January 2024

On January 15, the American Arbitration Association (AAA) issued amended Mass Arbitration Supplementary Rules and new Consumer Mass Arbitration and Mediation Fee Schedules (collectively, the New Rules). The New Rules will apply to all mass arbitration cases filed on or after January 15, but not to any mass arbitrations filed prior to that date. The New Rules aim to reduce friction and enhance process efficiency. However, unless the New Rules are supplemented by a well-constructed pre-dispute arbitration agreement, they will not solve the principal problems posed by mass arbitrations.

According to a recent year-in-review report by WebRecon, reversing the trend of the last two years, filings under the Telephone Consumer Protection Act (TCPA) increased in 2023 as compared to 2022. Likewise, complaints filed with the Consumer Financial Protection Bureau (CFPB) were up for the year. Fair Credit Reporting Act (FCRA) and Fair Debt Collection Practices Act (FDCPA) filings, however, were both down from the previous year. In all, the FCRA maintained its lead in the number of filings, followed by the FDCPA, and with the TCPA in third place.

The debt purchaser in In re McIntosh argued that because it was enforcing a debt that was not listed correctly on the debtor’s bankruptcy schedules, it was entitled to assume the debt had not been discharged. The U.S. Bankruptcy Court for the Southern District of Florida disagreed and entered an award of sanctions in the total amount of $64,686.93 — including $10,000 for emotional distress and over $21,000 in punitive damages.

On January 23, the Chairman of the National Credit Union Administration (NCUA) released a letter outlining its supervisory priorities for the new year. While the organization acknowledged that the credit union system had remained largely stable during 2023, it observed growing signs of financial strain on balance sheets. Specifically, the “rise in interest rate and liquidity risks resulted in an increase in the number of composite CAMELS code 3, 4, and 5 credit unions. Inflation and interest rates are affecting household budgets, which could lead to an increase in credit risk in future quarters.”

On January 9, a group of five bi-partisan South Carolina Senators introduced Bill 910, which would, among other things, require persons (non-bank lenders) providing “consumer installment loans” or “deferred presentment loans” to conduct ability to repay (ATR) analysis. Insured state and federally chartered banks and credit unions are exempt from the provisions of the proposed law, which is currently before the Committee on Labor, Commerce, and Industry for review.

Yesterday, the Consumer Financial Protection Bureau (CFPB or Bureau) issued a proposed rule with request for public comment to prohibit covered financial institutions from charging nonsufficient funds fees (NSF) for payment transactions that are instantaneously declined. The proposed rule would treat fees for transactions declined in real time to be unlawful under the Consumer Financial Protection Act.

On January 18, a court in the Eastern District of Wisconsin denied class certification in a Telephone Consumer Protection Act (TCPA) case concluding that the factual issue of whether the proposed class members had suffered an injury-in-fact sufficient to confer Article III standing based on the receipt of a ringless voicemail was an individualized issue that would predominate over common issues.

As the financial landscape continues to evolve, financial institutions and fintech businesses, including payment processors and money transmitters, are facing increased regulatory scrutiny and heightened consumer expectations. Our dedicated Payments team is at the forefront of these changes, actively addressing the full spectrum of legal challenges in this intricate and ever-evolving sector.