Consumer Credit Regulatory News and Trends


Below is a summary of enforcement and regulatory actions chosen by state and federal consumer financial protection regulators and enforcement agencies.

Enforcement measures


CFPB announces $950,000 settlement with money transmitter over allegedly inaccurate disclosures and records.The Consumer Financial Protection Bureau (CFPB) has announced a consent order with a non-bank money transfer provider for violations of EFTA, Regulation E and Money Transfer Rules. The CFPB alleged that the company (i) failed to accurately disclose exchange fees, transfer fees, and funds availability information; (ii) used an incorrect font size in Disclosures; (iii) failed to provide statements in English and Spanish for remittances to Spanish-speaking countries; (iv) failed to include the required terms in the written disclosures; (v) has not developed written policies and procedures to govern the resolution of errors; and (vi) failed to maintain adequate records regarding the investigation and resolution of errors. In addition to the $950,000 fine, the company also agreed to implement extensive corrective measures to its compliance management, training, written policies, and audit and monitoring functions.

CFPB announces action against online lender over military loan and repayment policies. The CFPB has filed a complaint against an online lender for violations of the Military Loans Act (MLA) and Unfair, Deceptive, or Abusive Acts or Practices (UDAAP). The CFPB alleged that the lender (i) violated the MLA by charging military members interest rates above the 36% cap on loans, requiring military members to submit to arbitration, and failing to make mandatory military disclosures; and (ii) engaged in deceptive, unfair and abusive acts of forcing customers to join a “membership program” to access low APR loans and refused to allow customers to cancel their membership until that the loans have been repaid.

CFPB announces $191 million settlement with National Bank over surprise overdraft fees. The CFPB announced a consent order with a national bank for violating UDAP. The CFPB alleged that the bank engaged in both unfair and abusive practices by adopting a debit card transaction processing policy under which consumers, who had sufficient funds in their account at the time of purchase, would incur overdraft charges if there were insufficient funds in the account at the time of settlement of the transaction. Under the settlement, the bank is required to pay $141 million in consumer reparations and a $50 million fine. Please see our Customer Alert on this subject here.

FTC and California DFPI announce temporary restraining order and receivership against mortgage relief companies.The Federal Trade Commission (FTC) and the California Department of Financial Protection and Innovation (DFPI) have announced a temporary restraining order against a group of mortgage relief companies for alleged UDAP, the sale rule by Telemarketing, California Consumer Financial Protection Act, Mortgage Assistance Services Rule, and Violations of the COVID-19 Consumer Protection Act. According to the complaint, the companies used deceptive marketing to lure consumers to mortgage modification services, which consumers paid for but the companies never provided. Instead, the companies would have required consumers to sign letters asking mortgage lenders to contact only those companies. The entities then provided consumers with falsified documents relating to specific claims against their mortgages, causing consumers further financial harm or the loss of their homes. The temporary restraining order requires businesses to cease operations and freeze business assets. The order also requires the repatriation of foreign assets and appoints a receiver to assume control of the companies.

FTC announces $3 million settlement with credit-services company over allegedly deceptive marketing of pre-approved credit card offers. The (FTC) announced a consent order with a credit service company for alleged violations of UDAP. According to the complaint, the company knowingly advertised that (i) consumers were pre-approved for credit products when they knew the credit providers had not pre-approved any credit and (ii) misled consumers by telling them they had a “90% chance” of approvals without justification. . The FTC also noted that the company had included disclaimers in marketing materials that “there was no guarantee of approval,” but that was ineffective because the FTC considered the disclosures to be “disclaimers.” buried”, for example by placing the terms after a click. -via a link or by burying them in fine print more than 20 lines below the “Apply Now” button.


New York DFS announces $30 million settlement with crypto broker for anti-money laundering, cybersecurity and consumer protection violations. The New York State Department of Financial Services (NY DFS) announced a consent order with a consumer-focused crypto brokerage for breaches of bank secrecy/anti-money laundering law money (BSA/AML) and cybersecurity regulations under New York law. According to NY DFS, the company’s compliance monitoring program was understaffed when it comes to its cryptocurrency trading platform. NY DFS said the corporate compliance officer lacked experience commensurate with the needs of the compliance program, resulting in a backlog of 4,378 alerts, and no automated transaction monitoring system. existed despite an average of 106,000 daily transactions. Additionally, the company’s cybersecurity program was understaffed and further lacked sufficiently detailed written policies and procedures under New York’s cybersecurity regulations. In addition to the monetary penalty, the company will also be required to retain the services of an independent consultant to perform a comprehensive assessment of the company’s compliance efforts.

Regulatory developments


The CFPB releases the results of oversight reviews of violations of federal law by student loan servicers and university-owned lenders. The CFPB released findings, following several supervisory reviews, that university-owned student lenders violated federal law by withholding transcripts from nonpaying students. CFPB reviews also found that some student loan servicers had misrepresented borrowers’ eligibility for federal student loan relief and forgiveness programs, in violation of federal law. The CFPB ordered repairers to repair the damage caused by these actions.

FTC and CFPB file amicus brief on consumers’ ability to challenge credit reports. The FTC joined the CFPB in submitting an amicus brief to the United States Court of Appeals for the Third Circuit in the case of Ingram vs. Experian, in which they asked the court to overturn a district court’s decision interpreting the Fair Credit Reporting Act (FCRA). In Ingram, the district court held that the Fair Credit Reporting Act only requires a provider to investigate collateral disputes “in good faith” and that it may decline to investigate collateral disputes that it deems to be frivolous . According to the agencies’ brief, the lower court’s interpretation was unsupported by FCRA text and would infringe consumers’ right to investigation of inaccuracies in their credit reports, which is supported by the clear text of the FCRA. law and is essential to the FCRA’s goal of redress.

The CFPB issues an interpretative rule outlining when digital marketing service providers must comply with federal consumer finance laws.The CFPB has issued an interpretative rule explaining that where digital marketers are involved in identifying or selecting potential consumers or placing content that affects consumer behavior, they are considered “service providers” and are subject to the Federal Consumer Financial Protection Act. The CFPB explained that the exception under the Consumer Financial Protection Act for advertising only applies where the business “only provides time or space for an advertisement” and does not apply not when the company is “materially involved in content strategy development”. The CFPB also noted that this could include analytics providers.


California DFPI sues cryptocurrency account providers. The DFPI filed a lawsuit against a provider of fee-based cryptocurrency accounts. According to the DFPI, these accounts were marketed to California residents without being properly registered as securities. The company is said to have promised consumers annual interest rates of up to 36% – a rate significantly higher than rates on investment-grade short-term fixed-income securities or bank savings accounts. The DFPI’s action signals California’s determination to treat these accounts as securities, thereby subjecting them to the same disclosure requirements and other investor protection requirements applicable to registered securities.

New York State passes legislation making it easier for residents to access PSLF programs. New York has enacted legislation that establishes uniformity around what is considered full-time employment for purposes of the federal Public Service Loan Relief (PSLF) programs and will allow public service employers to certify the employment on behalf of workers directly with the U.S. Department of Education, removing a significant barrier to applying for and accessing the PSLF.


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