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 June 26, the Bank for International Settlements released its Annual Economic Report 2022, arguing that global monetary systems should be built upon central bank digital currencies (CBDCs), not cryptocurrencies. For more information, click here.

  • On June 23, the Federal Trade Commission (FTC) proposed a new and historic federal regulation specific to car dealers to address concerns of consumer deception in the sales process. The proposed Motor Vehicle Trade Regulation Rule would:

    • Require price advertising to be based on a standard formula for presenting the “Offering Price” for a vehicle;

    • Require new paperwork in the sales process to confirm that any optional “add-on” products included in a sale are purchased voluntarily with the “Express, Informed Consent” of the consumer; and

    • Prohibit a laundry list of specific kinds of misrepresentations in the sales process.

The commissioners approved the proposal in a 4-1 vote, garnering the support of three Democratic appointees and one Republican appointee, which bodes well for the rule’s final adoption. The FTC seeks comments on the proposed rule within 60 days of the rule’s official publication in the Federal Register. For more information, click here.

  • On June 24, the Consumer Financial Protection Bureau (CFPB or Bureau) announced that it will amend Regulation V, which implements the Fair Credit Reporting Act (FCRA), to address recent legislation that assists consumers who are victims of trafficking. This final rule establishes a method for victims of trafficking to submit documentation to consumer reporting agencies, including information identifying any adverse item of information about the consumer that resulted from certain types of human trafficking, while also prohibiting consumer reporting agencies from furnishing a consumer report containing the adverse item(s) of information. As mandated by the National Defense Authorization Act for Fiscal Year 2022, the Bureau is taking this action to assist consumers who are victims of trafficking in building or rebuilding financial stability and personal independence. For more information, click here.

  • On June 23, the Federal Reserve Board released the results of its annual bank stress test, which showed that banks continue to have strong capital levels, allowing them to continue lending to households and businesses during a severe recession. All banks tested remained above their minimum capital requirements, despite total projected losses of $612 billion. Under stress, the aggregate common equity capital ratio — which provides a cushion against losses — is projected to decline by 2.7% to a minimum of 9.7%, which is still more than double the minimum requirement. For more information, click here.

  • On June 22, the CFPB took “the first step toward addressing credit card company penalty policies costing consumers $12 billion each year, starting by looking at excessive late fees.” In an Advance Notice of Proposed Rulemaking, the CFPB asks for information on the Federal Reserve Board of Governors’ 2010 immunity provision for excessive late fees that allows credit card companies to escape enforcement scrutiny. The CFPB seeks data about credit card late fees and late payments, assessing whether those fees are “reasonable and proportional.” It is also requesting data about card issuers’ revenue and expenses, the potential deterrent effect of late fees, and the role late fees play in credit card companies’ profitability. For more information, click here.

  • On June 22, the Office of Information and Regulatory Affairs released the Spring 2022 Unified Agenda of Regulatory and Deregulatory Actions. The report, which includes contributions related to the Securities and Exchange Commission, lists short- and long-term regulatory actions that administrative agencies plan to take. For more information, click here.

  • On June 21, the Department of Justice (DOJ) filed a lawsuit and a settlement framework with Meta Platforms, Inc. (previously known as Facebook) to resolve allegations that Meta’s advertising placement algorithms discriminate against Facebook users based on their race, color, religion, sex, disability, familial status, and national origin in violation of the Fair Housing Act. The DOJ action stemmed directly from the discrimination charge filed by HUD against Facebook in 2019. For more information, click here.

  • On June 21, the Federal Deposit Insurance Corporation (FDIC) issued a notice of proposed rulemaking, applicable to all insured depository institutions, to increase initial base deposit insurance assessment rates by 2 basis points, beginning with the first quarterly assessment period of 2023. The FDIC concurrently adopted an amended restoration plan, which incorporates the increase in initial base assessment rates to raise the reserve ratio to the minimum threshold of 1.35% by the September 30, 2028 statutory deadline. The proposed assessment rate schedules would remain in effect unless and until the reserve ratio meets or exceeds 2% to support growth in the deposit insurance fund in progressing toward the FDIC’s long-term goal of a 2% designated reserve ratio. For more information, click here.

  • On June 17, the CFPB Director Rohit Chopra announced that the CFPB intends to “move away from highly complicated rules” in favor of “simpler and clearer rules.” As part of this effort, the CFPB will “dramatically [increase] the amount of guidance it [provides] to the marketplace,” while intending such guidance to be simple and straight forward. For more information, click here.

  • On June 15, in a keynote address at the Consumer Federation of America’s 2022 Consumer Assembly, CFPB Deputy Director Zixta Martinez squarely took aim at “rent-a-bank schemes” in some of the first (if not the first) such comments by a senior CFPB official. Historically, the CFPB confines itself to “true lender” litigation against participants in high-rate programs involving Native American tribal parties (and not banks) already challenged by state enforcement authorities. We view Deputy Director Martinez’s comments as potentially signaling more widespread pursuit of this theory by the CFPB. For more information, click here.

State Activities:

  • On June 22, Pennsylvania Attorney General Josh Shapiro announced, as part of a coalition of 46 attorneys general, a $1.25 million multistate settlement with Florida-based Carnival Cruise Line (Carnival), stemming from a 2019 data breach involving the personal information of 180,000 Carnival employees and consumers nationwide. While Carnival publicly reported the breach in March 2020, notifications sent to attorneys general offices stated that Carnival first became aware of suspicious email activity in May 2019 — 10 months before Carnival reported the breach. “When personal data is exposed to bad actors, it’s essential that consumers are notified as quickly as possible,” said AG Shapiro. “Added delays increase the possibility of that personal data being used for nefarious purposes.” For more information, click here.

  • On June 21, Connecticut Attorney General William Tong and Department of Consumer Protection Commissioner Michelle Seagull advised homeowners interested in residential solar panels to do careful research and be wary of misleading marketing and high-pressure sales tactics by solar companies. Attorney General Tong and Commissioner Seagull “warned consumers to pay particular attention to: whether their home gets adequate sun exposure to justify the solar panel investment, whether their current roof will need replacement during the projected life of the solar panels, how tax credits and refunds work, the effect solar panels may have on their home’s value, and how selling their home would be affected if leasing solar panels.” For more information, click here.

  • On June 8, the New York State Department of Financial Services (NYDFS) issued new guidance on issuing U.S. dollar-backed stablecoins, establishing first-of-its-kind state standards for USD-backed stablecoins issued by entities subject to NYDFS regulation. Informal policies have been in place since 2018, but NYDFS Superintendent Adrienne A. Harris believes this new guidance “creates clear criteria for virtual currency companies looking to issue USD-backed stablecoins in New York.” For more information, click here.

Privacy and Cybersecurity Activities:

  • On June 23, the House Subcommittee on Consumer Protection and Commerce unanimously passed an amended draft of the American Data Privacy and Protection Act (ADPPA). This legislation would create a comprehensive federal privacy regime and would preempt most existing state privacy laws. The ADPPA now moves to the House Committee on Energy and Commerce, which will consider this legislation next month. If passed by the House, this legislation may face significant challenges in the Senate where key leadership members have indicated that the legislation’s current version would not advance. For more information, click here.

  • On June 21, President Biden signed the State and Local Government Cybersecurity Act of 2021 (S.2520), which updates the Homeland Security Act and directs the Department of Homeland Security to improve information sharing and coordination with state, local, and tribal governments. This legislation encourages federal cybersecurity experts to share information regarding cybersecurity threats, vulnerabilities, and breaches, as well as resources to prevent and recover from cyberattacks. The law also builds on previous efforts by the Multi-State Information Sharing and Analysis Center (MS-ISAC) to prevent, protect, and respond to future cybersecurity incidents. For more information, click here.