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Jason Cover

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Jason’s in-depth experience advising on consumer lending matters both as in-house counsel and outside advisor provides extensive industry knowledge for his financial services clients.

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Last month, the Texas legislature introduced two companion bills, S.B. No. 2677 and H.B. No. 700, to regulate sales-based commercial financing. For purposes of the proposed legislation, sales-based financing is a transaction that is repaid as a percentage of sales or revenue, or according to a fixed payment mechanism that provides for a reconciliation process to adjust payments to an amount that is a percentage of sales or revenue. These bills propose significant changes to the regulatory landscape for sales-based financing transactions, including the imposition of a usury cap on such transactions and disclosure requirements that only extend to financing of over $500,000. The bills are currently pending before committees.

On March 7, the Community Financial Services Association of America (CFSA) and the Consumer Service Alliance of Texas filed a petition for a writ of certiorari with the U.S. Supreme Court seeking to overturn a decision by the U.S. Court of Appeals for the Fifth Circuit. The Fifth Circuit held that in order to obtain judicial relief, a party challenging governmental action taken by an individual who remained in office against the President’s wishes due to an unconstitutional removal restriction must show that a hypothetical replacement officer would have taken a different action. The petitioners argue that this standard is unreasonably burdensome and inconsistent with the Supreme Court’s decision in Collins v. Yellen.

On January 10, the Alaska Legislature introduced Senate Bill 39 that aims to amend the state’s Small Loan Act. This proposed legislation seeks to implement significant changes, including the introduction of a predominant economic interest test, the repeal of Alaska’s payday loan law, and amending the maximum interest rate that can be charged on loans up to $25,000.

On January 15, the Consumer Financial Protection Bureau (CFPB or Bureau) issued a Compliance Aid to clarify the requirements under the Electronic Fund Transfer Act (EFTA) and Regulation E. Electronic Fund Transfers (EFTs) are defined as “any transfer of funds that is initiated through an electronic terminal, telephone, computer, or magnetic tape for the purpose of ordering, instructing, or authorizing a financial institution to debit or credit a consumer’s account.” The Compliance Aid, presented in a Frequently Asked Questions (FAQs) format, addresses various aspects of EFTs, including coverage, financial institutions’ obligations, and error resolution processes.

As part of a flurry of last minute regulatory activity by the Biden administration’s Consumer Financial Protection Bureau (CFPB or Bureau), on January 15, the CFPB published an advisory opinion in the Federal Register rescinding a previous advisory opinion which the Bureau issued during the first Trump administration in November 2020. The 2020 advisory opinion had described how a specific type of “earned wage” product did not constitute the offering or extension of “credit” under the Truth in Lending Act (TILA) and Regulation Z. The new advisory opinion is effective immediately.

This article was republished on insideARM on January 23, 2025, in their newsletter on January 27, 2025, and was mentioned in this insideARM article on February 3, 2025.

As the Consumer Financial Protection Bureau (CFPB or Bureau) anticipates a shift in its leadership with the incoming administration of President Trump, the Bureau has released a report titled “Strengthening State-Level Consumer Protections.” This report appears to be a strategic move by the CFPB to influence state-level consumer protection laws before the anticipated shift in federal regulatory policy, and the Bureau’s recommendations appear to be items that would need to be the subject of legislation, if they are to occur. As detailed below, the changes advocated by the CFPB would strengthen the position of both state regulators and private plaintiffs in actions against industry participants.

On January 13, the Consumer Financial Protection Bureau (CFPB or Bureau) released a report providing its analysis of the growth and impact of Buy Now, Pay Later (BNPL) loans in the United States since 2019. BNPL loans, typically zero-interest loans repaid in four or fewer installments, have not been widely reported to nationwide consumer reporting companies, creating a lack of data, according to the CFPB. (Most consumer reporting agencies do not offer a readily available mechanism to report BNPL loans.) The stated purpose of the CFPB’s study was to bridge that gap by using a matched sample of BNPL applications and originations from six major BNPL firms along with corresponding de-identified credit records.

Yesterday, the Consumer Financial Protection Bureau (CFPB or Bureau) proposed a new rule aimed at banning certain contractual provisions in agreements for consumer financial products or services. The CFPB’s proposal targets certain terms and conditions sometimes found in so-called contracts of adhesion or standard-form contracts, including waivers of legal rights and protections, contract terms that limit free expression, and other terms that the CFPB believes undermine consumers’ rights and protections. The proposed rule also seeks to codify certain prohibitions under the Federal Trade Commission’s (FTC) Credit Practices Rule.

This week, New York became the latest state to introduce legislation aimed at regulating Earned Wage Access (EWA) services. Assembly Bill 258 titled — “An Act to Amend the Banking Law, in Relation to Providing for Income Access Services in the State” — contains several significant provisions that, if passed, will significantly impact EWA providers in New York.

On December 18, the Consumer Financial Protection Bureau (CFPB or Bureau) issued a circular to “other law enforcement agencies,” urging them to take action against certain credit card practices. The CFPB highlights alleged legal violations by some credit card companies, particularly in relation to the devaluation of rewards points and the clarity of terms and conditions for earning and redeeming rewards.