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 March 2, Chairman of the House Financial Services Committee Patrick McHenry (R-NC) and Senator Cynthia Lummis (R-WY) issued a letter to the Board of Governors of the Federal Reserve System (Fed), the Office of Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration (NCUA), voicing their collective concerns on the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin 121 (SAB 121). SAB 121 directed companies that custody digital assets — whether directly or indirectly — to recognize a consumer’s digital assets as a liability and a corresponding offset on their balance sheets. Historically, assets held in a custodial capacity are not reported as either assets or liabilities on the custodian’s balance sheet. The federal agencies that received the letter must provide a response to certain questions by March 16. For more information, click here.
  • On March 2, the Consumer Financial Protection Bureau (CFPB) published a new report, analyzing the financial profiles of Buy Now, Pay Later borrowers. While many Buy Now, Pay Later borrowers use the product without noticeable indications of financial stress, the report finds that Buy Now, Pay Later borrowers will more likely become active users of other types of credit products like credit cards, personal loans, and student loans. They also will more likely exhibit measures of financial distress than non-users. For example, Buy Now, Pay Later borrowers are more likely to be highly indebted or have revolving balances or delinquencies on their credit cards compared to consumers who do not use Buy Now, Pay Later products. Buy Now, Pay Later borrowers also are more likely to use high-interest financial services, such as payday loans, pawn loans, and bank account overdrafts. For more information, click here.
  • On March 2, the Federal Trade Commission (FTC) issued a proposed order, banning online counseling service BetterHelp, Inc. from sharing consumers’ health data, including sensitive information about mental health challenges, for advertising. The proposed order also requires the company to pay $7.8 million to consumers to settle charges that it revealed consumers’ sensitive data with third parties for advertising after promising to keep the data private. For more information, click here.
  • On March 1, Senators Elizabeth Warren (D-MA), Chris Van Hollen (D-MD), and Roger Marshall (R-KS) issued a letter to cryptocurrency exchange Binance and its CEO Changpeng Zhao, alleging that Binance “implemented a series of systems specifically designed to circumvent regulatory oversight and facilitate theft, money laundering, and terrorist financing … .” Critically, the letter requests Binance, among other things, to produce complete copies of all Binance and Binance subsidiary balance sheets from 2017 to the present. For more information, click here.
  • On March 1, the CFPB released a new issue spotlight, examining how the financial products used to deliver public benefits, such as Social Security and unemployment compensation, affect individuals’ ability to fully access the assistance provided through those programs. The issue spotlight outlines how governments often choose to deliver public benefits through financial products, particularly prepaid cards, that may subject recipients to high fees and cut into the amount of funds the consumer receives. For more information, click here.
  • On March 1, while delivering remarks during an Atlantic Council GeoEconomics Center-hosted event, Under Secretary of Treasury for Domestic Finance Nellie Liang revealed that the Central Bank Digital Currency (CBDC) Working Group — established by President Biden’s 2022 digital asset-related executive order — will begin to meet regularly to discuss possible CBDC and other payment innovations. According to Liang, “114 countries … are exploring a CBDC … [and] 11 countries have fully launched CBDCs … .” For more information, click here.
  • On March 1, cryptocurrency exchange Coinbase CEO Brian Armstrong released an op-ed, describing the potential consequences of the United States “falling behind both technologically and politically” by failing to be a leader in the digital asset space. For more information, click here.
  • On February 28, the U.S. Department of Justice (DOJ) announced its sixth redlining settlement under its Combatting Redlining Initiative. This most recent case involves an agreement between the DOJ and Ohio-based Park National Bank to resolve allegations that the bank failed to provide mortgage loans by redlining majority-Black and Hispanic neighborhoods in the Columbus, OH area. Under the terms of the proposed consent order, Park National will pay more than $9 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 February 28, the FDIC Office of Inspector General issued its annual “Top Management and Performance Challenges Facing the Federal Deposit Insurance Corporation” assessment report. The FDIC ranked “supervising risks posed by digital assets” as the third top challenge and noted that “136 FDIC-insured banks have ongoing or planned digital asset activities.” For more information, click here.
  • On February 28, the Financial Crimes Enforcement Network of the U.S. Department of Treasury (FinCEN) issued an alert, warning financial institutions to be vigilant in identifying and reporting check fraud schemes targeting the U.S. Mail after a nationwide surge in such activity. In 2021, FinCEN saw a 23% increase in the number of check fraud-related suspicious activity reports (SARs). This upward trend continued in 2022, when the number of SARs-related check fraud nearly doubled. For more information, click here.
  • On February 28, the FTC and CFPB jointly issued a request for information, seeking public comment on how background screening affects individuals pursuing rental housing in the United States. Specifically, the request asks for information on the use of consumer reports and credit scores, criminal and eviction records, and algorithms in the tenant screening process. For more information, click here.
  • On February 27, the CFPB permanently banned RMK Financial Corporation, which does business as Majestic Home Loans, from the mortgage lending industry by prohibiting RMK from engaging in any mortgage lending activities or receiving remuneration from mortgage lending. In 2015, the CFPB issued an agency order against RMK for, among other things, sending advertisements to military families that led the recipients to believe the company was affiliated with the U.S. government. Despite the 2015 order’s prohibition on these and other actions, the company engaged in a series of repeat offenses, including disseminating millions of mortgage advertisements to military families that deceptively used fake U.S. Department of Veterans Affairs (VA) seals, the Federal Housing Administration (FHA) logo, and other language or design elements to falsely imply that RMK was affiliated with the government. In addition to the ban, RMK will also pay a $1 million penalty to be deposited into the CFPB’s victims’ relief fund. For more information, click here.

State Activities:

  • On March 2, the Wyoming Senate president and the Wyoming House of Representatives speaker signed SF0127. If enacted, the bill (Wyoming Stable Token Act) would establish a Wyoming stable token commission with authority to issue Wyoming stable tokens and retain funds received for issuance of such tokens in a Wyoming stable token trust account to support redemption of Wyoming stable tokens. Notably, the bill would require the commission to maintain 100% of the notional value of all outstanding issued Wyoming stable tokens in the Wyoming stable token trust account. For more information, click here.
  • On March 2, New York Attorney General Letitia James issued new proposed rules designed to protect consumers and small businesses from corporate profiteering. The rules would enhance the enforcement of the state’s current price gouging laws, making it easier to investigate and combat price gouging by setting clear guidelines against price gouging during emergencies. The state’s current price gouging law prevents companies in any stage of the supply chain from capitalizing on a market disruption to increase profits for vital and necessary goods and services. The state’s legislature amended the law in 2020 to imbue the AG with rulemaking authority. The AG initiated the first-ever price gouging rulemaking process this month, and the proposed rules include, among other things, actions to (1) clarify that a price increase of more than 10% during an abnormal market disruption may constitute price gouging; (2) prohibit corporations with large market shares from increasing profit margins during abnormal market disruptions; (3) provide guidelines for companies that rely on dynamic pricing; (4) provide protection for products or services introduced after a market disruption; and (5) clarify what costs a company may claim when setting prices. For more information, click here.
  • On February 28, the California Department of Financial Protection and Innovation (DFPI) announced that it entered into a consent order with an unlicensed Orange County student debt relief company and its owner. The announcement comes as a part of DFPI’s continuing efforts to prevent student loan debt relief companies from engaging in operations that violate the state’s Consumer Financial Protection Law and the Student Loan Service Act. According to DFPI Commissioner Clothilde Hewlett, “These so-called debt relief companies are preying upon the nearly 4 million California consumers with student loans” during a time when there is immense uncertainty surrounding the Biden debt relief plan. The February 28 consent order resolves claims that the Orange County student debt relief company advertised and acquired customers via unsolicited phone calls and falsely represented to borrowers that the company was a part of, or affiliated with, an official government agency. DFPI ordered the company to desist and refrain from unlicensed student loan debt relief servicing and refrain from engaging in unlawful, deceptive, and abusive student loan debt relief practices. Additionally, the order required the company to rescind all debt relief, debt management, or debt consulting service agreements, and provide refunds to California consumers. For more information, click here.
  • On February 28, DFPI issued guidance regarding remote work, as it pertains to California’s Residential Mortgage Lending Act (CRMLA), after discontinuing the COVID-19 state of emergency. The CRMLA does not expressly prohibit employees of a licensee from working at a remote location. Rather, a licensee may authorize an employee to perform limited functions at a remote location not considered a branch office, as long as the location does not have the indicia of a branch office and is not advertised to the public as a business location. Where a mortgage loan originator is working remotely, a branch manager is required to continue to supervise the employee. Under certain CRMLA provisions, DFPI must examine the supervisory activities of a branch manager to ensure that the manager adequately supervises each mortgage loan originator and employee regardless of whether they work at a branch office or remote location. As a part of the guidance, DFPI provides a list of several items it will consider when determining whether a location is adequately supervised. For more information, click here.
  • On February 27, Wyoming Governor Mark Gordon signed HB0284 into law, which will take effect July 1. The bill subsumes debt buyers into the definition of “collection agency,” subjecting debt buyers to regulation by the state’s Collection Agency Board. Accordingly, debt buyers will be required to obtain licenses from the board to conduct collections or act as a debt collector. A “debt buyer” is defined a person who is regularly engaged in the business of purchasing charged-off consumer debt for collection purposes. The act will not affect the validity of any civil action or arbitration filed or commenced by a debt buyer, or any judgment entered in favor of a debt buyer, before the law takes effect. For more information, click here.