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 September 9, the Federal Reserve Board published a paper, describing the landscape of partnerships between community banks and fintech companies. The paper captures insights gathered from extensive outreach with community banks, fintechs, and other stakeholders. The outreach involved discussions focused on the strategic and tactical decisions that support effective partnerships. For more information, click here.
- On September 9, the Consumer Financial Protection Bureau (CFPB) released a report on the agreements signed between credit card issuers and colleges, or organizations affiliated with colleges, finding that the market for college credit cards continued its general trend of decline in 2020. The report also finds that agreements with alumni associations continued to make up the largest part of this market, as defined by the number of agreements, the number of accounts, and the amounts of payments made by issuers to their counterparties. For more information, click here.
- On September 8, the Office of the Comptroller of the Currency (OCC) proposed rescinding certain updated fair lending rules as the agency begins work on drafting a new regulation. Under the proposal, the OCC would go back to the previous 1995 regulations for the Community Reinvestment Act (CRA), a 1977 fair lending law. For more information, click here.
- On September 8, the Federal Trade Commission (FTC) approved final revisions that would bring several rules that implement parts of the Fair Credit Reporting Act in line with the Dodd-Frank Wall Street Reform and Consumer Protection Act. For more information, click here.
- On September 8, the CFPB released new model validation notice (MVN) formats required under Regulation F online. The newly available alternate MVN formats should make it easier to incorporate the MVN into existing systems and to make formatting and other permissible changes by the November 30 effective date for Reg. F. For more information, click here.
- On September 7, the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency announced that they will extend the comment period to October 18 on proposed guidance designed to help banking organizations manage risks associated with third-party relationships, including relationships with financial technology-focused entities. The proposed guidance seeks to assist banking organizations in identifying and addressing the risks associated with third-party relationships and responds to industry feedback requesting alignment among the agencies with respect to third-party risk management guidance. For more information, click here.
- On September 7, the CFPB took action against an income share agreement (ISA) provider for mispresenting its product and failing to comply with federal consumer financial law that governs private student loans. The ISA provider provides students with money to finance their higher education, in the form of ISAs, under which students agree to pay a percentage of their income for a set period of time or until they reach a payment cap. Allegedly, the ISA provider falsely represented that the ISAs are not loans, failed to provide disclosures required by federal law, and violated a prepayment penalty prohibition for private education loans. Under the CFPB’s order, the ISA provider must provide disclosures that comply with federal consumer financial law, eliminate the prepayment penalties, and stop misleading borrowers. For more information, click here.
- On September 7, CFPB Acting Director Dave Uejio issued a statement after the U.S. District Court for the Western District of Texas upheld the Payment Provisions in the CFPB’s 2017 rule on payday, vehicle title, and certain high-cost installment loans. For more information, click here.
- On September 3, the CFPB issued guidance on student loan servicing contracts to borrowers responsible for federal student loan payments in forbearance for more than a year and when some servicers’ contracts end. For more information, click here.
- On September 9, the Virginia State Corporation Commission adopted regulations, implementing laws that protect borrowers by regulating student loan servicers in Virginia. According to a Virginia attorney general press release, the legislature passed “Chapter 26 in Title 6.2 of the Virginia Code and that tasked the SCC with issuing regulations implementing Chapter 26. Chapter 26 protects student borrowers from servicers who would, among other things, engage in unfair or deceptive conduct, misapply loan payments, or misreport information to credit bureaus.” The act also authorizes the Virginia attorney general to bring enforcement actions. For more information, click here.
- On September 10, Texas Attorney General Ken Paxton announced the filing of six lawsuits against school districts alleged as “defying Governor Abbott’s Executive Order GA-38 regarding mask mandates.” According to the AG, Order GA-38 places the governor in charge of the statewide response to the COVID-19 pandemic. For more information, click here.
- On September 10, Washington, D.C. Attorney General Karl Racine announced his office “is partnering with local nonprofit organizations to sponsor three additional in-person STAY DC clinics to help residents navigate the application process so they can get support to pay their rent and utility bills, as many have struggled financially during the COVID-19 pandemic.” Per the press release, “STAY DC is a financial assistance program for District renters and housing providers who are looking for support to cover housing and utility expenses and offset the loss of income. The program is meant to help families settle debts, pay landlords what they are owed and, ultimately, avoid a crisis when the District’s moratorium on eviction proceedings expires later this year.” For more information, click here.
Privacy and Cybersecurity Activities:
- On September 10, the FTC released an advisory reminding individuals that there is still COVID-19 aid available through the federal government and likely through state and local government. While some individuals may receive benefits automatically, others may need to apply. For those applying for COVID-19 benefits, the FTC reminds individuals that the government will not “ask you to pay anything to get COVID-related financial help[;]” anyone who asks for payment and financial or personal information is likely running a scam. For those interested in reading the full alert, click here.
- Earlier in September, a court-appointed special master, handling discovery disputes related to a suit where grocery shoppers claim they can’t wear face coverings due to a medical condition, recommended that the defendants, if they wish, should “conduct a more thorough search of any or all Plaintiffs’ text messages, Facebook accounts and private emails” to a acquire a more in-depth digital record. Access to the plaintiffs’ Facebook accounts includes access to their personal messages — implicating the plaintiffs’ privacy. Grocery store customers argued that the grocery stores’ policy prohibiting shoppers to enter the store without a mask violated their rights under the American’s with Disabilities Act. To read the full opinion, click here.