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:

Federal Activities

State Activities

Federal Activities:

• On September 20, the Consumer Financial Protection Bureau (CFPB) announced a proposed rule aimed at amending the disclosure requirements for international money transfers, commonly known as remittances. The proposed amendment is aimed at clarifying for consumers the types of inquiries that may be better handled by their remittance company before contacting the CFPB or the relevant state regulator. The proposed rule will be published in the Federal Register, and the public will have until November 4, to submit their comments. For more information, click here.
• On September 20, the CFPB announced a warning against debt collectors who exploit surviving spouses by attempting to collect unpaid medical bills without considering the legal nuances of whether the debts are actually owed. The CFPB highlighted that such practices may violate state and federal laws. The CFPB emphasized its commitment to protecting consumers from predatory debt collection practices and ensuring that surviving spouses understand their rights and responsibilities. For more information, click here.
• On September 18, the CFPB issued a set of frequently asked questions (FAQs) providing guidance on applying Regulation Z requirements to Pay-in-Four Buy Now, Pay Later (BNPL) products accessed through digital user accounts (DUAs). These FAQs follow the CFPB’s interpretive rule issued in May, subjecting BNPL transactions to provisions of Regulation Z applicable to “credit cards.” The FAQs consist of a series of questions and answers purportedly designed to clarify the application of Regulation Z. These questions address various aspects of BNPL loans, including their definition, the nature of DUAs, and the regulatory requirements imposed on BNPL providers. For more information, click here.
• On September 18, the Securities and Exchange Commission (SEC) announced settled charges against Rari Capital, Inc. and its co-founders for misleading investors and engaging in unregistered broker activity related to their blockchain-based investment platforms. The SEC alleged that Rari Capital falsely promoted the automatic rebalancing and high yields of its Earn pools, resulting in significant investor losses. Additionally, Rari Capital Infrastructure LLC settled charges for continuing unregistered securities offerings and broker activities after taking over operations of the Fuse platform in 2022. The settlements include permanent injunctions, civil penalties, and officer-and-director bars for the co-founders for a period of five years, subject to court approval. For more information, click here.
• On September 17, both the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) finalized new guidelines regarding bank mergers. According to the agencies, these updates aim to enhance transparency and provide clearer guidance on the evaluation of merger applications under the Bank Merger Act (BMA). The OCC’s final rule updates its regulations for business combinations involving national banks and federal savings associations. The FDIC’s Final Statement of Policy on Bank Merger Transactions updates the FDIC’s approach to evaluating transactions subject to its approval under the BMA. For more information, click here.
• On September 17, the Justice Department announced its withdrawal from the 1995 Bank Merger Guidelines, affirming that the 2023 Merger Guidelines are now its sole authoritative statement for all industries. The department also released commentary on how the 2023 Merger Guidelines apply to banking, highlighting common competition issues in bank mergers and outlining relevant guidelines for analysis. This decision follows a collaborative process with the Federal Reserve, FDIC, and OCC, and incorporates public feedback and market developments. The 2023 Merger Guidelines and the new commentary do not predetermine enforcement actions, which will continue to depend on case-specific facts and prosecutorial discretion. For more information, click here.
• On September 17, the CFPB published Circular 2024-05 addressing whether a financial institution violates the Electronic Fund Transfer Act (EFTA) and Regulation E by charging overdraft fees for ATM and one-time debit card transactions without proof of the consumer’s affirmative consent to enrollment in covered overdraft services. The CFPB’s response is clear: Yes, charging fees in these circumstances can indeed constitute a violation of EFTA and Regulation E. For more information, click here.
• On September 17, the CFPB issued a data spotlight analyzing the impact of changing mortgage interest rates on housing affordability. The report highlights that mortgage rates have risen significantly since their low in January 2021, peaking at 7.79% in October 2023 before easing to around 6.2% in September 2024. This increase has drastically affected housing affordability, with the mortgage payment on a $400,000 loan rising by over $1,200 from trough to peak. The analysis also explores the potential for refinancing as interest rates decrease, which could offer financial relief to millions of borrowers. For more information, click here.
• On September 17, at the request of the Federal Trade Commission (FTC), a federal court approved settlements requiring the forfeiture of assets valued at approximately $40 million from defendants accused of defrauding consumers by enrolling them in unauthorized continuity plans for CBD and keto-related products. The orders not only impose monetary judgments but also permanently ban the defendants from engaging in the alleged illegal conduct, including debiting money from consumers’ accounts without prior authorization and credit card laundering. The defendants, including Legion Media, LLC, KP Commerce, LLC, Pinnacle Payments, LLC, and Sloan Health Products, LLC, along with their owner/operators, must turn over substantial assets to provide refunds to affected consumers. For more information, click here.
• On September 17, the FDIC announced a notice of proposed rulemaking (Proposal) aimed at enhancing recordkeeping for bank deposits received from fintech and other third-party, non-bank companies. Banks typically hold direct customers’ funds in individual deposit accounts designated for each customer on their own ledger, but fintech and non-bank companies often partner with banks in payments and deposit programs. End user or other third-party funds originated through those partners are often held in a single custodial account at a bank with the bank partner responsible for maintaining the ledger. Under the Proposal, FDIC-insured banks holding certain accounts — what the FDIC calls “custodial accounts with transactional features” — would be required to take specific steps to ensure accurate account records are maintained, including the bank having “direct, continuous, and unrestricted access to the records of the beneficial owners, including, but not limited to, in the event of the business interruption, insolvency, or bankruptcy of the third party.” The bank would be required to complete a daily reconciliation of these records. The FDIC is accepting public comments on the Proposal for 60 days after publication in the Federal Register. For more information, click here.
• On September 17, the SEC charged five entities and three individuals in connection with two relationship investment scams involving fake crypto asset trading platforms, NanoBit and CoinW6. The SEC alleges that the defendants used social media to solicit investors, deceived them to gain their trust, and then stole their money. These are the SEC’s first enforcement actions against such scams. The complaint, filed in the U.S. District Court for the Eastern District of New York, seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties against the defendants. For more information, click here.
• On September 16, the National Credit Union Administration (NCUA) released its Q2 2024 State-Level Credit Union Data Report, revealing a decline in total assets, shares and deposits, and membership at federally insured credit unions over the past year, while loans outstanding increased. The report shows a national median asset growth of negative 0.2% and a median growth in shares and deposits of negative 1.2%. Membership declined by 0.3%, whereas the median growth rate of loans outstanding was 2.4%. Additionally, the median total delinquency rate rose to 60 basis points, and 84% of credit unions reported positive year-to-date net income. For more information, click here.
• On September 16, the FTC announced that it is sending over $2.6 million in refunds to consumers harmed by the online cash advance provider FloatMe Corp. The FTC had previously taken action against FloatMe in January, alleging the company deceived consumers with false promises of “free money” and discriminated against those receiving public assistance. The refunds will be distributed via PayPal to 449,344 affected consumers starting September 23. Consumers eligible for a refund will receive an email notification and should redeem their Pay1Pal payment within 30 days. For more information, click here.
• On September 16, the Bank for International Settlements (BIS) announced that more than 40 private sector financial firms, convened by the Institute of International Finance (IIF), joined BIS and a group of leading central banks in Project Agorá to explore how tokenization can enhance wholesale cross-border payments. The selected firms, which include commercial banks, payment service providers, and financial market infrastructure companies, represent a diverse set of business models, institution sizes, expertise, and geographies. Project Agorá will now enter its design phase, focusing on integrating tokenized commercial bank deposits with tokenized wholesale central bank money to improve the monetary system’s functionality. For more information, click here.
• On September 16, the SEC announced charges against Flyfish Club, LLC for conducting an unregistered offering of crypto asset securities in the form of nonfungible tokens (NFTs). Flyfish raised approximately $14.8 million from investors to finance a private members-only restaurant, promoting the NFTs as investment opportunities. The SEC found that Flyfish violated Sections 5(a) and 5(c) of the Securities Act of 1933 by offering and selling these securities without registration. Without admitting or denying the findings, Flyfish agreed to a cease-and-desist order, a $750,000 civil penalty, and compliance with certain undertakings. For more information, click here.
• On September 13, CFPB Director Rohit Chopra delivered remarks at the Congressional Black Caucus Foundation’s 53rd Annual Legislative Conference, emphasizing the critical role of housing in both health and wealth. Director Chopra highlighted the CFPB’s efforts to combat redlining, ensure fair home appraisals, and streamline refinancing to build wealth for homeowners. He also addressed the need to clean up the tenant screening industry and scrutinize fees that hinder access to housing. For more information, click here.
• On September 13, the CFPB published a blog post highlighting the impact of rising interest rates on student loans, which could cost students over $3 billion in additional interest for loans taken out in 2024 alone. Interest rates for new federal student loans have reached their highest levels since before the Great Recession, with undergraduate loans at 6.53% and graduate and parent loans exceeding 9%. The CFPB emphasized its commitment to monitoring the effects of these rate increases and ensuring compliance with federal consumer financial protection laws. For more information, click here.
• On September 13, CFPB General Counsel Seth Frotman delivered remarks at the Poverty Law Conference, emphasizing the critical role of consumer financial protection law in addressing poverty. GC Frotman highlighted the CFPB’s efforts to combat junk fees, which disproportionately affect low-income individuals, and discussed the importance of fair lending practices and access to public benefits. He underscored that consumer financial laws are essential for protecting vulnerable populations and ensuring that financial markets do not exploit those with the least resources. For more information, click here.
• On September 13, the FDIC, Federal Reserve Board, and OCC announced an extension of the comment period for their request for information on bank-fintech arrangements until October 30. The agencies are seeking public input on the nature and implications of these arrangements and effective risk management practices. This extension provides additional time for the public to consider the request and prepare comprehensive comments. Originally, comments were due by September 30. For more information, click here.
• On September 13, the U.S. District Court for the Southern District of Texas issued a mixed ruling in a reverse redlining case against Colony Ridge Development, LLC, its affiliates, and Loan Originator Services. In its complaint, the CFPB alleged that the defendants operated an illegal land sales scheme and targeting tens of thousands of Hispanic borrowers with false statements and predatory loans. The complaint alleged violations of the Equal Credit Opportunity Act (ECOA), the Fair Housing Act (FHA), the Dodd-Frank Act’s prohibition on unfair, deceptive, or abusive acts or practices (UDAAP), and a variety of violations of the Interstate Land Sales Full Disclosure Act. The court dismissed the FHA claims, agreeing with the defendants that the FHA pertains to refusals or denials of housing, not actual sales. However, the court allowed the government to proceed with certain ECOA claims, finding sufficient allegations of discriminatory lending practices targeting Hispanic consumers. Additionally, the court dismissed all claims against Loan Originator Services, LLC, due to insufficient involvement in the alleged discriminatory scheme. For more information, click here and here.
• On September 12, U.S. Senate Majority Whip Dick Durbin, along with seven Senate Democrats, urged the 10 largest Bitcoin ATM operators to take immediate action to curb fraud targeting elderly Americans. The senators highlighted reports of criminals using threats and intimidation to coerce elderly individuals into depositing large sums of money into crypto wallets via Bitcoin ATMs. The letter, signed by senators, including Richard Blumenthal and Elizabeth Warren, emphasized the dramatic rise in BTM scams, with losses increasing nearly tenfold from 2020 to 2023. The senators requested detailed responses from the companies by October 4, to better understand the measures being taken to prevent such fraud. For more information, click here.
• On September 12, the U.S. Department of the Treasury announced sanctions against a Cambodian tycoon, his conglomerate L.Y.P. Group Co., LTD, and O-Smach Resort for their involvement in serious human rights abuses related to human trafficking and forced labor in online scam centers. Victims reported being lured to O-Smach Resort with false offers of employment, having their phones and passports confiscated, and being forced to work scam operations. As a result of the sanctions, all property of the designated persons within the U.S. are blocked, and U.S. persons are generally prohibited from engaging in transactions with them. For more information, click here.
• On September 12, Consumers’ Research, the nation’s oldest consumer advocacy organization, issued a consumer warning against the cryptocurrency company Tether (USDT), for purportedly failing to undergo an independent audit to verify its claim of being one-for-one backed by the U.S. dollar. The organization expressed concerns about Tether’s history of false claims and its business dealings with sanctioned entities. Consumers’ Research urged state authorities to consider the availability of Tether in their jurisdictions and take appropriate measures to protect citizens from potential financial harm. For more information, click here.

• On September 11, U.S. Senator Sherrod Brown, along with several colleagues, urged Federal Reserve Chair Jerome Powell to finalize a proposed rule expanding the Fed’s settlement services to operate 24/7/365, including weekends and holidays. The proposed expansion of services like Fedwire and the National Settlement Service aims to provide faster access to funds, reducing costs for individuals vulnerable to overdraft and nonsufficient funds fees, and helping small businesses maintain liquidity. The senators emphasized that faster payments would benefit millions of Americans who rely on ACH for essential payments and improve overall financial stability. The letter highlights the importance of modernizing the payment system to meet the demands of a 24/7 economy. For more information, click here.
• On September 10, U.S. Senators Jack Reed, Sherrod Brown, and Tammy Duckworth urged the CFPB to apply credit card-like rules and protections to BNPL lenders. The senators emphasized the need for stronger oversight to prevent hidden fees and excessive debt accumulation, which can harm consumers’ financial health. They called for the CFPB to supervise the largest BNPL providers and publish additional data on BNPL usage to inform regulatory actions. For more information, click here.

State Activities:

• On September 14, California Governor Gavin Newsom enacted Assembly Bill No. 3148, amending Section 23016 of the Financial Code. The bill changes the assessment method for licensees under the California Deferred Deposit Transaction Law (CDDTL) from being based on the number of locations operated by a licensee to instead be a pro rata share determined by the proportion of a licensee’s total dollar amount of deferred deposit transactions relative to the aggregate total amount made by all licensees as shown by specified annual reports to the commissioner. However, it mandates a minimum assessment of $500 per licensed location per year. This amendment aims to distribute the costs of administering the CDDTL more equitably among licensees. For more information, click here.