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:
Privacy and Cybersecurity Activities
- On June 3, the Federal Trade Commission (FTC) provided its annual report to the Consumer Financial Protection Bureau (CFPB) on its 2021 enforcement and related activities regarding the Truth in Lending Act (TILA), Consumer Leasing Act (CLA), and Electronic Fund Transfer Act (EFTA). The report highlights the FTC’s enforcement actions related to the acts and their implementing regulations, including in the areas of automobile purchases and financing, payday lending, credit repair and debt relief, and electronic fund transfer. For more information, click here.
- On June 2, ForUsAll, a San Francisco based 401(k) retirement provider, filed a lawsuit against the Department of Labor relating to the latter’s March 2022 guidance for 401(k) plan fiduciaries considering plan investments in cryptocurrencies. Published by the Department’s Employee Benefits Security Administration, Compliance Assistance Release No. 2022-01 cautions plan fiduciaries to exercise “extreme care” before they consider adding a cryptocurrency option to a 401(k) plan’s investment menu for plan participants. For more information, click here.
- On June 1, the Department of Justice announced the unsealing of an indictment against a former product manager at Ozone Networks, Inc. d/b/a OpenSea (OpenSea) for wire fraud and money laundering concerning a scheme to commit insider trading in non-fungible tokens (NFTs) by using confidential information about what NFTs OpenSea’s homepage planned to feature for his personal financial gain. For more information, click here.
- On May 31, the FTC took action against Financial Education Services and its owners, as well as a number of related companies, for scamming consumers out of more than $213 million. The FTC’s complaint alleges that the company preys on consumers with low credit scores by luring them in with the false promise of an easy fix and then recruiting them to join a pyramid scheme, selling the same worthless credit repair services to others. For more information, click here.
- On June 1, New York lawmakers passed a pair of cryptocurrency-related bills, now pending with Governor Kathy Hochul, which would impose a two-year ban on issuing new permits for cryptocurrency mining operations that meet certain criteria and create a 16-member task force to examine “the effects of the widespread use of cryptocurrencies” along with “the use of digital currencies’ impact on state and local tax receipts.” For more information, click here and here.
- On June 1, the California Department of Financial Protection and Innovation (DFPI) released an invitation for comment on the DFPI’s regulatory approach to crypto asset-related financial products and services, as well as the potential regulation of such products and services under the California Consumer Financial Protection Law (CCFPL). For more information, click here.
- On May 26, the California Supreme Court ruled that the FTC’s “Holder Rule” does not limit the award of attorneys’ fees where a consumer seeks fees from a holder under a state-prevailing party statute. In Pulliam, the court concluded that the FTC did not intend to preempt state laws allowing attorneys’ fee awards. For more information, click here.
- On May 26, North Carolina Attorney General Josh Stein issued a press release, indicating his office had won a permanent ban against an individual and his businesses from offering debt relief, debt settlement, foreclosure assistance, and mortgage loan modification services to North Carolinians. In the lawsuit, Attorney General Stein alleged the defendant “upfront fees for his services from North Carolina consumers. In exchange, he falsely promised that he would reduce people’s mortgage loan payments, get loan forbearance so they could delay making loan repayments, and prevent lenders or mortgage services from foreclosing on customers. However, he failed to provide any of these services.” For more information, click here.
- On May 4, following in the footsteps of President Biden’s recent executive order (Federal EO), California Governor Gavin Newsom issued his own blockchain-related executive order (CA EO), making California the first among the states to endorse a proactive, harmonized approach to regulate blockchain technology. The CA EO assesses how existing state and public institutions may leverage blockchain technology to foster innovation and propel California to the forefront of the emerging digital asset market. The CA EO is founded on two notable objectives: (1) federal and state regulatory harmony and (2) consumer education and scholastic exposure. For more information, click here.
Privacy and Cybersecurity Activities:
- On June 2, Politico Pro announced that federal lawmakers have circulated a draft of comprehensive federal privacy legislation, reportedly pieced together by House Representatives Frank Pallone (D-NJ) and Cathy McMorris Rodgers (R-WA), as well as Senator Roger Wicker (R-MI). The draft bi-partisan bill would provide a private right of action when a “substantial privacy harm” has occurred. A draft of the bill can be found here.
- On June 3, the FTC published a report, finding that consumers have lost more than $1 billion in cryptocurrency to scams since 2021. Most of these cryptocurrency losses involved bogus cryptocurrency investment opportunities, which totaled $575 million in reported losses since January 2021. The report suggests that many of these scams begin on social media. The FTC advises consumers to watch out for anyone who claims they can guarantee profits or big returns by investing in cryptocurrency; people who require you to buy or pay in cryptocurrency; and love interests who want to show you how to invest in cryptocurrency or to send them cryptocurrency. For the report, click here.
- On June 3, the FTC announced it was seeking input on ways to modernize the agency’s business guidance, “.com Disclosures: How to Make Effective Disclosures in Digital Advertising.” First published in March 2013, the FTC seeks guidance on several issues, including the use of sponsored and promoted advertising on social media, the adequacy of online disclosures when consumers must navigate multiple webpages, and whether the current guidance adequately addresses advertising on mobile devices. For the announcement, click here.