Like most industries today, Consumer Finance Services businesses are being significantly impacted by the novel coronavirus (COVID-19). Troutman Pepper has developed a dedicated COVID-19 Resource Center to guide clients through this unprecedented global health challenge. We regularly update this site with COVID-19 news and developments, recommendations from leading health organizations, and tools that businesses can use free of charge.
Our bank and loan servicing clients also face novel challenges affecting their industry due to COVID-19, particularly the ever-changing rules and regulations concerning evictions and foreclosures. We closely track these updates and have assembled an interactive tracker containing state orders and guidance documents regarding residential foreclosure and eviction moratoriums.
To help you keep abreast of relevant activities, below find 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:
Privacy and Cybersecurity Activities
- On March 18, the U.S. Department of the Treasury issued a fact sheet regarding the American Rescue Plan’s economic impact payments, child tax credits, and other state recovery funds. As of March 17, approximately 90 million Economic Impact Payments had been disbursed, which is more than $242 billion. Additionally, to facilitate the disbursement of Child Tax Credit advance payments during 2021, the American Rescue Plan requires the IRS to establish an online portal for taxpayers to update relevant data for mid-year payment adjustments (e.g., the birth of a child during 2021). For more information, click here.
- On March 18, the U.S. Department of Education announced that about 72,000 student loan borrowers, who were defrauded by their schools, will receive student loan forgiveness that could total $1 billion. Current provisions in federal law will allow federal borrowers to seek cancellation if their institution engaged in certain misconduct. As of March 18, the department intends to issue full loan discharges for borrowers with approved borrower defense claims. This includes borrowers with previously approved claims that received less than a full loan discharge. For more information, click here.
- On March 18, the Centers for Disease Control and Prevention sent a proposal to the Office of Management and Budget for regulatory review. This is one of the first step toward extending the order preventing evictions during the ongoing COVID-19 emergency, which is set to expire in two weeks. For more information, click here.
- On March 17, the Consumer Financial Protection Bureau (CFPB) issued a consumer advisory to encourage consumers to take action to protect economic impact payments under the American Rescue Plan. The advisory provides a list of steps a consumer can take to ensure that they have the full benefit of those funds by protecting them from bank and credit union setoffs if the consumer’s account is overdrawn. For more information, click here.
- On March 17, the Federal Reserve issued a Federal Open Market Committee statement regarding the COVID-19 pandemic. Following a moderation in the pace of the recovery, indicators of economic activity and employment have turned up recently, although the sectors most adversely affected by the pandemic remain weak. According to the FOMC, inflation continues to run below 2%. For more information, click here.
- On March 17, CFPB Acting Director Dave Uejio issued a statement encouraging financial institutions and debt collectors to allow stimulus payments to reach consumers: “The Consumer Financial Protection Bureau is squarely focused on addressing the impact of the COVID-19 pandemic on economically vulnerable consumers and is looking carefully at the stimulus payments that millions are now receiving through the American Rescue Plan. The Bureau is concerned that some of those desperately needed funds will not reach consumers, and will instead be intercepted by financial institutions or debt collectors to cover overdraft fees, past-due debts, or other liabilities. . . . In recent days, many financial industry trade associations in dialogue with the CFPB have said they want to work with consumers struggling in the pandemic. . . . I applaud the actions of our state partners, who have taken rapid action and concrete measures to protect stimulus funds.” For more information, click here.
- On March 17, U.S. Senators Sherrod Brown, Ron Wyden, Bob Menendez, and Chris Van Hollen introduced a bill that would extend existing rules restricting garnishment of federal benefit payments issued under the American Rescue Plan. The bill also would require such payments to be encoded, and would extend other restrictions on collection of such funds. For more information, click here.
- On March 16, the Federal Trade Commission (FTC) announced that the three national credit reporting agencies will allow consumers weekly access to monitor their credit report for free until April 20, 2022. For more information, click here.
- On March 19, a bill that would lower small-loan interest rate caps to 36% from 175% failed to pass in both of New Mexico’s legislative chambers. For more information, click here.
- On March 16, Ohio Governor Dewine signed a bill into law that shortens the statute of limitations in Ohio for filing a lawsuit based on a contract. The statute of limitations will drop from eight to six years on written contracts and from six to four years on oral contracts. For more information, click here.
- On March 17, Virginia Attorney General Mark Herring announced a new law preventing garnishment or seizure of economic support payments. HB 5068, passed during special session after the first round of federal support payments, makes the first $1,200 of any COVID-19-related economic relief payments exempt from garnishment by debt collectors and creditors. For more information, click here.
- On March 10, the Oklahoma Senate passed a health care debt collection bill. The bill has been engrossed to the house for its consideration. SB 548 would prevent health care providers from reporting debts to a credit reporting agency or placing them with a collection agency unless a medical provider provides a good faith estimate for the services to be rendered. For more information, click here.
Privacy and Cybersecurity Activities:
- On March 19, Axios reported the COVID-19 pandemic has “left many vulnerable to exposure, exploitation and fraud.” FTC Chairwoman Rebecca Slaughter told Axios that many people moving their lives online due to the pandemic has had “real implications for the exposure of personal data[.]” Axios reported the pandemic led to “better privacy and cybersecurity practices” in some companies, “[i]n others, they exposed big shortcomings.”
- On March 17, the FTC offered consumers tips on spotting email scams. For instance, the FTC warned consumers they might receive an email from a prominent antivirus company informing them they have been charged for a product, and that consumers should call immediately if the charge was a “mistake.” The FTC reminds consumers that they:
- Shouldn’t click on any links before verifying their authenticity;
- Shouldn’t use the number in the email to call the “company;”
- Never give their password to a stranger by phone;
- Never give your bank account, credit card, or personal information over the phone when contacted “out of the blue.”
To read the full post, click here.
- On March 16, the FTC reminded consumers they are eligible to acquire free weekly credit reports until April 20, 2022. “[S]taying on top of your credit report is one important tool to help manage your financial data” during the COVID-19 pandemic. The FTC also reminds consumers to fix any error or mistakes spotted on credit reports; consumers may dispute errors by clicking here. To read the full post, click here.
- On March 16, the FTC warned consumers that scammers are “reportedly using fake unemployment benefits websites as phishing lures.” Phishing is a fraudulent practice of sending emails purporting to be from a reputable source to trick consumers to reveal personal information. The Department of Justice’s National Unemployment Insurance Fraud Task Force reported that scammers are making websites and “messages look like they’re from a state workforce agency.” To read the full warning, click here.