To help you keep abreast of relevant activities, below find a breakdown of some of the biggest events at the federal and state levels to impact the Consumer Finance Services industry this past week:
- On July 29, the Federal Deposit Insurance Corporation (FDIC) issued an advisory and a fact sheet, addressing misconceptions about the scope of deposit insurance coverage and related concerns arising in the crypto space, including that banks should confirm and monitor digital asset companies to ensure the latter do not misrepresent the availability of deposit insurance. For more information, click here.
- On July 29, the Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB) issued a joint letter, reminding auto finance companies of their responsibilities to recognize important legal protections for military families under the Servicemembers Civil Relief Act (SCRA). While servicemembers have the same rights as nonmilitary borrowers, the SCRA provides additional rights to protect servicemembers and their families against unique financial challenges. For more information, click here.
- On July 29, the Federal Trade Commission (FTC) took action against a payment processing company and two of its sales affiliates for allegedly trapping small businesses with hidden terms, surprise exit fees, and zombie charges. The FTC claims that the defendants made false claims about fees and cost savings to lure merchants, many of whom allegedly had limited English proficiency. Once merchants were enrolled, the FTC alleges the defendants withdrew funds from their accounts without their consent and made it difficult and expensive to cancel the service. For more information, click here.
- On July 28, the FDIC and the Federal Reserve Board issued a joint letter, demanding that a crypto brokerage firm stop making allegedly false and misleading statements regarding its FDIC deposit insurance status, as well as take immediate corrective action. For more information, click here.
- On July 27, the CFPB published an analysis of how actions announced by the three largest national consumer reporting companies will affect people with unpaid medical debt on their credit reports. Nearly half of those with medical collections on their credit reports will continue to see them, even after the changes go into full effect next year. The medical collection tradelines that remain on credit reports after the changes likely represent a majority of the dollar amount of all medical collections currently reported. For more information, click here.
- On July 27, the CFPB updated the Debt Collection Rule frequently asked questions. For more information, click here.
- On July 26, U.S. Senate Banking Committee Ranking Member Pat Toomey (R-PA) and U.S. Senator Kyrsten Sinema (D-AZ) introduced the Virtual Currency Tax Fairness Act to simplify the use of digital assets for everyday purchases. This bipartisan legislation would exempt small personal transactions using virtual currencies for goods and services from taxation. For more information, click here.
- On July 21, the Securities and Exchange Commission (SEC) and the DOJ initiated parallel crypto insider trading actions, with the SEC including allegations that multiple tokens listed on a crypto asset trading platform are securities. In its first insider trading case of “crypto asset securities,” the SEC charged three individuals with perpetrating a scheme to trade crypto assets that the SEC alleges are securities on the basis of confidential nonpublic information. The DOJ announced the unsealing of an indictment regarding its first cryptocurrency insider trading tipping scheme case, charging the same three individuals with conspiracy and wire fraud in connection with the alleged insider trading. For more information, click here and here.
- On July 26, Virginia Attorney General Jason Miyares announced an $8 million data breach settlement with a gas station and convenience store chain. The breach allegedly occurred after “after hackers gained access to the company’s computer network in late 2018 through a phishing attack, and later deployed malware on [the company’s] point-of-sale terminals.” Based on this attack, the malware extracted sensitive payment card information between April 18, 2019 and December 12, 2019. “It is imperative that businesses employ every reasonable security measure to protect their customers and prevent sensitive data breaches like this one,” Attorney General Miyares said. “I am pleased we were able to reach a settlement that addresses the conduct at issue and implements safeguards going forward to ensure this type of breach does not happen again.” For more information, click here.
- On July 25, California Attorney General Rob Bonta issued a consumer alert, warning military service members, veterans, and their families to be aware of targeted scams and fraud. According to the press release, “a recent report on consumer complaints received by the Federal Trade Commission, in 2021, military consumers lost over $103 million to scams.” Attorney General Bonta listed common scams against the military community, including: home loan scans, identity theft and fraud, pension scams, affinity fraud, and predatory auto sales and financing. For more information, click here.
- On July 22, New Jersey Acting Attorney General Matthew J. Platkin announced that the Division of Consumer Affairs sent cease-and-desist warning letters to a combination of service, retail, and restaurant operators in New Jersey. The letters alert merchants of their duty to disclose total selling prices, including surcharges for using credit cards, debit cards, or pre-paid cards to consumers. For more information, click here.
- On July 19, the U.S. District Court for the District of Delaware issued a decision that should draw the attention for banks charging overdraft fees for overdraft protection. In Miller v. Del-One Federal Credit Union, the court’s opinion: (1) validated a fraud claim based on allegedly inaccurate disclosure of overdraft policies; and (2) found that the official overdraft fee opt-in form included in Regulation E, promulgated under the Electronic Fund Transfers Act, and administered by the Consumer Financial Protection Bureau (CFPB), must not only adapt to the institution’s policies, but also state all associated overdraft procedures. For more information, click here.