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 May 13, the U.S. House of Representatives passed the Comprehensive Debt Collection Improvement Act, a collection of bills intended to reform how debts are collected. The bill now heads to the Senate for its consideration. For more information, click here.
- On May 14, the Federal Reserve Board (Board) announced the third extension of a rule to bolster the effectiveness of the Small Business Administration’s Paycheck Protection Program (PPP). Like the earlier extensions, this one will temporarily modify the Board’s rules so that certain bank directors and shareholders can apply to their banks for PPP loans for their small businesses. For more information, click here.
- On May 13, the U.S. Department of the Treasury announced that it distributed $742 million to 42 states and three territories through the Homeowner Assistance Fund (HAF). A part of the American Rescue Plan, HAF seeks to prevent mortgage delinquencies and defaults, foreclosures, loss of utilities or home energy services, and displacement of homeowners experiencing financial hardship due to the COVID-19 pandemic. For more information, click here.
- On May 12, the Senate Commerce Committee (FTC) voted to proceed with Lina Khan’s nomination as commissioner of the Federal Trade Commission. Previously, Khan served as a legal advisor to former FTC Commissioner Rohit Chopra. For more information, click here.
- On May 13, the California Senate passed a bill that will require the original creditor or owner of a debt to notify a consumer within five days of the sale or assignment of the debt to someone else, while also giving consumers the right to request certain information about a debt from debt collectors, such as the debt’s delinquency status or the date of the last payment, among other pieces of information. For more information, click here.
- On May 13, the Nevada Financial Institutions Division (NFID) extended its temporary guidance allowing employees of licensed collection agencies to work from home through July 31. The guidance was previously set to expire on May 31. For more information, click here.
- On May 12, a bill was introduced to the New Jersey Senate, which would provide financial relief to landlords and tenants in response to the COVID-19 pandemic. Among other measures, the bill would “prohibit a landlord from furnishing information about the nonpayment or late payment of rent which accrued during the covered period, or other court filings or proceedings related to non-payment or late payment of rent which accrued during the covered period, directly to another residential landlord, or to a debt collection or credit reporting agency.” For more information, click here.
- On May 12, Oregon H.B. 2009 passed through the Housing and Development Committee. The bill “establishes temporary limitations on lenders’ remedies for borrowers’ failures to make payments on obligations secured by mortgages, trust deeds or land sale contracts for certain real property” due to “loss of income that is related to the COVID-19 pandemic.” For more information, click here.
- On May 10, the Nevada Assembly Committee on Commerce and Labor submitted recommendations to S.B. 248, which limits a collection agency’s ability to collect on medical debt. The proposed amendments include changing the definition of medical debt, allowing medical debtors to initiate contact and make voluntary payments, and preventing certain written communications from being sent via certified mail. For more information, click here.
- On May 10, the Maine Senate Committee on Appropriations and Financial Affairs received a bill establishing a homeowner assistance fund program through funds received under the American Rescue Plan Act of 2021 to “prevent mortgage delinquencies and defaults, foreclosures, loss of utilities or home energy services and displacements of homeowners experiencing financial hardship.” The proposed legislation invokes an emergency clause making effective upon approval. For more information, click here.
Privacy and Cybersecurity Activities:
- On May 10, California Attorney General Rob Bonta joined a coalition of 43 state attorneys general in signing a letter to Facebook CEO Mark Zuckerberg, urging Facebook to abandon plans to launch a version of Instagram for children under the age of 13. The collation argues that social media can be harmful to the mental well-being of children, and it allows for cyberbullying to occur. The letter notes that Facebook has historically failed to protect the welfare of minors who use its products. The coalition’s action shows the growing trend of adding extra privacy protections for minors. For example, this trend can be seen in the California Consumer Privacy Act (CCPA) — see Troutman Pepper’s series about CCPA compliance, including provisions on minor privacy protections, available here.
- On May 14, U.S. Secretary of Commerce Gina Raimondo and U.S. Secretary of Homeland Security Alejandro Mayokras co-authored an op-ed in CNBC, detailing the impact of the Colonial Pipeline ransomeware attack and how this attack creates a learning opportunity for organizations to improve their cybersecurity defenses. The op-ed points to an estimate that over $350 million in ransom was paid to attackers in 2020 — a more than 300% increase over the previous year — with an average payment of over $300,000. Moreover, the op-ed noted that according to a 2021 report, the greatest number of victims in 2020 by industry were in manufacturing, professional and legal services, and construction. The co-authors also discussed practice guidelines and linked to a Department of Commerce’s National Institute of Standards and Technology (NIST) guide to help combat ransomeware attacks. In our article here, Troutman Pepper discusses ways business leaders can reduce their organizations’ cyber risks.
- On May 12, President Joe Biden signed an executive order intended to enhance U.S. cybersecurity practices and protect federal government systems. The executive order calls for collaboration between the federal government and the private sector to confront “persistent and increasingly sophisticated malicious cyber campaigns” that threaten U.S. security. Some specific steps the executive order highlights include:
- Creating a standardized playbook for federal responses to cyber incidents;
- Establishing a “Cybersecurity Safety Review Board” of public and private-sector officials, which should convene after major cyber attacks to provide analysis and recommendations; and
- Improving the security of software sold to the government, including by requiring developers to share certain security data with the public.