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:

Federal Activities

State Activities

Federal Activities:

  • On March 16, the Consumer Financial Protection Bureau (CFPB) released a bulletin, warning servicers of their obligation to halt unlawful conduct involving private student loans discharged by bankruptcy courts. The bulletin details recent findings by CFPB examiners that certain loan servicers illegally returned loans to collections after bankruptcy courts discharged the loans. For more information, click here.
  • On March 16, the Blockchain Association submitted Freedom of Information Act requests to the Federal Deposit Insurance Corporation (FDIC), the Board of Governors of the Federal Reserve System (Federal Reserve), and the Office of Comptroller of Currency, seeking documents and communications on the “de-banking” of crypto firms given the recent closures of crypto-friendly banks Silvergate Bank and Signature Bank. For more information, click here.
  • On March 15, the Federal Reserve announced that the FedNow Service will start operating in July. The first week of April, the Federal Reserve will begin the formal certification of participants to launch the service. Early adopters will complete a customer testing and certification program, informed by feedback from the FedNow Pilot Program, in preparing to send live transactions through the system. For more information, click here.
  • On March 15, the Federal Housing Finance Agency (FHFA) announced that it took a number of steps since January 2022 to update Fannie Mae and Freddie Mac’s single-family guarantee fee pricing framework, specifically focusing on upfront fees. In January 2023, FHFA announced redesigned and recalibrated grids for upfront fees in addition to a new upfront fee for certain borrowers with a debt-to-income ratio above 40%. These updated pricing grids include the upfront fee eliminations announced in October 2022 to increase pricing support for purchase borrowers limited by income or by wealth. For more information, click here.
  • On March 15, the CFPB announced that it launched an inquiry into companies that track and collect information on people’s personal lives. In issuing this new request for information, the CFPB wants to understand the full scope and breadth of data brokers and their business practices, their impact on the daily lives of consumers, and whether they all play by the same rules. This request offers the public a chance to share feedback about companies that play a significant role in people’s lives and in the economy. For more information, click here.
  • On March 15, the CFPB released the 2023 Home Mortgage Disclosure Act institutional and transactional coverage charts. For more information, click here.
  • On March 15, while addressing reporters after a commission vote, Securities and Exchange Commission Chairman Gary Gensler reiterated his prior stance that proof-of-stake tokens like Ethereum may constitute securities under the Howey Test. For more information, click here.
  • On March 14, while delivering remarks at the Independent Community Bankers of America ICBA Live 2023 Conference, Federal Reserve Governor Michelle Bowman discussed the increase in consumer demand for crypto-assets and related services, and reiterated the Federal Reserve’s recent guidance on integrating crypto-assets into the banking sector: State member banks should notify their lead supervisory point of contact prior to engaging in crypto-asset-related activities. For more information, click here.
  • On March 14, Federal Reserve Governor Michelle W. Bowman discussed innovation trends within the U.S. financial system during a conference held by the Independent Community Bankers of America. For more information, click here.
  • On March 13, the Federal Reserve Board issued FAQs on its Bank Term Funding Program, established “to make available additional funding to eligible depository institutions in order to help assure banks have the ability to meet the needs of all their depositors.” For more information, click here.
  • On March 13, the Justice Department and the CFPB announced that they filed a statement of interest in Connolly, et al. v. Lanham, et al. to explain the application of the Fair Housing Act (FHA) and the Equal Credit Opportunity Act (ECOA) to lenders relying on discriminatory home appraisals. Currently pending in the U.S. District Court for the District of Maryland, Connolly alleges that an appraiser and a lender violated the FHA and ECOA by lowering the valuation of a home because the owners were Black and by denying a mortgage refinancing application based on that appraisal. For more information, click here.
  • On March 13, while speaking at a banking roundtable in Sydney, Australia, Assistant Secretary for Terrorist Financing and Financial Crimes Elizabeth Rosenberg discussed the growth of the “virtual asset space.” While she noted the legitimate use cases of decentralized finance (DeFi), she also shared her team’s “active” work on an illicit finance risk assessment of DeFi since some use the technology to hide criminal activity and launder money. For more information, click here.
  • On March 9, the House Financial Services Committee’s Subcommittee on Financial Institutions and Monetary Policy held a hearing to discuss proposals that would alter the CFPB’s structure and authority. For more information, click here.
  • On March 9, the Financial Crimes Enforcement Network informed U.S. financial institutions that the Financial Action Task Force (FATF) — an intergovernmental body that establishes international standards for anti-money laundering, countering the financing of terrorism, and countering the financing of proliferation of weapons of mass destruction (AML/CFT/CPF) — issued a public statement on February 24, announcing its suspension of the Russian Federation’s membership from FATF. The statement noted that “the Russian Federation’s actions unacceptably run counter to the FATF core principles aiming to promote security, safety, and the integrity of the global financial system.” The FATF further urged “all jurisdictions to remain vigilant of threats to the integrity, safety and security of the international financial system arising from the Russian Federation’s war against Ukraine.” The FATF also reiterated “… that all jurisdictions should be alert to possible emerging risks from the circumvention of measures taken in order to protect the international financial system and take the necessary measures to mitigate these risks.” For more information, click here.
  • On March 8, the Federal Trade Commission issued a bulletin, addressing the connections between cryptocurrency scams and community groups, and how consumers may identify such scams. For more information, click here.
  • On March 3, the CFPB received a rulemaking petition from the National Consumer Law Center (NCLC) in response to forthcoming FCRA rulemaking announced in its fall 2022 regulatory agenda. NCLC presented three issues for consideration as part of the FCRA rulemaking process: (1) “establish strict requirements to regulate the furnishing of information regarding a debt in collections by third-party debt collectors and debt buyers”; (2) “require translation of consumer reports by the [CRAs] into the eight languages most frequently used by limited English proficient consumers”; and (3) “establish an Office of Ombudsperson to assist consumers who have been unable to fix errors in their consumer reports from the nationwide CRAs and other CRAs within the CFPB’s supervisory authority.” For more information, click here.

State Activities:

  • On March 16, a coalition of 14 attorneys general (AGs) wrote a letter condemning the world’s four largest credit card companies for their decision to pause the adoption of the International Organization for Standardization’s new merchant category code for gun and ammunition sales. In September 2022, the AGs sent the credit card companies a letter, praising their decision to enact the new category codes as a means of thwarting widespread gun violence across the nation. The March 16 letter, however, reminded the companies that they can, by implementing the codes, disrupt gun violence and urged the companies to “stick to [their] original promise.” For more information, click here. The move made by these credit card companies was viewed as a direct result of a September 2022 letter from 24 Republican AGs, detailed here, urging the companies to halt the use of this new merchant category.
  • On March 15, Colorado AG Phil Weiser filed the finalized Colorado Privacy Act (CPA) rules after completing a review that confirmed the rules are legal and constitutional. Among other things, the CPA allows Colorado consumers to access the data that businesses, nonprofits, and other entities collect about them and empowers consumers to require them to delete or correct the data. The CPA also gives Colorado consumers additional control over how their personal data is used, granting them the right to opt out of the sale of their personal data and use of personal data for targeted advertising and profiling. Under the CPA, companies must disclose how they use Colorado consumers’ personal data and implement protection measures to guard against harm to consumers. The CPA also grants the AG authority to hold companies accountable for their CPA violations, draft rules to clarify CPA provisions, and provide guidance to companies for compliance. The rules are set to take effect July 1. Colorado is now the third state to enact general state privacy laws and the second to draft rules implementing such laws. For more information, click here.
  • On March 15, the New York State Department of Financial Services (DFS) missed the deadline to publish its proposed amendments to its debt collection rule. While the latest version of the proposed amendments expired, the DFS will likely release an updated version in the coming months. For more information, click here.
  • On March 14, the New York Department of Financial Services (NYDFS) responded to criticism from Barney Frank, co-author of the Dodd-Frank Act and prior board member of Signature Bank, that the NYDFS’ decision to take over Signature Bank sent a message that “crypto is toxic.” An unidentified NYDFS spokesperson informed The Block that Frank’s remarks were untrue, and Signature Bank closed because the bank did not provide “reliable and consistent data, creating a significant crisis of confidence in the bank’s leadership.” For more information, click here.
  • On March 9, the New York AG Letitia James filed a civil enforcement action against Seychelles-based digital asset exchange KuCoin for allegedly violating state securities laws by “purchas[ing] and offer[ing] to purchase cryptocurrencies that are commodities and securities without being registered … as a commodity broker-dealer or a securities broker or dealer … .” Notably, KuCoin sold Ethereum (ETH) on its platform, and the NY AG alleged that ETH constitutes a security under both New York’s Waldstein Test and the U.S. Supreme Court’s Howey Test. This is the first time a regulator expressly described ETH as a security, and the NY AG’s perspective conflicts with Commodity Futures Trading Commission Chairman Rostin Benham’s March 8 testimony before the Senate Agriculture Committee that ETH was a commodity. For more information, click here.
  • On March 9, the Utah Legislature passed the Decentralized Autonomous Organization Act (DAO Act), which deems a DAO, among other things, a legal entity separate and distinct from its members with the capacity to sue and to be sued. As we previously discussed here, a DAO generally consists of a group of individuals organized around a mission that the group intends to effectuate through the use of smart contracts. For more information about the DAO Act, click here.
  • On March 6, eight AGs won judgments, totaling nearly $245 million in the U.S. District Court for Southern Texas against the two owners of a robocall operation comprised of three companies. The judgments represent the culmination of AG-initiated litigation that addressed allegations that the owners and their companies directed billions of illegal robocalls to people across the country. The AGs first filed the lawsuit in June 2020, alleging violations of the Telephone Consumer Protection Act, the federal Telemarketing Sales Rule, and several other state consumer protection laws due to the companies’ alleged use of deceptive robocalls about extended car warranties and health care services. The companies also allegedly spoofed caller ID numbers to deceive consumers and contacted consumers on the Do Not Call Registry. The judgments banned the owners from initiating or facilitating robocalls, working with any companies that make robocalls, or engaging in any telemarketing. The near $245 million combined judgment however is largely suspended in favor of permanent bans on the companies’ operations and because of the owners’ inability to pay. For more information, click here.