Legal and Regulatory Developments
Why the CFPB's Preferencing and Steering Practices Circular Should Scare Lead Generators and Consumer Financial Services Providers
If you've been focused on only the high-level statements from the CFPB, you might already expect Rohit Chopra to fashion himself and the agency as "pro-consumer." Consistent with that approach, the agency just signaled its distaste for, and desire to severely restrict, the common and useful advertising practices of comparison-shopping platforms and lead generation.
SEC Climate Disclosure Rule
The Securities and Exchange Commission adopted a slimmed-down final version of its rule to enhance and standardize climate-related disclosures by public companies and in public offerings. The vote to adopt the rule, which dropped Scope 3 and scaled back Scope 1 and 2 requirements, was 3-2 along party lines, and it drew criticism from both conservatives and progressives. You can read the fact sheet here and press release here.
Federal Regulators Continue their Focus on Fair Lending and Appraisal Bias
Federal regulators are continuing their focus on fair lending issues. In February, the Federal Financial Institutions Examination Council (FFIEC) released a statement on examination principles related to valuation discrimination and bias in residential lending. Around the same time, the FFIEC's Appraisal Subcommittee (ASC) held a hearing on appraisal bias that focused on ways to reduce instances of unfair property valuations. Taken together, it's clear federal regulators are continuing to focus on fair lending issues in 2024.
CFPB Updates the Supervisory Appeals Process
The Consumer Financial Protection Bureau (CFPB) released a procedural rule updating its supervisory process for institutions seeking to appeal a compliance rating or an adverse finding. Although the appeals process remains opaque, we are aware of instances when appeal of supervisory examination findings related to matters of law and fact have been successful and have made a meaningful difference to supervised financial institutions. The updated supervisory appeal process became effective February 22, 2024.
Listen to Episode 4 of Venable's Ad Law Tool Kit Show – "Lead Generation"
In the realm of lead generation and performance-based customer acquisition, pursuing profits carries significant legal risks. Host Shahin Rothermel is joined by Venable partners Jonathan Pompan and Ari Rothman to talk about how advertisers should heed crucial best practices to mitigate these risks. These include understanding regulations governing communication with leads, compliance measures, online contract formation, lead qualification, cautious approaches to upsells and consent, and monitoring endorsements for Federal Trade Commission (FTC) compliance to avoid liabilities arising from misleading claims or noncompliance with regulations. The quest for profits can lead to big legal risks, some of them too large for advertisers that buy leads through third parties.
The CFPB's Next Target in its War on "Junk Fees": Overdraft Fees
In January 2024, the CFPB continued its crackdown on what it decries as "junk fees," releasing a Proposed Rule to curb overdraft fees. The Proposed Rule could have a significant effect on the nature, availability, and cost of overdraft protection for deposit products, as it would significantly limit the fees that may be imposed on overdraft products and subject overdraft programs to Regulation Z and other consumer financial credit regulations.
Chalk Talk: OCC Re-Thinks Business Combinations
The OCC recently released a proposed rule and policy statement on business combinations involving national banks and federal savings associations (banks), which includes mergers, acquisitions of assets, and assumptions of deposit liabilities. The proposals appear to reflect the OCC's intention to provide greater transparency into how it reviews proposed business combinations and tighten the standards it uses to evaluate them.
Declined: CFPB Proposes Rule to Limit Non-Sufficient Funds Fees
One week after the CFPB published its proposed rule restricting overdraft fees, the CFPB proposed yet another rule prohibiting nonsufficient funds fees (NSF fees) on transactions like declined debit card purchases and attempted ATM withdrawals, among others.
Georgia on the Mind: An Explainer for Payments Companies Considering the Merchant Acquirer Limited Purpose Bank Charter
In January 2024, one of the largest U.S. non-bank merchant acquirers announced that it is pursuing a special-purpose bank charter developed by Georgia. Although the "merchant acquirer limited purpose bank" (MALPB) has been a charter option for non-bank payments companies for over a decade, non-banks have not been able to fully leverage it because card networks have not allowed them to be direct participants. That prohibition appears to be changing in light of this new application.
New Year, New Signs—FDIC Amends Deposit Insurance Sign and Advertising Regulations
After an intense 2023 rulemaking, supervisory, and enforcement cycle for the federal banking agencies, the FDIC issued a final rule on FDIC official signs and advertising requirements right before the new year. The rule comes on the heels of a campaign to police these issues, especially on digital platforms involving non-bank competitors, vendors, and partners to banks, as well as novel financial products.