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 October 16, the Federal Trade Commission (FTC) issued the final amendments to the Negative Option Rule, now retitled the Rule Concerning Recurring Subscriptions and Other Negative Option Programs. These amendments significantly expand the rule’s coverage and introduce new requirements that purportedly aim to protect consumers from deceptive and unfair practices in negative option marketing. Specifically, the rule: prohibits misrepresentations of any material fact made while marketing goods and services using negative option features; requires disclosures be provided before sellers can obtain consumers’ billing information and charge them; requires sellers to obtain consumers’ unambiguously affirmative consent to the negative option feature before charging them; and requires sellers to provide consumers with simple mechanisms to immediately halt all recurring charges. For more information, click here.
  • On October 15, the Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) announced that they reached a settlement with Fairway Independent Mortgage Corporation (Fairway). This settlement addresses allegations of redlining in majority-Black neighborhoods in Birmingham, AL. Fairway is headquartered in Madison, WI, but operates under the trade name MortgageBanc in the Birmingham area. Fairway, the third-largest mortgage lender in the U.S., is now the second non-bank mortgage company to enter into a redlining settlement. The CFPB and DOJ’s complaint against Fairway alleged violations of the Equal Credit Opportunity Act, the Consumer Financial Protection Act, and the Fair Housing Act. The complaint also noted that Fairway’s own data showed that it was not meeting the credit needs of majority-Black neighborhoods in the Birmingham area, but, before October 2022, it took no steps to address redlining risk other than telling loan officers not to discriminate. For more information, click here.
  • On October 15, U.S. Congressman Wiley Nickel (D-NC) and Congresswoman Young Kim (R-CA) introduced the bipartisan Ending Scam Credit Repair Act to combat fraudulent practices in the credit repair industry. The bill aims to protect consumers by banning upfront fees, enhancing dispute transparency, and requiring state registration for credit repair organizations (CROs). By ensuring CROs only receive payment after delivering documented improvements and increasing penalties for violations, the bill seeks to provide accountability and transparency in the industry. This legislative effort is supported by various financial services and consumer advocacy groups, who emphasize the need to protect consumers from predatory credit repair schemes. For more information, click here.
  • On October 9, Under Secretary for Domestic Finance Nellie Liang delivered remarks at the Chicago Payments Symposium, emphasizing the need to modernize the regulatory framework for domestic payments. Under Secretary Liang highlighted the rapid growth in digital payments and the emergence of nonbank payment service providers, such as e-money issuers, which operate outside the traditional banking system. She proposed key foundational elements for a federal regulatory framework, including financial resources, risk management, and activities restrictions, to ensure trust, innovation, and competition in the payments system. Liang called for a broader discussion to build a comprehensive and consistent regulatory framework that addresses the evolving landscape of money and payments. For more information, click here.
  • On October 9, the Board of the International Organization of Securities Commissions (IOSCO), a leading international policy forum for securities regulators, announced the release of its Final Report on Investor Education surrounding Crypto-Assets. The report, based on a survey conducted among IOSCO’s Committee for Retail Investors, highlights key findings on retail investor behavior and experiences with crypto-assets. It underscores the importance of investor education in the crypto-asset space, addressing issues such as speculative investments driven by “FOMO,” low entry costs, and advice from social media. The report also suggests specific educational messages to help investors understand the risks and protections associated with crypto-asset investments. For more information, click here.

State Activities:

  • On October 18, ACA International, Inc., a debt collection industry group, and Independent Recovery Resources, Inc., a New York debt collection agency, filed a complaint in the Eastern District of New York against New York City Mayor Eric Adams, the New York City Department of Consumer and Worker Protection (DCWP), and the DCWP commissioner. The plaintiffs seek declaratory and injunctive relief to prevent the enforcement of the rules amending Title 6 of the Rules of the City of New York, which they argue are unconstitutional and preempted by federal and state law. The rules, which are set to take effect on December 1, would stringently regulate various debt collection activities by debt collectors operating in the city. Specifically, the plaintiffs argue that the rules’ requirements will impose significant financial and operational burdens on debt collectors. For instance, the rules mandate detailed record-keeping and communication logs, which will allegedly require substantial investment in new systems and processes. Additionally, the rules’ expanded debt validation requirements and several other vague provisions make it difficult for debt collectors to understand and comply, increasing the risk of unintentional violations. For more information, click here.
  • On October 16, the New York State Department of Financial Services (NYDFS) issued an industry letter to entities regulated by DFS (covered entities) providing guidance addressing the cybersecurity risks associated with the use of artificial intelligence (AI). The guidance purportedly aims to assist covered entities in understanding and assessing cybersecurity risks associated with threats arising from the use of AI by cybercriminals and the controls that may be used to mitigate those risks. The NYDFS emphasizes that this new guidance does not impose any new requirements on covered entities, but it rather provides an outline for meeting existing compliance obligations under the NYDFS Cybersecurity Regulation, 23 NYCRR Part 500, in light of the advancements in AI technology. For more information, click here.
  • On October 7, the Council of the District of Columbia enacted the “New Student Loan Borrower Bill of Rights Amendment Act of 2024.” This legislation amends the Department of Insurance and Securities Regulation Establishment Act of 1996 to prevent abusive practices related to student and private education loans. It requires the creation of a revised Student Loan Borrower Bill of Rights by January 1, 2025, clarifies licensing requirements for student loan servicers under federal contracts, and establishes specific rights and obligations for loan servicers and lenders. The act also authorizes the attorney general to enforce its provisions and prescribes prohibited conduct for loan servicers and lenders. For more information, click here.
  • On October 1, the U.S. Court of Appeals for the Second Circuit in East Fork Funding v. U.S. Bank, certified the following question to the New York Court of Appeals: Whether Sections 4 and/or 8 of the Foreclosure Abuse Prevention Act, codified at N.Y. C.P.L.R. 203(h) and 3217(e), respectively, apply to a unilateral voluntary discontinuance taken prior to the act’s enactment. 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 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.

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 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 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 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.