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 January 13, the Federal Trade Commission (FTC) announced that an investment advice company agreed to a proposed court consent order, requiring it to refund more than $1.2 million to consumers and pay a $500,000 civil penalty for deceiving consumers with false claims about their services. The case marks the first time that the FTC has collected civil penalties against a company that received the “notice of penalty offenses” for money-making opportunities sent in October 2022 and the first civil penalties for violations of the Restore Online Shoppers’ Confidence Act. For more information, click here.
  • On January 13, the Federal Reserve Board (Fed) released results of a survey of senior financial officers at banks about their strategies and practices for managing reserve balances. The Fed uses the Senior Financial Officer Survey to obtain information about deposit pricing and behavior, bank liability management, the provision of financial services, and reserve management strategies and practices. For more information, click here.
  • On January 13, the Fed announced preliminary financial information, indicating that the Federal Reserve Banks had estimated net income of $58.4 billion in 2022. The 2022 audited Reserve Bank financial statements are expected to be published in coming months and may include adjustments to these preliminary unaudited results. For more information, click here.
  • On January 12, the Bank for International Settlements issued a bulletin, addressing the recent high-profile failures of crypto firms that have reignited the debate on the appropriate policy response to address the risks in crypto. The bulletin also discusses the “shadow financial” functions enabled by crypto markets, which share many of the vulnerabilities of traditional finance. For more information, click here.
  • On January 12, the Securities and Exchange Commission (SEC) filed a civil enforcement action against cryptocurrency lender Genesis Global Capital (Genesis) and cryptocurrency exchange Gemini Trust Company (Gemini), alleging the companies’ collaborative offering of an interest-bearing cryptocurrency deposit product known as “Gemini Earn” constituted an unregistered offer and sale of securities in violation of federal securities laws. In November 2022, Genesis announced that it will prohibit retail investors from withdrawing their cryptocurrency deposits from Gemini Earn accounts due to liquidity risks. According to the SEC, at the time Genesis announced its decision to pause withdrawals, the company held approximately $900 million in investor assets from approximately 340,000 Gemini Earn investors. Notably, the SEC alleged Genesis generated the revenue necessary to provide interest payments to Gemini Earn investors by lending the investors’ cryptocurrency deposits to accredited institutional investors at a higher interest rate than it paid to Gemini Earn investors. For more information, click here.
  • On January 12, Chairman of the House Financial Services Committee Patrick McHenry (R-NC) announced the creation of a Digital Assets, Financial Technology, and Inclusion Subcommittee led by Rep. French Hill (R-AR). The scope of the subcommittee’s jurisdiction will include, among other things, certain inclusion and risk prevention objectives, such as:
    • Providing clear rules of the road among federal regulators for the digital asset ecosystem;
    • Overseeing the operations and policy development with respect to the Office of Terrorism Financial Intelligence;
    • Overseeing the policy development at the International Financial Institutions; and
    • Identifying the best practices and policies that continue to strengthen diversity and inclusion within the national security and international finance industry.

    For more information, click here.

  • On January 12, the U.S. Department of Justice (DOJ) announced that it reached an agreement to resolve redlining allegations against a Los Angeles-based bank. Under the terms of the proposed consent order, the bank will pay more than $31 million to resolve the allegations that it engaged in a pattern or practice of redlining in violation of the Fair Housing Act and the Equal Credit Opportunity Act. For more information, click here.
  • On January 11, the Consumer Financial Protection Bureau (CFPB) proposed a rule to establish a public registry of supervised nonbanks’ terms and conditions in “take it or leave it” form contracts that claim to waive or limit consumer rights and protections, such as bankruptcy rights, liability amounts, or complaint rights. In some cases, terms and conditions in nonnegotiable form contracts mislead consumers into believing the terms or conditions are legally enforceable. Under the proposed rule, nonbanks subject to the CFPB’s supervisory jurisdiction will need to submit information on terms and conditions in form contracts they use that seek to waive or limit individuals’ rights and other legal protections. That information will be posted in a registry and open to the public, including to other consumer financial protection enforcers. For more information, click here.
  • On January 11, the CFPB reached a settlement in its lawsuit against a law firm for illegal debt collection practices. If approved by the court, the proposed settlement will prohibit the firm from filing any new lawsuit against a consumer unless it has specific documents supporting the debt and certifies that an attorney reviewed those documents. The order will also require the company to dismiss any pending lawsuit where it cannot satisfy these requirements. The firm must also pay a penalty of $100,000 to be deposited into the CFPB’s victims relief fund. For more information, click here.
  • On January 10, the FTC announced that it will send payments totaling more than $2.9 million to 20,402 people who paid thousands of dollars for a Warrior Trading’s investment programs. The company made misleading and unrealistic claims to sell a day trading “system” that failed to pay off for most customers. For more information, click here.
  • On January 9, the DOJ announced that under a settlement agreement with Meta Platforms, Inc., the parties reached an agreement on the Variance Reduction System (VRS) compliance metrics. These metrics intend to reduce variances in the delivery of housing ads for sex and estimated race/ethnicity so that the actual audience that sees an ad will more closely reflect the eligible target audience. For more information, click here.
  • On January 6, a U.S. federal district court granted Coinbase, Inc.’s (Coinbase) motion to compel arbitration of a class-action lawsuit in which the plaintiffs alleged Coinbase negligently facilitated the exchange of GYEN, a stablecoin offered by Japan-based company GMO Trust (GMO). According to the plaintiffs, GMO assured investors that GYEN was pegged to the Japanese yen at a one-to-one rate although GMO and Coinbase were allegedly aware that GYEN’s peg to the Japanese yen was prone to break. In response to Coinbase’s motion to compel arbitration, the plaintiffs argued that delegation clause contained in Coinbase’s user agreement was unconscionable. The delegation clause vested the arbitrator with exclusive authority to resolve disputes arising out of the interpretation or application of the arbitration clause contained in Coinbase’s user agreement. The court concluded that the delegation clause was neither substantively unconscionable nor procedurally unconscionable for two reasons: (1) Coinbase was not the plaintiffs’ only option for cryptocurrency services, and (2) the delegation clause itself did not contain unfair terms that were one-sided or that would otherwise “shock the conscience.” For more information related to the court’s opinion granting Coinbase’s motion to compel arbitration, click here. For more information related to the plaintiffs’ class-action complaint, click here.
  • On January 6, the FTC announced that it adjusted the maximum civil penalty dollar amounts for violations of 16 provisions of law the FTC enforces, as required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. The act directs agencies to implement annual inflation adjustments based on a prescribed formula. The new maximum civil penalty amounts will become effective on January 11, 2023. For more information, click here.

State Activities:

  • On January 11, California Attorney General Rob Bonta, along with 21 other state attorneys general, filed an amicus brief in the U.S. Supreme Court in support of the Biden administration’s student loan forgiveness plan. The states argue in the brief that the secretary of education acted within his statutory authority when he targeted debt cancellation for lower-income borrowers affected by the COVID-19 pandemic. Bonta underscored his support for the plan, stating, “The historic cancellation of federal student loan debt will ease the burden for millions of Californians weighed down by the cost of their higher education dreams…and I urge [the Supreme Court] to allow the Department of Education to begin providing this sorely needed measure of relief.” For more information, click here.
  • On January 10, the New York Department of Financial Services announced a series of proposals released by New York Governor Kathy Hochul, aimed at building a stronger health care system for the state’s residents. The proposals will modify the cost and delivery of care so that no New Yorker will not “have to choose between their health and their financial security.” Among the changes discussed by Governor Hochul in her State of the State Address is a plan to amend the state’s Consumer Credit Fairness Act to cover medical debt. For more information, click here.
  • On January 6, the California Department of Financial Protection and Innovation (DFPI) issued notice of modifications to its proposed regulations under the Student Loan Servicing Act (SLSA). DFPI released the first iteration of its proposed regulations in early September 2022, seeking to implement the SLSA and clarify the Student Loans: Borrower Rights Law, which became effective in the state on January 1, 2021. The proposed amendments to the regulations come after DFPI’s consideration of public comments on the regulations initially proposed and include, among other things: (1) revision of the definition of “education financing products” to include “private education loans,” as opposed to “private loans,” to make the regulations more consistent with the Truth in Lending Act; (2) revision of the definition of “federal student loan” to better sync with the definition of the term as used in the Higher Education Act; (3) revision of the definition of “installment contract” to list the manner in which the money to be repaid may be lent, which will ensure that installment contracts fall within the definition, regardless of how the contract is structured; and (4) revision of the time zone in which a payment must be received to be considered an on-time payment to Pacific Time, which will protect California borrowers. The comment period for the revised proposed regulations will end on January 26, 2023. For more information, click here.
  • On January 4, Colorado Attorney General Phil Weiser announced that his office had reached settlements with Bellco and Canvas credit unions, which will provide $4 million in refunds of unearned guaranteed automobile protection (GAP) premiums to consumers that the credit unions failed to provide previously. For more information, click here.
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Photo of Ethan G. Ostroff Ethan G. Ostroff

Ethan Ostroff’s practice focuses on financial services litigation and consumer law compliance counseling. Ethan is part of the firm’s national practice representing consumer-facing companies of all types in defense of individual and class action claims and counseling them on compliance with federal and

Ethan Ostroff’s practice focuses on financial services litigation and consumer law compliance counseling. Ethan is part of the firm’s national practice representing consumer-facing companies of all types in defense of individual and class action claims and counseling them on compliance with federal and state laws.

Photo of Elizabeth Briones Elizabeth Briones

Elizabeth is an associate in the Consumer Financial Services practice who represents businesses large and small – from corporations to local partnerships. She is an experienced litigator with a background in complex matters ranging from corporate contract disputes, premises liability, negligence, fraud, and…

Elizabeth is an associate in the Consumer Financial Services practice who represents businesses large and small – from corporations to local partnerships. She is an experienced litigator with a background in complex matters ranging from corporate contract disputes, premises liability, negligence, fraud, and other business torts. She has appeared in state, federal, and multidistrict litigation.

Photo of Addison Morgan Addison Morgan

Addison is an associate in the firm’s nationally recognized Consumer Financial Services Practice Group. He has represented several of the nation’s preeminent financial institutions in litigation arising under the Fair Credit Reporting Act (FCRA), the Telephone Consumer Protection Act (TCPA), the Fair Debt…

Addison is an associate in the firm’s nationally recognized Consumer Financial Services Practice Group. He has represented several of the nation’s preeminent financial institutions in litigation arising under the Fair Credit Reporting Act (FCRA), the Telephone Consumer Protection Act (TCPA), the Fair Debt Collection Practices Act (FDCPA), the FTC Holder Rule, and other consumer protection state analogs.

Photo of Thailer Buari Thailer Buari

Thailer is an attorney in the firm’s Consumer Financial Service practice, where he represents clients in consumer law, business disputes, and commercial litigation. Thailer manages cases from inception to trial, focusing on all aspects of the litigation process, including case development, settlement negotiations…

Thailer is an attorney in the firm’s Consumer Financial Service practice, where he represents clients in consumer law, business disputes, and commercial litigation. Thailer manages cases from inception to trial, focusing on all aspects of the litigation process, including case development, settlement negotiations, legal research and analysis, document review, motions hearings, and mediations.

Photo of Jed Komisin Jed Komisin

Jed defends clients engaged in civil litigation. He has significant courtroom experience and works with his clients to find comprehensive solutions to their legal issues.

Photo of Alan D. Wingfield Alan D. Wingfield

Alan Wingfield helps consumer-facing clients navigate compliance, litigation and regulatory risks posed by the complex web of state and federal consumer protection laws. He is a trusted advisor and tireless advocate, helping clients develop practical compliance and dispute-resolution strategies.