Like most industries today, consumer finance services businesses are being significantly impacted by the novel coronavirus (COVID-19). Troutman Sanders and Pepper Hamilton have developed a dedicated COVID-19 Resource Center to guide clients through this unprecedented global health challenge. We regularly update this site with COVID-19-related news and developments, recommendations from leading health organizations, and tools that businesses can use free of charge.

To help you keep abreast of relevant activities, below is a breakdown of some of the biggest COVID-19-driven events at the federal and state levels to impact the consumer finance services industry this past week.

Federal Activities

State Activities

Privacy and Cybersecurity Activities

Federal Activities:

  • On April 17, the Federal Trade Commission filed a complaint against Ponte Investments, LLC – a Rhode Island-based company – and its owner, John C. Ponte, claiming that they misrepresented Ponte Investments as an approved small business lender for the COVID-19 relief program. The FTC has sought a permanent injunction against these misrepresentations and other equitable relief from the United States District Court for the District of Rhode Island. Ponte Investments also operates as “SBA Loan Program” and “SBA Loan” For more information, click here.
  • Few of the emergency orders related to COVID-19 have addressed service of process. This article offers some practical guidance in light of state and federal service rules, which remain largely in effect despite stay-at-home and emergency court operations orders.
  • The American Council on Education (ACE) wrote a letter to Speaker of the House Nancy Pelosi (D-Calif.) and Minority Leader Kevin McCarthy (R-Calif.) requesting extended student loan relief on behalf of more than 30 higher education organizations. In the letter, which focuses on the likely long-term economic impact of the COVID-19 pandemic, ACE requested that Congress extend the benefits of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to student loan borrowers, through at least June 30, 2021, or until unemployment falls below 8% for three consecutive months. For more information, click here.
  • The National Credit Union Administration issued a temporary final rule on April 21, easing regulatory requirements to assist federal credit unions (FCUs) and federally insured credit unions (FICUs) during the COVID-19 pandemic. The rule makes the following key changes that will be effective through December 31, 2020:
    • Raises the maximum aggregate amount of loan participations that a FICU may purchase from a single originating lender to the greater of $5 million or 200% of the FICU’s net worth;
    • Suspends limitations on the eligible obligations that a FCU may purchase and hold; and
    • Tolls the required timeframes for the occupancy or disposition of properties that are not being used for FCU business or that have been abandoned.

For more information, click here.

  • The Consumer Financial Protection Bureau has released a video, available here, providing non-filers of federal tax returns with guidance to receive their economic impact payments, authorized by the CARES Act in response to the COVID-19 health crisis. The video notes that most people who qualify for an economic impact payment will receive the payment automatically. However, some individuals must take additional action at the Internal Revenue Service’s webpage in order to claim their economic impact payments or to claim their additional payments for dependent children under age 17. For more information, click here.
  • President Donald Trump signed the Paycheck Program and Health Care Enhancement Act, providing roughly $484 billion in relief for small businesses, including the United States Small Business Administration Paycheck Protection Program (PPP), hospitals, and expanded medical testing. The funding also includes economic disaster loans for small businesses. The United States Department of the Treasury and the Small Business Administration issued a Frequently Asked Questions document, which will be updated regularly, to address PPP guidelines for borrowers and lenders.

State Activities:

  • Multiple states have come together to enact initiatives aimed at prohibiting private student loan servicers from certain activities during the COVID-19 pandemic.
    • Recently, New York worked out an agreement with private student loan servicers operating in the state to offer similar relief guaranteed by the CARES Act.
    • Modeling an agreement after the one that New York reached with private servicers, California, Colorado, Connecticut, Illinois, Massachusetts, New Jersey, Vermont, Virginia, and Washington entered into an agreement with some of the nation’s largest private student loan servicers to provide relief to borrowers impacted by COVID-19.

For more information, click here.

  • On April 21, Missouri became the first state to sue China for its handling of the COVID-19 pandemic. Led by Attorney General Eric Schmitt, Missouri joins the ranks of at least seven federal class action lawsuits filed by private plaintiffs claiming that China, despite knowing the danger of COVID-19, acted slowly and attempted to cover up and suppress news of the virus out of its own economic self-interest. For more information, click here.
  • North Carolina Insurance Commissioner Mike Causey issued an extended order requiring collection agencies to advise consumers of the option to defer payments during any communication. This extended order will expire May 27, 2020. For more information, click here.
  • The Minnesota Department of Commerce has extended regulatory guidance related to collectors working from home while the State’s stay-at-home order is in effect and during any potential extension of that order. Due to the concerns surrounding the transmission of COVID-19, the department has decided not to act against any licensee who allows his or her individual registered collectors to temporarily work from home as a precautionary measure if the following criteria are met:
    • The activity is conducted from the home location of an individual working on behalf of a Minnesota licensee;
    • The individual is working from home due to a reason relating to the COVID-19 outbreak and has informed the licensee of such reason;
    • None of the activity will be conducted in person with members of the public from the home location; and
    • The licensee shall, at all times, exercise supervision of the activity being performed at the home office and ensure that appropriate safeguards and controls are in place to protect consumer information and data.
  • California’s Governor signed an executive order to exempt CARES Act payments and any other federal, state, or local government financial assistance made available to individuals in express response to the COVID-19 pandemic from any attachment, levy, execution, or garnishment, unless such activity is connected to any child support, spousal support, family support, or any criminal restitution action or judgment.
  • Vermont Attorney General T.J. Donovan issued a directive that payments authorized by the CARES Act are exempt from garnishment or collection under Vermont law. The Attorney General also is urging the banking community to voluntarily suspend collection activity for overdrafts or other administrative fees that could otherwise jeopardize the receipt, reallocation, and circulation of stimulus monies issued to Vermont residents as a result of the COVID-19 public health emergency.
  • New York Attorney General Letitia James issued guidance clarifying that CARES Act payments are exempt from garnishment. According to the guidance, CARES Act payments are aimed at consumers’ essential needs, “and therefore should not be subject to garnishment and similar legal process[es]. Banking institutions are advised that they should treat CARES Act payments as subject to the same protections as statutorily exempt payments.”
  • Oregon Governor Kate Brown issued an executive order to protect CARES Act stimulus payments to individuals from most garnishments.

Privacy and Cybersecurity Activities:

  • On April 20, the Department of Health and Human Services (HHS) received a donation from Oracle to assist the department in gathering crowd-sourced data on COVID-19. The system will provide doctors and other clinicians with the ability to document how patients are responding to possible COVID-19 treatments. For doctors and other clinicians interested in contributing this information, HHS has shared a link here.
  • On April 21, a policy of enforcement discretion was announced by the Office of the National Coordinator for Health Information Technology, the Centers for Medicare & Medicaid Services, and HHS Office of Inspector General. The enforcement discretion is aimed to allow compliance flexibilities regarding the implementation of the interoperability final rules.
  • On April 22, New York Governor Andrew M. Cuomo and Mike Bloomberg announced a contact-tracing program aimed to control the infection rate of COVID-19, namely by “prevent[ing] the spread of a virus by using testing to confirm if someone has COVID-19, interviewing that person to identify people they may have been in contact with during their illness and during the few days before symptoms began, reaching out to their contacts to alert them to their risk of infection and then referring contacts to medical providers and asking non-ill people to stay home for 14 days to be sure they don’t spread COVID-19 to others.” According to the announcement, several countries, such as Germany, Singapore, and South Korea, effectively have used contact tracing amid the COVID-19 outbreak and, as a result, have been able to re-open for business quicker and have experienced fewer deaths and lower rates of infection.

For an overview of contact-tracing applications in use or in development around the world and a discussion relating to the privacy issues to consider, see our Law360 article, “Privacy Guidelines for COVID-19 Contact-Tracing App Makers.”

  • On April 22, a coalition of 27 attorneys general, including those from Massachusetts and California, called on telecom companies to keep phones and broadband connected for the duration of the COVID-19 pandemic.

On April 23, HHS announced an upcoming action by the Centers for Disease Control and Prevention to provide resources for state and local jurisdictions to support those playing a “vital role in protecting Americans throughout the COVID-19 pandemic, by reporting and analyzing surveillance data, [and] tracing the spread of the virus[.]”