To help you keep abreast of relevant activities, below find a breakdown of some of the biggest events at the federal and state levels to impact the Consumer Finance Services industry this past week:

Federal Activities

State Activities

Federal Activities:

  • On September 1, the Consumer Financial Protection Bureau (CFPB) issued the first in a series of reports on the finances of consumers living in rural areas. Focusing on rural Appalachians, the CFPB’s report finds that nearly 24% of rural Appalachians have a medical debt in collections, compared to just 17% nationally. Moreover, rural Appalachians with medical debt collections have over double the rates of delinquency for other credit products compared to those without medical debt collections in each category. For more information, click here.
  • On September 1, the American Arbitration Association (AAA) updated its Commercial Arbitration Rules and Mediation Procedures, concluding a two-year internal review. The amendments provide greater procedural discretion to arbitrators, further streamline expedited arbitrations, change the amount-in-controversy requirements for certain arbitration paths, and provide express confidentiality protections, among other things. For more information, click here.
  • On August 30, House Subcommittee on Economic and Consumer Policy Chair Raja Krishnamoorthi (D-IL) issued letters to four federal agencies (the U.S. Department of the Treasury, Securities and Exchange Commission, Commodity Futures Trading Commission, and Federal Trade Commission) and five digital asset exchanges, requesting information about the steps taken by those agencies and exchanges to combat cryptocurrency-related fraud. For more information, click here.
  • On August 29, the Federal Reserve announced that it narrowed the timing of the FedNow Service launch to mid-year 2023, specifically targeting a production rollout of the service in the May to July timeframe. This further defines the previously communicated 2023 launch window for the anticipated instant payments service and comes as the FedNow pilot program prepares to enter technical testing for the service starting this month. For more information, click here.
  • On August 29, the Federal Bureau of Investigation issued a public service announcement, warning consumer investors of the risks and vulnerabilities of smart contracts, which effectuate transactions on decentralized finance (DeFi) protocols. For more information, click here.
  • On August 29, the U.S. Department of Education announced that it will discharge all remaining federal student loans for borrowers who enrolled in any location of Westwood College (including enrollment in Westwood’s online program) between January 1, 2002 through November 17, 2015 when it stopped enrolling new borrowers in advance of its 2016 closure. The department analyzed the evidence related to Westwood and concluded that the school engaged in widespread misrepresentations about the value of its credentials for attendees’ and graduates’ employment prospects, thus entitling all borrowers who attended during the period described above to a full loan discharge. For more information, click here.
  • On August 26, the Bank Policy Institute (BPI) and the American Bankers Association (ABA) wrote a letter to Office of the Comptroller of the Currency’s (OCC) Acting Chief Michael Hsu in response to the August 10 letter from Senators Elizabeth Warren, Dick Durbin, Bernie Sanders, and Sheldon Whitehouse that addressed the OCC’s interpretive letters, authorizing banks to engage in certain traditional banking activities using modernized technologies. The congressional letter stated that in light of the “recent turmoil in the crypto market, … the OCC’s actions on crypto may have exposed the banking system to unnecessary risk” and asks that the OCC withdraw “existing interpretive letters that have permitted banks to engage in certain crypto-related activities.” The BPI and the ABA letter stated that “the recent events in the crypto market were wholly unrelated to banks’ involvement in the traditional banking activities described in the OCC Interpretive Letters. Thus, their rescission would not enhance the protections of bank investors, consumers, or the financial system in connection with cryptocurrency activities. Rather, rescinding those letters would serve only to undermine banks’ ability to leverage modernized technologies to bring traditional banking products and services to customers in more reliable, safer and more efficient ways.” For more information, click here.

State Activities:

  • On September 1, California legislators passed the Digital Financial Assets Law (AB 2269). If signed by Governor Newsom, the bill would go into effect in January 2025 and require digital asset exchanges and crypto-related companies to acquire an operating license issued by the California Department of Financial Protection and Innovation. For more information, click here.
  • On August 30, California lawmakers passed a unique child privacy measure. The legislation, known as the California Age-Appropriate Design Code Act, explicitly mandates prioritization of the “privacy, safety, and well-being of children over commercial interests” by tech platforms when those interests conflict with users under the age of 18. With this landmark legislation, California lawmakers seek to set the standard for other state legislatures on the issue. For more information, click here.
  • On August 29, Washington State Commissioner of Insurance Mike Kreidler accepted defeat when a superior court judge ruled against a rule, preventing insurers from using consumer credit history to price insurance policies. Though the court found that Kreidler followed the rulemaking procedures under state law, it determined that Kreidler exceeded his authority and held that the practice is legal. Kreidler decided not to appeal the court’s decision. For more information, click here.
  • On August 29, an Illinois resident filed suit against a well-known social media company, alleging that the company failed to disclose its biometric data collection and storage policies. The suit also alleges that the company failed to get express written permission from users before storing the data. The suit, a proposed class action filed in Illinois federal court, claims that the company’s conduct violated the Illinois Biometric Information Privacy Act. For more information, click here.