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 20, the Biden-Harris administration announced the approval of an additional $4.28 billion in student debt relief for nearly 55,000 public service workers, bringing the total approved relief to almost $180 billion for 4.9 million borrowers. This latest action results from significant improvements to the Public Service Loan Forgiveness Program, which aims to incentivize careers in public service by forgiving remaining student loan balances after 120 qualifying payments. For more information, click here.
- On December 19, the Consumer Financial Protection Bureau (CFPB) released a blog post detailing the agency’s ongoing efforts to combat illegal junk fees in the consumer financial marketplace. According to the CFPB, as companies are increasingly prevented from charging these fees, they are adopting new, often illegal tactics to continue extracting revenue from consumers. These tactics include allegedly unlawfully amending existing contracts to impose unauthorized fees and using deceptive methods to secure consumer consent. The CFPB is actively monitoring these practices and has taken action against companies for such violations. For more information, click here.
- On December 19 and 17, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced significant sanctions targeting illicit financial networks supporting the Houthi movement in Yemen and the North Korean regime. On December 19, OFAC sanctioned a dozen individuals and entities involved in arms trafficking, money laundering, and shipping illicit Iranian petroleum to benefit the Houthis, including key financial officials and logistics operatives. This action aims to disrupt the Houthis’ ability to acquire weapons and generate revenue for their destabilizing activities. On December 17, OFAC, in partnership with the United Arab Emirates, sanctioned two individuals and one entity involved in laundering millions of dollars through a UAE-based front company to support North Korea’s weapons of mass destruction and ballistic missile programs. For more information, click here and here.
- On December 18, the U.S. Department of Education announced that borrowers can now apply for the Pay As You Earn and Income-Contingent Repayment plans, reopening these options to ensure legally required repayment choices are available, particularly for those impacted by the ongoing SAVE Plan litigation. These income-driven repayment plans, which set monthly payments based on earnings and family size, offer credit for Public Service Loan Forgiveness and have been crucial for public servants aiming for loan forgiveness after extended payment periods. The department closed these plans last summer due to the introduction of the SAVE Plan, but recent court rulings necessitated their reopening. The plans will remain available for new enrollments until July 1, 2027. For more information, click here.
- On December 18, the CFPB issued a circular to “other law enforcement agencies,” urging them to take action against certain credit card practices. The question the CFPB presented to itself in the circular was whether credit card issuers can violate the law if they or their rewards partners devalue earned rewards or otherwise inhibit consumers from obtaining or redeeming rewards. The CFPB’s response was affirmative, stating that covered persons and their service providers may violate the prohibition against unfair, deceptive, or abusive acts or practices in various circumstances. These include instances where the redemption values of rewards that consumers have already earned or purchased are devalued, consumers’ receipt of rewards is revoked or canceled based on buried or vague conditions, or consumers have reward points deducted from their balance without receiving the corresponding benefit of the rewards. The circular emphasizes that even if some of the conduct in question is attributable to a third party, such as a merchant partner, covered persons may still be liable, and observes that provisions in the rewards terms and conditions permitting such conduct may not be enough to overcome designation as an unfair or deceptive practice, at least where they are “buried” or “vague” and customers cannot reasonably understand them. For more information, click here.
- On December 18, the U.S. Court of Appeals for the Eleventh Circuit held oral argumentsin Insurance Marketing Coalition Limited (IMC) Federal Communication Commission (FCC), which challenges the FCC’s December 2023 order under the Telephone Consumer Protection Act. The stated aim of the order is to reduce unwanted robocalls and texts by closing the “lead generator loophole,” and require “one-to-one consent” for telemarketing communications. The new rule is set to take effect next month. However, during oral arguments, the Eleventh Circuit judges expressed skepticism about the FCC’s justification for its new rule. For more information, click here.
- On December 17, the CFPB issued a report highlighting significant issues faced by homeowners dealing with mortgage companies after a divorce or the death of a loved one. The CFPB reported that servicers often fail to assist surviving spouses and other successor homeowners, leading to delays, pressure to refinance at higher interest rates, and refusals to release original borrowers from liability. These practices can result in financial and emotional stress, legal complications, and even safety risks for domestic violence survivors. The CFPB urged mortgage investors and servicers to comply with existing laws and guidelines, improve their processes, and ensure clear and timely communication to protect homeowners’ rights and prevent unnecessary harm. For more information, click here.
- On December 17, the Federal Trade Commission (FTC) announced the release of its final Rule on Unfair or Deceptive Fees, also known as the “Junk Fee Rule,” which aims to address so-called bait-and-switch pricing tactics and other deceptive practices in the live-event ticketing and short-term lodging industries. This rule specifically targets practices that purportedly hide the total price of an item or service and misrepresent fees and will go into effect 120 days after publication in the Federal Register. The final rule mandates that businesses clearly and conspicuously disclose the total price, inclusive of all mandatory fees, whenever they offer, display, or advertise any price for live-event tickets or short-term lodging. For more information, click here.
- On December 16, the CFPB released its semiannual regulatory agenda, outlining its planned rulemaking initiatives. This agenda includes a mix of rules in the pre-rulemaking, proposed rule, and final rule stages, covering a wide range of topics from medical debt reporting to financial data transparency. The CFPB releases regulatory agendas twice a year in voluntary conjunction with a broader initiative led by the Office of Budget and Management to publish a Unified Agenda of Regulatory and Deregulatory actions across the federal government. The upcoming change in administration may significantly impact the CFPB’s ability to finalize these rules, however, including through Congress’ potential use of the Congressional Review Act.For more information, click here.
- On December 16, current House Financial Services Committee Chair Patrick McHenry (R-NC) and incoming Chair French Hill (R-AR) sent letters to the federal financial institution regulatory agencies, including the CFPB, calling for a halt to all “partisan” rulemakings. The letters urge agencies to refrain from finalizing rulemakings prior to the Trump administration entering office. Representatives McHenry and Hill also instructed the agencies to preserve all documents and communications that might be subject to the committee’s oversight activities. For more information, click here.
- On December 16, the CFPB released a special edition of its Supervisory Highlights, detailing a range of activities identified by CFPB examiners across the student loan origination and servicing markets. A number of the themes are familiar from past CFPB communications — like transcript withholding or the loss of federal benefits when federal loans are refinanced into private loans. But there are a couple of newer themes here, principally in the announcement that private student loan servicers are seemingly required to implement policies to allow consumers to raise school misconduct as a defense to repayment of their loans, similar to the Department of Education’s Borrower Defense process for direct federal loans. For more information, click here.
- On December 16, the UK’s Financial Conduct Authority (FCA) released a discussion paper (DP24/4) titled “Regulating Cryptoassets: Admissions & Disclosures and Market Abuse Regime for Cryptoassets.” This paper seeks public comments by March 14, 2025, and aims to inform the development of a balanced regulatory framework for cryptoassets that addresses market risks without stifling growth. The discussion paper focuses on the future market abuse regime for cryptoassets and the admissions and disclosures regime, building on the government’s plans to bring cryptoasset activities within the FCA’s regulatory perimeter. For more information, click here.
- On December 12, the U.S. Department of Justice (DOJ) announced that an early Bitcoin investor was sentenced to two years in prison for filing false tax returns that underreported his cryptocurrency gains, resulting in more than $1 million in tax loss. On December 16, the DOJ reported that a resident of Springfield, VA, was convicted for providing material support to ISIS by raising and sending more than $185,000 in cryptocurrency to the terrorist organization. On December 17, the U.S. Attorney’s Office for the District of Connecticut announced a former vice president of finance at a cryptocurrency firm, was sentenced to four years in federal prison for embezzling more than $4.46 million from his employer to cover personal trading losses. For more information, click here, here, and here.
- On December 19, the FTC and the Illinois attorney general (AG) reached a $20 million settlement with Leader Automotive Group and its Canadian parent company, AutoCanada, over allegations of widespread consumer fraud. The complaint detailed several alleged violations of state and federal laws, including deceptive advertising, unauthorized add-on charges, fake online reviews, and the sale of gray market vehicles. Specifically, the FTC and the Illinois AG charged Leader Automotive with violating Section 5(a) of the FTC Act, the FTC’s Used Car Rule, the Illinois Consumer Fraud and Deceptive Business Practices Act, the Illinois Uniform Deceptive Trade Practices Act, the Illinois Prizes and Gifts Act, and the Illinois Motor Vehicle Advertising Regulations. The proposed settlement requires Leader Automotive and AutoCanada to pay $20 million, which will be used to refund harmed consumers. Additionally, the companies must clearly disclose the offering price of vehicles in all advertisements and communications, excluding only required government charges. They are also required to obtain express informed consent from consumers before charging them for any add-ons or fees. For more information, click here.
- On December 17, the California Privacy Protection Agency (CPPA) announced the 2025 increases for fines and penalties under the California Consumer Privacy Act (CCPA), which will take effect on January 1, 2025. These adjustments, made biennially in accordance with the Consumer Price Index (CPI), include increases in monetary damages, administrative fines, and civil penalties for CCPA violations. The income threshold for businesses and the compensation rates for CPPA board members have also been updated. For example, the annual gross revenue threshold defining a “business” has been raised to $26,625,000 from $25 million, and the range for monetary damages per consumer per incident has been adjusted to $107-$799 from $100-$750. For more information, click here.