Debt Collection Consumer Disclosure Rule
The Consumer Financial Protection Bureau issued a second debt collection final rule that:
- clarifies the validation information and disclosures that a debt collector must provide to a consumer at the outset of debt collection communications and provides a model notice containing such information,
- prohibits debt collectors from bringing or threatening to bring a legal action against a consumer to collect a time-barred debt, and
- requires debt collectors to take certain actions before furnishing information about a consumer's debt to a consumer reporting agency (CRA).
This rule follows a recently released final rule regarding debt collection communications. Together, the two rules amend Regulation F, which implements and interprets the Fair Debt Collection Practices Act, and both take effect on November 30, 2021.
Congress Passes Corporate Transparency Act Creating Expansive Beneficial Ownership Registry with Significant Implications for U.S. and Foreign Business
Congress and the White House have agreed to include broad anti-money laundering reforms in one of the last major pieces of legislation expected to become law in this legislative session—the annual National Defense Authorization Act. Passed in both the House and the Senate, one such reform is the Corporate Transparency Act (CTA), which would create a beneficial ownership registry within the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN), requiring millions of "reporting companies" to report information on their "beneficial owners" to FinCEN. The purpose of the registry is to "crack down on anonymous shell companies, which have long been the vehicle of choice for money launderers, terrorists, and criminals." To date, the burden of beneficial ownership has fallen on financial institutions, which are required to identify and verify beneficial owners through the Bank Secrecy Act's customer due diligence and "know your customer" requirements. The CTA would shift the collection burden to the reporting companies and create a first-of-its-kind comprehensive U.S. database that will improve the ability of law enforcement to combat money laundering, the financing of terrorism, and other illicit activity.
Pushing to the Forefront – Get Ready for Push-to-Card Payments
As the payments industry continues to evolve at a lightning pace, one of the newest developments is the ability for payments companies to leverage card network services to “push” payments to cardholders. Earlier this year, the technology gained attention as a potentially safe and efficient way to transfer funds in response to the challenges presented by the COVID-19 pandemic. In particular, as businesses shift to a remote environment, push-to-card services can provide benefits for both individuals and businesses, including for person-to-person (P2P) money transfer, funds disbursement, and bill payment, among other uses. And with the increased focus on “faster payments,” push technology has been discussed as a private sector means to speed up transaction settlement.
Managing Risks in Third-Party Sender ACH Processing
With much of the economy disrupted as a result of the COVID-19 pandemic, one area that continues to grow is automated clearing house (ACH) payments, according to data recently released by Nacha, the nonprofit that governs ACH payments. While the recent jump in ACH volume was driven in part by the delivery of federal stimulus payments, it is reflective of a longer term trend of growth in the industry, as ACH becomes increasingly popular for consumer bill payment (rent and utilities), health care payments, payroll processing, and business account payables.
SBA Publishes FAQ Explaining Loan Necessity Questionnaire
On December 9, 2020, the Small Business Administration (SBA) published FAQ Number 53, addressing why certain borrowers will receive Paycheck Protection Program (PPP) Loan Necessity Questionnaires. (See our prior alert on the questionnaires here.) The SBA also publicly released for-profit and nonprofit questionnaires.
FTC Commissioner Encourages Partnership with CFPB and "Systemic" Change Following FTC Action against Debt Collection Scheme
On November 30, 2020, the Federal Trade Commission (FTC) announced that it had taken action against a debt collection company, Midwest Recovery Systems ("Midwest"), alleging that an alleged "debt parking" scheme caused more than $24 million in harm to consumers. While the complaint and settlement themselves are not that remarkable, the dissent filed by Commissioner Chopra is. Commissioner Chopra challenges the FTC's approach to debt collection, suggesting the FTC refer such cases to the Consumer Financial Protection Bureau (CFPB) and that the FTC focus on other things. We have written previously about Commissioner Chopra's other ideas for reshaping FTC approaches and priorities, and if Commissioner Chopra were to become the next Chair under President-elect Biden, things could get interesting at the agency.
OCC Proposal Would Prohibit Banks from Denying Services to Entire Industry Categories
Recently, the Office of the Comptroller of the Currency (OCC) released a notice of proposed rulemaking that, if adopted, would prohibit national banks and federal savings associations from categorically declining to provide financial services to industries engaged in lawful business activities. Instead, national banks would need to perform a risk evaluation of each customer before declining the customer service.
Setting the Record Straight: Agencies Seek to Clarify and Codify Guidance on Guidance
The use of supervisory guidance by the federal banking agencies has been the cause of much consternation in the banking industry, given that guidance is, well, guidance, and does not have the force and effect of law. Until recently it was not uncommon for institutions to be cited for violations of or noncompliance with supervisory guidance. However, at the end of October 2020, the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, and Bureau of Consumer Financial Protection (collectively, the "Agencies") issued a notice of proposed rulemaking to clarify and codify the Agencies' Role of Supervisory Guidance (Proposed Rule)—thereby setting the record straight.
In the Age of Digital Interconnectivity, API Is Front and Center
In today's digital world, APIs, or application programming interfaces, play a rapidly growing role in meeting our need for more interconnectivity. APIs are software intermediaries that allow different programs and applications to share data—communicating and interacting with each other to expand business functionalities. As we all grow increasingly reliant on remote access and work, API will continue to serve as an essential element of facilitating business and everyday life. To that end, every business needs to consider how best to protect this valuable resource. In this article, we discuss several ways in which legal issues surrounding APIs arise and how businesses can better protect their APIs.