements in the Real Estate Settlement Procedures Act.