Consumer Financial Protection Bureau (CFPB)

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Given the future uncertainty of the Consumer Financial Protection Bureau’s (CFPB) efforts to regulate bank overdraft fees, New York’s Department of Financial Services (DFS) has stepped in to fill a perceived gap. The DFS announced proposed regulations to tackle what it perceives as unfair overdraft fees. The proposed regulations will “ensure consumers will no longer be burdened with overdraft fees for minor transactions and require banks to provide timely notifications to consumers about overdraft fees to improve transparency.”

A federal district judge in Massachusetts entered a nearly $51 million judgment against Commonwealth Equity Group LLC (d/b/a Key Credit Repair) and its CEO after granting summary judgment in favor of the Consumer Financial Protection Bureau (CFPB) and Massachusetts Attorney General (AG) Andrea Campbell. The lawsuit alleged that the company violated federal and state consumer protection and telemarketing laws. The company and CEO were found jointly liable for $31.7 million in restitution and each ordered to pay more than $19 million in penalties.

As U.S. elections heat up, Republicans have put Democrats on the defense about the economy and the public’s perception of it. One talking point for Democrats in response, including in President Joe Biden’s last two State of the Union addresses, has been federal efforts to combat so-called junk fees.

Still, the strongest regulations are coming from states, and companies will need to keep an eye on all of these laws to comply.

On August 7, the U.S. Department of Treasury hosted a virtual briefing to discuss the steps that the Biden-Harris administration is taking to address perceived unfair and deceptive practices in the consumer solar energy industry. Deputy Secretary of Treasury Wally Adeyemo, along with Federal Trade Commission (FTC) Chair Lina Khan and Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra, announced a new interagency consumer solar industry initiative directed at both sales and financing of residential systems. Each made statements about the unique effort to root out anti-competitive and sometimes-fraudulent activity by a handful of “bad actors” who are taking advantage of the burgeoning industry. The presenters also noted that they will be coordinating with state attorneys general (AG) and state financial regulators.

California Attorney General (AG) Rob Bonta, along with a coalition of AGs, has submitted a letter to the Consumer Financial Protection Bureau (CFPB) regarding a proposed final rule. This rule aims to establish a registry of nonbank entities that have been subject to orders related to consumer protection law violations.

On August 21, the U.S. Supreme Court denied a request by West Virginia Attorney General (AG) Patrick Morrisey and 26 other state AGs to participate in oral arguments in Consumer Financial Protection Bureau (CFPB) et al. v. Community Financial Services Association of America et al., which concerns whether the CFPB’s statutory authorization violates the Constitution’s Appropriations Clause. Morrissey and 26 other predominantly Republican state AGs have submitted an amicus brief arguing that it does. Morrissey is joined by the AGs for Alabama, Alaska, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, and Wyoming.

Indiana Attorney General Todd Rokita and the Indiana Department of Financial Institutions announced a settlement in excess of $250,000 with Integrity Acceptance Corp., affiliated companies, and their owners to resolve allegations that they originated personal loans without the required license, contracted for charges in excess of the maximum allowable rate, misrepresented finance charges, and failed to disclose prepaid finance charges in violation of the Indiana Uniform Consumer Credit Code and Indiana Deceptive Consumer Sales Act. As part of the settlement, the entities will forgive $223,685 in loans, pay $33,991 in restitution, and pay $33,000 in civil penalties and costs to the state. The entities and their owners are also enjoined from engaging in similar conduct in the future.

As discussed here, on December 7, 2022, the Consumer Financial Protection Bureau (CFPB or Bureau) made a preliminary conclusion that a New York commercial financing law was not preempted by the Truth in Lending Act (TILA). The Bureau indicated it was also considering whether to make a preemption determination regarding similar state laws in California, Utah, and Virginia. On January 20, 2023, California Attorney General Rob Bonta submitted a letter to the CFPB agreeing with its preliminary determination that California’s Commercial Financing Disclosures Law (CFDL) is not preempted by TILA because the CFDL only applies to commercial financing and not to consumer credit transactions within the scope of TILA. Attorney General Bonta further urged the CFPB to “revisit the Federal Reserve Board’s (Board) vague and overbroad articulation of the TILA preemption standard. The CFPB should articulate a narrower standard that emphasizes that preemption should be limited to situations where it is impossible to comply with both TILA and the state law or where the state law stands as an obstacle to the full purposes TILA, which is to provide consumers with full and meaningful disclosure of credit terms in consumer credit transactions.”

Arizona Attorney General Mark Brnovich released opinion No. 22-(R22-011), concluding earned wage access (EWA) products that are fully non-recourse and no-interest are not “consumer lender loans” under Arizona law. Thus, those who make, procure, or advertise EWA products are not required to be licensed as a “consumer lender” by Arizona’s Department of Insurance and Financial Institutions. The AG’s findings apply to EWA providers working with an employer as well as those working directly with an employee.