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 November 26, the U.S. Court of Appeals for the Fifth Circuit ruled in favor of Joseph Van Loon and other plaintiffs, reversing a lower court’s decision that upheld the Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctions against Tornado Cash. The court found that OFAC exceeded its statutory authority under the International Emergency Economic Powers Act by sanctioning Tornado Cash’s immutable smart contracts, which facilitate anonymous cryptocurrency transactions. The court held that these smart contracts are not “property” as defined by the act because they are not capable of being owned, controlled, or altered. The case was remanded to the district court with instructions to grant the plaintiffs’ motion for partial summary judgment based on the Administrative Procedure Act. For more information, click here.
- On November 25, the U.S. Court of Appeals for the Fifth Circuit issued a per-curiam, single-sentence order in Community Financial Services Association of America, Ltd v. Consumer Financial Protection Bureau (CFPB) purporting to “clarify” its prior stay of the compliance date for the CFPB’s payday loan rule. The new order provides that the rule will go into effect on March 30, 2025, 286 days after the Supreme Court entered its judgment in the CFSA lawsuit and not 286 days after the Fifth Circuit’s subsequent decision not to rehear the case en banc. For more information, click here.
- On November 21, CFPB Director Rohit Chopra delivered remarks at the FinRegLab AI Conference, advocating for a shift from traditional credit scores to more predictive and transparent models utilizing artificial intelligence. Chopra highlighted the limitations of FICO scores, including their lack of inclusivity for individuals without credit histories, opacity, and insufficient predictive power. He emphasized the need for regulatory and market collaboration to develop an open-source AI model for credit scoring, which would enhance fairness and competition. For more information, click here.
- On November 22, New York Governor Kathy Hochul approved an amendment to the Fair Medical Debt Reporting Act, refining the definition of medical debt. The amendment excludes debt charged to a credit card unless the card is specifically issued for health care services, products, or devices. This technical correction ensures consistency across the General Business Law and Public Health Law, and applies retroactively to December 13, 2023. For more information, click here.