To keep you informed of recent activities, below are several of the most significant federal and state events that have influenced the Consumer Financial Services industry over the past week:
- On December 30, Reuters reported that the Securities and Exchange Commission (SEC) may notify the 14 asset managers vying to issue a spot Bitcoin ETF that their applications could be approved as early as next week, ahead of a possible January 10 launch. The approval of spot Bitcoin ETFs is expected to bring additional institutional investment into the digital asset industry. Celsius Network, which filed for Chapter 11 protection in July 2022, has scaled back its ambitions after the SEC rejected its plan to earn fees from validating digital asset transactions and start new lines of business. The company’s scaled-back bankruptcy plan also frees up $225 million in digital assets that would have been used to fund the new business lines that were rejected by the SEC. For more information, click here.
- On December 8, the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) filed an amici curiae brief urging the U.S. Court of Appeals for the Fourth Circuit to reverse a district court’s decision finding that furnishers need not investigate indirect disputes involving purely legal questions under the Fair Credit Reporting Act (FCRA). For more information, click here.
- On December 28, Washington Attorney General (AG) Bob Ferguson announced a settlement with a telecommunications company, resolving two investigations that revealed that the company violated the emergency health and safety moratorium that was implemented during the COVID-19 pandemic. More specifically, the AG’s investigations showed that the company disconnected service for 1,099 Washingtonians, despite the governor having issued a proclamation that prevented telecommunications companies from disconnecting customers from landline services. As a part of the agreement, the company will pay $692,250 in penalties and $825,000 in restitution to the affected consumers. Additionally, the company must verify to the AG that it has refunded all reconnection and late fees that it charged customers during the pandemic. For more information, click here.
- On December 28, New York AG Letitia James secured a settlement exceeding $740,000 from an online mental health provider, resolving claims related to the provider’s use of long and burdensome cancellation processes. After investigating the company’s subscription practices, the AG found that the provider required consumers to cancel their subscriptions by email. However, the provider required the consumer to take additional steps (such as completing a multiquestion survey) to effectuate cancellation and, in some instances, required consumers to wait as long as a week for their cancellation requests to be processed. In some cases, where the company’s processing delays crossed over into a new billing cycle, the company charged the consumer for an additional month of service. The AG’s investigation also revealed that the company manipulated online reviews by having its employees complete positive reviews and hide negative reviews. Under the agreement, the provider will pay $200,000 in penalties and $540,162 in restitution. For more information, click here.
- On December 27, the Massachusetts AG’s office announced it sued SpireBit, an allegedly phony digital assets trading firm, for defrauding customers. The lawsuit alleges that the company targeted elderly Russian speakers with an elaborate scam, using phone calls and pop-up ads. For more information, click here.
- Recently, Maryland AG Anthony Brown commended the FTC for passing the Combating Auto Retail Scams (CARS) Rule. Brown, along with 17 other AGs, wrote the FTC in September 2022 in support of the proposed new rules designed to combat illegal tactics aimed at potential car buyers, including bait-and-switch tactics and “hidden junk fees.” The CARS rule, which will take effect on July 30 of this year, prohibits dealers from using inaccurate offers regarding the cost of cars or terms of financing, inaccurate information about the availability of discounts, and misinformation about the actual availability of the vehicles to mislead consumers. The rule also prohibits certain so called “hidden junk fees.” For more information, click here.
- The Department of Financial Protection and Innovation (DFPI) is hosting a virtual informal listening session to hear from external stakeholders regarding the Digital Financial Assets Law (DFAL). The listening session will be held on January 8, from 10 a.m. to 12 p.m. PST. If you would like to attend, email firstname.lastname@example.org for an invitation, and include “DFAL Listening Session RSVP” in the subject line. A Zoom link will be sent via email closer to the listening session date. On November 20, 2023, DFPI issued an informal Invitation for Comments, seeking input on a potential regulatory action on the topics of DFAL license application, licensure requirements, and stablecoin approval. This listening session allows external partners, including parties that would be subject to proposed regulations, an additional opportunity to provide input on these topics and improve the quality of any proposed regulations prior to publication of a notice of rulemaking. To receive future updates about DFAL rulemaking, visit ca.gov/subscribe and follow the “Industry” link. Questions regarding this informal listening session may be directed to Regulations Coordinator DeEtte Phelps at Regulations@dfpi.ca.gov.