July 21, 2020

Consumer Financial Services Practice Digest

7 min

First-ever CFPB Report on Debt Relief Services: Debt Settlement and Credit Counseling

The Consumer Financial Protection Bureau (CFPB) released a first-ever report examining recent trends in debt settlement and credit counseling. The report uses data from the CFPB's Consumer Credit Panel, a nationally representative sample of approximately five million de-identified credit records maintained by one of the three nationwide consumer reporting agencies. The CFPB notes: that the analysis only includes settlements furnished by the creditor and not accounts furnished by a debt buyer; debt buyer reporting practices varied over this period analyzed; and also, not all accounts managed by a CCA are necessarily reported as such by the furnisher, so the number of accounts is under-reported in that data.

OCC's New Community Reinvestment Act Regulation Faces Congressional Review Act Hitch

Last week, the U.S. House of Representatives passed a Congressional Review Act resolution disapproving the OCC's recent final rule (the Final Rule) modernizing its Community Reinvestment Act (CRA) regulations by a vote of 230-179. The OCC issued the Final Rule alone after the Federal Deposit Insurance Corporation (FDIC) and the Board of Governors of the Federal Reserve System (FRB) declined to participate. The FDIC and OCC participated in the initial joint notice of proposed rulemaking (NPR), while the FRB refrained from participation in either issuance. Since the Final Rule was issued by the OCC alone, it applies only to national banks, federal savings associations, insured federal branches, and certain uninsured federal branches.

Please Disrupt Me: Regulatory Concerns in Fixing Healthcare Payments

America's fragmented systems for billing and making healthcare payments are ripe for the sort of "disruption" that has revolutionized the delivery of other financial services. Consumers seeking routine medical care often have no idea what they will be required to pay and, once the care has been provided, often receive a flurry of (largely) paper-based bills from different sources, including hospitals, multiple physician practices, clinical labs, and medical imaging providers, as well as explanations of benefits from the patient's own insurance company. Moreover, many healthcare providers do not have simple, direct methods for accepting electronic payments by ACH or debit or credit cards. Thus, the sheer difficulty of determining what is owed and making a payment likely contributes to patient confusion, which may, in turn, make patients less likely to pay their medical bills on time or at all.

CFPB issues Final Rule Revoking the Mandatory Underwriting Provisions of the Payday Rule

The CFPB revokes the previous Payday Rule from 2017 and issues a significantly different Final Rule. Key changes include removal of the Mandatory Underwriting Provisions and implementation of the Payment Provisions. Notable is that Director Kraninger specifically declined to ratify the 2017 Rule’s underwriting provision.

UPDATE: Doing Business Via the Internet with Hong Kong or Elsewhere in Asia is Getting Harder

Two recent actions involving the FCC reflect the escalating difficulties U.S. businesses, especially in consumer-facing industries, are confronting when attempting to transact business with Chinese entities (whether based in China or owned or controlled by Chinese nationals or the government). This alert updates our May 2020 guidance regarding FCC efforts involving China in another area (issuing orders to show cause against four companies indirectly owned and controlled by the Chinese government).

Supreme Court Severs For-Cause Removal Provision, but CFPB Remains

In an opinion written by Chief Justice Roberts, the Supreme Court held, 5-4, that the for-cause removal provision, which requires that the director of the CFPB be removable by the president only for “inefficiency, neglect of duty, or malfeasance in office” violates the separation of powers and is unconstitutional. The Court severed the provision but did not make any other changes to the CFPB.

Answering the Call: Supreme Court to Determine the Definition of an ATDS Under the TCPA

Today the Supreme Court granted certiorari in Facebook, Inc. v. Duguid where it will resolve a circuit split and decide the issue of whether an "automated telephone dialing system" ("ATDS" or "autodialer") under the Telephone Consumer Protection Act ("TCPA") encompasses any device that can "store" and "automatically dial" telephone numbers, even if the device does not "us[e] a random or sequential number generator." In other words, the Court will determine whether a caller uses an autodialer to place a call or send a text message if the platform being used merely dials without human involvement from a stored list of telephone numbers (the minority view), or whether the platform itself must randomly or sequentially generate the telephone numbers that it dials (the majority view).

Going it Alone: OCC Finalizes Community Reinvestment Act Regulations without Other Regulators

On May 20, 2020, the Office of the Comptroller of the Currency (OCC) issued a final rule (the "Final Rule") overhauling its Community Reinvestment Act (CRA) regulations. The Final Rule follows a joint notice of proposed rulemaking (NPR) issued by the OCC together with the Federal Deposit Insurance Corporation (FDIC) late last year (the "Proposed Rule"). The Board of Governors of the Federal Reserve System (FRB) declined to participate in either issuance. Since the Final Rule was issued by the OCC alone, it applies only to national banks, federal savings associations, insured federal branches and certain uninsured federal branches. The rule is effective October 1, 2020, and compliance is generally required by January 1, 2023.

Certiorari Granted: Supreme Court Will Decide the Fate of FTC's Disgorgement Authority

Two weeks ago, the Supreme Court handed down its opinion in Liu v. SEC where it limited the SEC's disgorgement authority to net profits returned to investors. Today, the Supreme Court granted certiorari in two FTC cases to decide whether Section 13(b) of the FTC Act providing for "injunctive relief" includes the authority to obtain "equitable monetary relief" in the form of disgorgement.

Disgorgement in the Wake of Liu v. SEC: Alive, But Not Unscathed

On June 22, 2020, the Supreme Court issued its decision in Liu v. Securities and Exchange Commission, 591 U.S. ___ (2020)—a case concerning whether, and under what circumstances, the SEC may obtain disgorgement awards in judicial enforcement actions. In an 8–1 opinion by Justice Sotomayor, the Court rejected the petitioners' frontal assault on such disgorgement awards. Nevertheless, the Court imposed limits upon the scope of disgorgement remedies—in particular, requiring that awards be limited to a wrongdoer's net profits and that they be "awarded for victims." The Court's ruling will likely require the SEC to engage in increased litigation regarding the calculation of disgorgement awards. It may similarly impact efforts by other agencies, such as the Federal Trade Commission, to obtain disgorgement awards.

With Innovation as a Top Priority for Acting Comptroller, OCC Issues ANPR on Digital Banking

Acting Comptroller Brian Brooks took the reins of the Office of the Comptroller of the Currency (OCC) on May 29, 2020, and he quickly moved to put his stamp on the agency. His Statement on Becoming Acting Comptroller identifies four priorities, which include building on the OCC's foundation of innovation to help the banking system keep up with changes in the way consumers and businesses manage their finances. Less than a week later, on June 3, 2020, the OCC issued an Advance Notice of Proposed Rulemaking (ANPR) inviting public comments on digital banking activities. Comments to the ANPR are due on August 3, 2020.

COVID-19 Recent News

FinCEN Releases Additional COVID-19 Advisory on Imposter Scams and Money Mule Schemes

Uncle Sam to the Rescue: The U.S. CARES Act

A Collection of FinCEN Guidance in Response to the COVID-19 Pandemic

SBA Releases Details for PPP Loans, Including Borrower Names for Loans of $150,000 or More

Congress Approves Five-Week Extension of PPP Application Deadline

CARES Act PPP Funds and Government Investigations: What You Need to Know

GAO Report Identifies Gaps in Paycheck Protection Program Implementation and Oversight

Debt Collection: COVID-19 Response, Furnishing, and Regulatory Scrutiny

SBA Further Clarifies PPP Loan Forgiveness Requirements and EIDL Refinance Rules