March 22, 2023

Consumer Financial Services Practice Digest

5 min

CFPB Requests Information on Data Brokers and Business Practices

The Consumer Financial Protection Bureau (CFPB) has issued a request for information (RFI) to examine the practices of data brokers and businesses involved in the collection, use, and sale of consumer information on March 15, 2023. The purpose of the RFI is to help the CFPB and policymakers understand the current state of business practices and assess whether data brokers are covered by the Fair Credit Reporting Act (FCRA) and other statutory authorities. The CFPB is specifically interested in identifying any instances of consumer harm or market abuses, including those that Congress originally identified in passing the FCRA in 1970.

New York Commercial Financing Disclosure Requirements

Providers of commercial financing that are subject to the New York State Commercial Finance Disclosure Law must provide disclosures to potential recipients of commercial financing at the time a specific offer of financing is extended to a recipient, pursuant to new regulations adopted by the New York Department of Financial Services. The disclosure requirements, which take effect on August 1, 2023, are like moves in other states to regulate commercial lending like consumer lending, including in California, Utah, and Virginia.

Supreme Court Agrees to Hear Case Involving CFPB Funding

On February 27, 2023, the Supreme Court granted the certiorari petition of the Consumer Financial Protection Bureau to hear a case that could cast doubt on all of the regulations that have been promulgated by the bureau to date, as well as all pending investigations and litigation brought by the agency.

Four Cybersecurity Law Issues for Financial Services to Track in 2023

The financial services sector must already contend with a maze of regulations in a variety of areas, and 2023 is poised to usher in new cybersecurity regulations for the industry. Organizations should ensure their security programs are prepared to meet the coming wave of compliance requirements. Here is our take on four major legal developments that financial services companies should track this year.

Fintech Companies Might Need to Register with CFPB Under Proposed Rule

The CFPB recently proposed a rule to establish a public registry of terms and conditions in form contracts that purport to waive or limit consumer rights and protections. The rule would require supervised nonbanks to register with the CFPB if their contractual terms and conditions include provisions seeking to restrict certain consumer rights or to waive any constitutional, statutory, or common law legal protection, right, or defense.

CFPB Warns Digital Mortgage Comparison-Shopping Platforms About Referral Fees and Pay-to-Play Advertising

The CFPB has moved to curb digital mortgage comparison-shopping platforms from receiving referral fees, issuing an advisory opinion that outlines how companies violate the Real Estate Settlement Procedures Act (RESPA) when "they steer shoppers to lenders by using pay-to-play tactics rather than providing shoppers with comprehensive and objective information." The advisory is a warning to digital marketing platforms of the potential consequences of business relationships with mortgage lenders. The CFPB has a direct sightline into the marketing activities of mortgage lenders though supervision and routine examinations, and has already put a target on digital marketing providers.

Ninth Circuit Rejects Dark Patterns Challenge to Arbitration Agreement

The Ninth Circuit has never been shy about declining to compel arbitration, and the Court has issued multiple cases outlining what constitutes sufficient notice of certain provisions in consumer-facing terms and conditions, including website terms and conditions.

FCC Proposes Rule to "Close the Lead Generator Loophole," with Business-Changing Ramifications

The Federal Communications Commission (FCC) issued a Notice of Proposed Rulemaking proposing to "ban the practice of obtaining a single consumer consent as grounds for delivering calls and text messages from multiple marketers on subjects beyond the scope of the original consent."

The CFPB Joins the FTC on Negative Option Marketing and Dark Patterns in New Circular

When it comes to negative options, the CFPB has strong opinions. As demonstrated in its new circular, these opinions generally align with those of the FTC, which has repeatedly targeted trial offers, subscription sales, and other programs involving recurring charges for enforcement. The circular reaffirms the CFPB's focus—shared with the FTC—on combating digital dark patterns used to engage in unfair, deceptive, or abusive acts or practices, especially when those techniques are combined with negative option marketing.

Adjusting Your Operations and Compliance for UDAAP Risks

Venable attorneys shared the latest UDA(A)P developments from the CFPB, FTC, and states, including supervisory guidance and enforcement. This presentation identified tools to assist with adapting compliance management systems and operations to risk tolerances informed by UDAAP concerns. Learn how to prepare for and defend against potential enforcement and private overreach.

"Future of FinTech and Bank Partnerships" at the 2023 OLA Legal Issues Conference

Michael Aphibal and Jonathan Pompan, Chair of the Consumer Financial Services Practice Group, presented "Future of FinTech and Bank Partnerships" at the 2023 Online Lenders Alliance (OLA) Legal Issues Conference, held February 23-24 in Arlington, Virginia.

Download Venable's Advertising Law Tool Kit – 11th Edition

It's here! The 11th edition of Venable's popular Advertising Law Tool Kit is now available for download. 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. Download this year's Tool Kit or bookmark the link to our e-book for quick access to these industry best practices.