Legal and Regulatory Developments
CFPB Launches Portal for Public Petitions for Rulemaking
The CFPB is now accepting petitions for agency action submitted directly by members of the American public, according to a press release and a new portal that was opened on February 16, 2022. In support of this change, the Bureau cited to the U.S. Constitution's guarantee of the public's right to petition the government. This initiative represents the latest step by the CFPB in pursuit of its agenda to increase consumer input into its decisions and the transparency of its decision-making.
U.S. Sanctions Against Russia: Summary as of Tuesday, March 1, 2022
This alert provides an overview of U.S. sanctions imposed against Russia in response to its invasion of Ukraine up to and including the issuance of Directive 4 and General License 8A , and the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR Part 587, by the Office of Foreign Assets Control (OFAC) on Monday, February 28, 2022 (effective March 1, 2022).
When Can the FTC, CFPB, and State Consumer Credit Regulators Pierce the Corporate Veil?
Venable attorneys Ellen Berge, Alexandra Megaris, and Jonathan Pompan presented "When Can the FTC, CFPB, and State Consumer Credit Regulators Pierce the Corporate Veil?" at the 2022 OLA Legal Issues Conference on February 16, 2022. Owners, members, directors, officers, and even employees are not automatically shielded from liability for violations of consumer protection laws committed by the company. The FTC and CFPB routinely name individuals in enforcement actions, the vast majority of which are nonadjudicated settlements. Panelists discussed the legal standards the agencies must meet in order to successfully hold individuals liable for corporate transgression, the practical implications of being a named defendant in a law enforcement action, and ways to mitigate your risk.
Fighting the Fix: States Challenging OCC and FDIC Madden-Fix Rules Lose in District Court
A federal district judge rejected states' challenge to the Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC) rules that the permissible interest rate for a loan is determined when the loan is made, not when it is sold or assigned. The February 8, 2022 outcomes in California v. Office of the Comptroller of the Currency and California v. Federal Deposit Insurance Corp. are a win for banks, bank partnership models, and secondary buyers. OCC and FDIC adopted these rules to address the uncertainty surrounding the bank partner lending model and secondary loan markets created by the Second Circuit Court of Appeal's 2015 decision in Madden v. Midland Funding, LLC.
Debt Buyer Sued for Deceptive Practices of Downstream Third-Party Collectors; CFPB Uses Its Substantial Assistance Authority
On January 10, 2022, the Consumer Financial Protection Bureau (CFPB) filed a complaint in federal district court against three affiliated debt-buying businesses and the individuals who founded and operated them for "knowingly and recklessly [placing debts with and selling them to] debt collection agencies that used threats and misrepresentations to coerce payments from consumers."
Buy-Now-Pay-Later: A 360 Degree Overview
Buy-Now-Pay-Later (BNPL) products are taking center stage as a popular way for consumers to purchase goods or services now and pay for them over time through a short series of installments, often interest-free. Industry researchers have found that BNPL is especially attractive to younger Gen Z consumers, who increased their use of BNPL products from 6% in 2019 to 36% in 2021. Observers have also noted that BNPL provides a mechanism to serve consumers with subprime credit histories or those who are underbanked and underserved. With this growth, lawmakers and regulators, especially the Consumer Financial Protection Bureau (CFPB), have voiced concerns about BNPL, including that consumers may easily spend more than they can afford and rack up multiple BNPL purchases with varying payment schedules and payment terms.
Takeaways from the CFPB's Fall 2021 Supervisory Highlights: Debt Collection
While debt collectors were preparing for compliance with new Regulation F, this past fall the CFPB was busy examining larger debt collectors for compliance with the Fair Debt Collections Practices Act (FDCPA). Examiners zeroed in on representations made to consumers about the connection between repayment of debts and consumers' creditworthiness.
State Automatic Renewal Laws Are Starting to Look Like a Patchwork Quilt as the FTC Expands Enforcement of ROSCA
With several new state laws effective in 2022, it is becoming increasingly difficult for businesses to develop baseline compliance protocols across federal and state automatic renewal laws. Against this backdrop, federal and state regulators continue to examine the sales practices of companies that sell products and services on an automatically renewing basis; states continue to pass new laws—and strengthen existing laws—that further embolden private plaintiffs and class action lawsuits; and the card brands have imposed increasingly strict requirements on companies offering products and services on a negative option basis.
Emerging Markets and Trends in Lending: Personal Loans, Buy Now, Pay Later (BNPL), Small Business and More
Jonathan L. Pompan moderated and presented a session on emerging markets for the receivables management sector at the 25th Annual Receivables Management Association International conference. A shifting economic and regulatory environment means new opportunities and challenges in the consumer finance and small business loan sectors. New credit and finance options are available to consumers and small businesses in e-commerce and other channels. Some are fueled by fintechs and “neobanks,” app providers, bank partners, and direct lenders. The products and regulatory frameworks can get blurry and make understanding the receivables opportunities challenging. This session explored the new and increasingly popular consumer finance products, and explore recent legal and regulatory developments, including potential pitfalls and opportunities, updates on the regulatory landscape, and key compliance considerations.
Federal Trade Commission Releases Online Customer Review Guidance
It might be hard for some to imagine, but the Federal Trade Commission (FTC) is feeling groovy. This month, the agency released two guidance documents that track best practices to prevent consumers from being misled when marketers solicit and pay for online reviews and when review platforms feature online customer reviews. The new documents are like two sides of an old-school vinyl album. Side A is for online retailers and marketers, while Side B is for review platforms (i.e., consumer review websites). The lyrics might be slightly different, but the tunes make for a pretty good mash-up.
FTC Approves Rulemaking Process for Earnings Claims
The latest edition of the FTC’s recent practice of holding open meetings brings a potential rule regarding earnings claims to the forefront. During the FTC’s open meeting, the Commission unanimously approved issuing an Advance Notice of Proposed Rulemaking with respect to earnings claims. As the Commissioners pointed out in their comments (additional information below), the motivation for this rulemaking is to repair the FTC’s ability to recover monetary relief for consumers after the Supreme Court’s decision in AMG Capital Management.
Download Venable's Advertising Law Tool Kit – 10th Edition
We are pleased to share with you the tenth edition of Venable's popular Advertising Law Tool Kit. This annual resource compiles a broad spectrum of marketing-related topics, background information, and checklists into an easy-to-access guide, authored by some of the most experienced attorneys in the industry.
Consumer Financial Services Outlook 2022
Venable attorneys reviewed the current state of federal and state consumer financial protection law and policy and outlined what you and your company need to know about what’s ahead. Speakers shared their experiences from the front lines and offered strategies to help you navigate the evolving legal and regulatory landscape. This session focused on providers of consumer financial products and services and their service providers, including advertisers, in such markets as student loans, payment systems, mortgage lending and servicing, BNPL, small dollar lending, consumer reporting, consumer credit and related services, money transmission and check cashing, prepaid cards, debt collection, and debt relief services.