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:
- On January 2, the Consumer Financial Protection Bureau (CFPB) released an annual report that details improvements and deficiencies in the nationwide consumer reporting agencies’ responses to consumer complaints transmitted by the CFPB. The report includes considerations for the nationwide consumer reporting companies to improve compliance with consumer financial protection laws. For more information, click here.
- On December 27, 2022, investors of Gemini’s interest-bearing crypto deposit product Gemini Earn filed a class-action lawsuit against Gemini and its founders Tyler and Cameron Winklevoss, alleging Gemini failed to register the Gemini Earn product as a security in violation of the Securities Exchange Act, and Gemini fraudulently misrepresented pertinent information relating to the Gemini Earn product. In November 2022, Gemini announced its decision to pause consumer withdrawals on its Gemini Earn product. Notably, through a lending partnership with now-bankrupt crypto brokerage firm Genesis Global Capital LLC, the complaint alleges Genesis entrusted all “Gemini Earn investors’ crypto assets” to Genesis. For more information, click here.
- On December 22, 2022, the CFPB issued an order against an international remittance company for multiple violations of the requirements governing electronic money transfers, including failing to refund customers after the company made money transfer errors. The CFPB found the company failed to comply with many Electronic Fund Transfer Act requirements, including failing to provide accurate disclosures to senders. The agency order requires the company to bring its business practices into compliance with the law, to reimburse harmed consumers, and to pay a $700,000 penalty. For more information, click here.
- On December 22, 2022, the Federal Reserve Bank of Boston (Boston Fed) and the Massachusetts Institute of Technology (MIT) announced the conclusion of Project Hamilton — a two-year collaborative project that analyzed the technical aspects of a hypothetical U.S. central bank digital currency (CBDC). According to Boston Fed Executive Vice President Jim Cunha, Project Hamilton focused on better understanding the capabilities and limitations of different technologies potentially used to manage and transfer CBDCs. For more information, click here.
- On December 21, 2022, the Federal Reserve Board issued technical updates to its policy governing the intraday credit provision in accounts at Federal Reserve banks. In particular, the updates include a new rule, establishing settlement times for debits and credits to institutions’ Federal Reserve accounts for certain transactions. The updates streamline the settlement process and shorten the time needed for debits and credits to settle. For more information, click here.
- On December 30, 2022 former District of Columbia Attorney General Karl Racine secured a $3.5 million settlement from Grubhub Holdings, Inc. and Grubhub, Inc. (Grubhub) for unlawfully charging customers hidden fees and using deceptive marketing tactics to increase its profits. The AG sued Grubhub in March 2022, alleging violations of D.C.’s Consumer Protection and Procedures Act. The settlement includes an $800,000 civil penalty. Additionally, Grubhub must take certain actions to prevent any future consumer law violations, including prominently displaying a disclosure that additional fees may apply at checkout and itemizing each fee charged to a consumer. For more information, click here.
- On December 28, 2022 the New York Department of Financial Services (DFS) released its revised proposed amendments to 23 NYCRR 1 — the state’s debt collection regulation. Initially proposed in late October 2022, the amendments intend to change several provisions of the current regulation related to initial disclosure requirements, disclosures pertaining to the statute of limitations, substantiation requirements, and telephone and electronic communications. The revised proposed amendments include, among others:
- A prohibition against excessively communicating or attempting to communicate with a consumer. Also, a collector communicating by phone is presumed to comply with the prohibition if the collector makes no more than one completed call and three attempted calls to a consumer per seven-day period per alleged debt.
- A requirement that within five days of an initial consumer communication about the collection of any debt, the collector must provide the consumer clear and conspicuous written notification of information about the debt, such as: (1) validation information mandated by Regulation F (with exceptions), (2) the reference date used by the collector to determine the itemization date, and (3) the account number (for revolving or open-end credit accounts). The collector must also provide notice that the consumer has the right to dispute the validity of the date, along with instructions for how the consumer may do so.
- A requirement that a collector clearly and conspicuously include in all consumer communications a disclosure notice that the statute of limitations on the debt is or may be expired, and, among other things, notify the consumer that suing on an expired debt is a Fair Debt Collection Practices Act violation.
DFS also released a copy of its assessment of the initial round of public comments, and the comment period for the most recent amendments is open until February 13. For more information, click here.
- From December 27 through December 30, 2022, the California Department of Financial Protection and Innovation (DFPI) issued 32 separate consumer alerts, concerning certain crypto brokers and websites that “appear to be engaged in fraud.” The DFPI released the consumer alerts in response to complaints it received from retail investors who alleged they were victims of various crypto investment scams that resulted in individual consumer losses of $2,000 to as much as $1.2 million. The consumer complaints received by the DFPI contained allegations primarily related to pig-butchering scams, which involve an individual creating a fake identity online to build fake relationships, or the advance fee scam, which entails a fraudster requesting a large amount of money from the consumer to process fake withdrawals from the fraudster’s scam site. For more information, click here.