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In this issue, we discuss the New York State Department of Financial Services' (DFS) new mandatory cybersecurity requirements for financial services entities and the proposed changes in New York law that would license fintech loan platforms; provide a briefing on a nationwide consumer class action, illustrating what lenders need to keep top of mind regarding consumer arbitration clauses; deliver an in-depth analysis on the CFPB field hearing that explored the benefits and risks of using "alternative data" to calculate individual credit scores; and provide an overview of a pending California Senate bill that would require registration for lead generator "finders." You will also find a copy of the materials and the recording from our recent webinar, Consumer Financial Services 2017 Outlook: Post-Inauguration Day Insights, and a list of upcoming industry events you may be interested in attending. | |
| IN DEPTH | |
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New York's Department of Financial Services Finalizes Cybersecurity Requirements for Financial Institutions On March 1, 2017, the New York State Department of Financial Services' (DFS) mandatory cybersecurity requirements for financial services entities became effective, with implementation to occur within 180 days (or by September 1, 2017). The requirements broadly cover all entities operating under or required to operate under DFS licensure, registration, or charter, or which are otherwise DFS-regulated, as well as, by extension, unregulated third-party service providers to regulated entities. |
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Online Lender Wins Motion to Compel Arbitration and Avoids Nationwide Consumer Class Action In a putative nationwide consumer class action against an online marketplace lender and its bank partner, Bethune v. LendingClub Corp., et al., a federal judge in the Southern District of New York recently granted defendants' motion to compel arbitration and bar class action litigation. |
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Proposed Change in New York Law Would License Fintech Loan Platforms Platform lenders and other online loan marketplaces may be required to obtain a license from the New York Department of Financial Services (DFS) based on proposed changes to New York's Licensed Lender Law. The changes, proposed in January 2017 as part of New York Governor Andrew Cuomo's 2017/2018 budget proposal, would expand the application of the law by adding new licensable activities and removing a previous interest rate-based coverage threshold. If enacted, these changes would become effective January 1, 2018. |
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CFPB Field Hearing on Alternative Data New Considerations for Helping "Credit-Invisible" Consumers Build Credit The CFPB's February 16 field hearing featured remarks from CFPB Director Richard Cordray, a discussion panel with participants from industries and consumer advocate groups, and a short public comment period. The Director also announced that the CFPB was releasing a formal Request for Information (RFI) regarding the use of alternative data and modeling techniques to solicit additional views on these issues. |
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California Senate Bill Would Require Registration for Lead Generator "Finders" Lead generators working as "finders" of prospective borrowers in California may have a new registration requirement to contend with under a pending California Senate bill that would expand and alter the coverage of the California Finance Lenders Law (CFLL). CA SB 297 would impose a registration requirement on "finders" and enact a number of requirements for licensees, including enhanced disclosures and limits on paying non-registered finders. |
| RECENT EVENT | |
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Consumer Financial Services 2017 Outlook: Post-Inauguration Day Insights The presentation materials and recording from our program, Consumer Financial Services 2017 Outlook: Post-Inauguration Day Insights, are available. Listen to a recording of the program and view the corresponding slides, or download the presentation materials. | |
| UPCOMING EVENTS | |
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March 7, 2017: Why Consumer Protection? for the American Bar Association Section of Antitrust Law March 21, 2017: Lead Generation Regulation and Enforcement: Government Perspectives at LeadsCon Las Vegas April 28, 2017: Consumer Financial Services Legal and Regulatory Update at the 2017 Financial Counseling Association of America (FCAA) Annual Conference | |
NY cybersecurity requirements for financial institutions, CFPB hearing on alternative data, and more in this issue of Consumer Financial Services Practice Digest
3 min