Like most industries today, Consumer Finance Services businesses continue to be significantly impacted by COVID-19. To help you keep abreast of relevant activities, below find a breakdown of some of the biggest legislative and regulatory 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 May 12 and May 10, the House Financial Services and Senate Banking Committees, respectively, held hearings with Financial Stability Oversight Council (FSOC) Chairwoman Secretary Yellen to discuss FSOC’s annual report to Congress. Digital assets were front and center, particularly the need for a federal regulatory framework for stablecoins. For more information, click here.
  • On May 11, the U.S. Senate voted 51-50 to confirm Alvaro Bedoya as a member of the Federal Trade Commission, requiring Vice President Kamala Harris to cast the tie-breaking vote. Bedoya gives Democrats a 3-2 majority at the consumer protection agency. For more information, click here.
  • On May 9, the Consumer Financial Protection Bureau (CFPB) published an advisory opinion to affirm that the Equal Credit Opportunity Act bars lenders from discriminating against customers after they have received a loan, not just during the application process. For more information, click here.
  • On May 9, the Board of Governors of the Federal Reserve System issued its May 2022 Financial Stability Report, which included emphasizing that stablecoins are an area of risk in the current financial system and discussing central bank digital currencies (CDBC), noting the “Federal Reserve does not intend to proceed with issuance of a CBDC without clear support from the executive branch and from the Congress, ideally in the form of a specific authorizing law.” For more information, click here.
  • On May 6, the CFPB released its Fair Lending Report for 2021. As in 2020’s report, published last year, the CFPB shows that its focus remains on what it characterizes as “financial inclusion, racial and economic equity, and fair competition.” The 2021 report also makes several prominent mentions of the use of artificial intelligence and machine learning. For more information, click here.
  • On May 3, the Federal Housing Finance Agency announced that enterprises Fannie Mae and Freddie Mac will require lenders to use the Supplemental Consumer Information Form (SCIF) as part of the application process for loans that will be sold to the enterprises. The SCIF intends to collect information about the borrower’s language preference, if any, and on any homebuyer education or housing counseling the borrower received, so lenders can better understand borrower needs during the home buying process. For more information, click here.

State Activities:

  • On May 13, Arizona Attorney General Mark Brnovich announced a consent judgment against the owner and manager of a group of debt collection businesses. The judgment permanently bars the owner “from participating in any debt collection activities,” requires him to “pay more than $1.6 million for consumer restitution,” and “includes up to $900,000 in civil penalties.” The attorney general’s office alleged the businesses “called consumers and made false claims and threats, convincing people to pay debts they had no authority to collect.” The businesses allegedly impersonated law enforcement officers, government officials, process servers, and law firm personnel to scare or intimidate consumers into paying alleged debts. For more information, click here.
  • On May 13, New York Attorney General Letitia James issued a consumer alert providing “guidance to protect the privacy of individuals seeking abortion care and prevent unwanted digital tracking and data sharing.” The alert indicates that “online platforms and consumer apps, like those widely used to track fertility and menstrual cycles, have been collecting and sharing consumers’ personal information,” and this “information may then be used against individuals seeking abortion care or those who help them without their awareness.” State Senator Liz Krueger states, “I am working with Attorney General James and my colleagues on legislation to enhance privacy protections, and commend the attorney general for taking this proactive step and providing patients with valuable information about how to better secure their personal information.” For more information, click here.
  • On May 12, California Attorney General Rob Bonta issued a statement on the Los Angeles Superior Court’s decision to uphold the constitutionality of Senate Bill 10 (SB 10), which “allows local governments to rezone transit-rich areas or urban infill sites for denser housing, irrespective of existing zoning restrictions.” Attorney General Bonta stated, “Laws like SB 10 are essential to address California’s housing shortage and affordability crisis, providing local governments with an important tool to increase housing supply in their communities.” Attorney General Bonta went on to refer homeowners and tenants to his Housing Strike Force and Housing Portal — created last November. For more information, click here.
  • On May 12, the Maryland Commissioner of Financial Regulation issued a notice titled, “Industry Advisory Regulatory Guidance,” that interprets a federal appellate court decision and directs lenders and servicers to review their practices in charging consumer borrowers loan payment fees. In the notice, the commissioner warns that affected regulated entities should consider whether refunds may be warranted under the new interpretation. For more information, click here.
  • On May 3, the New York State Senate passed S5473D, which will apply immediately in all actions “in which a final judgment of foreclosure and sale has not been enforced.” (See S5473D at Section 10.) This means that the new law applies retroactively, affecting future foreclosure actions and existing foreclosures, including those in which a judgment of foreclosure and sale has been entered, but the auction has not yet occurred. Essentially, the bill seeks to overturn the New York Court of Appeals’ well-reasoned decision in Freedom Mtge. v. Engel, 37 N.Y.3d 1 (2021), and it retroactively annuls lenders’ longstanding right to revoke their option to accelerate mortgage loans after default. The bill — which we anticipate Governor Hochul to sign as passed — sets out to accomplish this by amending several statutes that govern foreclosures under New York law. For more information, click here.

Privacy and Cybersecurity Activities:

  • On May 10, Connecticut Governor Ned Lamont signed an act concerning personal data privacy and online monitoring, making Connecticut the fifth state in the country to enact a comprehensive privacy regime. This legislation closely resembles the comprehensive laws adopted in Virginia and Colorado and will take effect on July 1, 2023. The Connecticut law does not include a private right of action and provides a temporary 60-day right to cure that sunsets on December 31, 2024. For more information click here.
  • On May 11, the Promoting Digital Privacy Technologies Act (H.R. 847) passed the U.S. House of Representatives by a vote of 401-19. The act seeks “to support research on privacy enhancing technologies and promote responsible data use.” Notably, this legislation would require the National Institute of Standards and Technology (NIST) director to work with private, public, and academic stakeholders to develop “privacy enhancing technologies” and “voluntary, consensus-based technical standards, guidelines, methodologies, procedures, and processes” aimed at increasing the “integration of privacy enhancing technologies in data collection, sharing, and analytics performed by the public and private sectors.” H.R. 847 will now head to the U.S. Senate Committee on Commerce, Science, and Transportation. For more information, click here.