Yesterday, the Consumer Financial Protection Bureau (CFPB or Bureau) issued a proposed interpretive rule opining that earned wage access (EWA) products — whether provided through employer partnerships or marketed directly to borrowers — are subject to Truth in Lending Act (TILA) and Regulation Z requirements. The proposed rule’s broad definitions and aggressive stance on fees and tips as finance charges conflict with many state laws and could lead to litigation.
After several attempts in the Missouri legislature, last week Governor Mike Parson signed a Commercial Financing Disclosure Law. This legislation requires certain disclosures to be made by providers of commercial purpose closed-end and open-end loans, and sales-based financing transactions. The law will take effect six months after the Division of Finance finalizes promulgating rules or on February 28, 2025, if the Division does not intend to promulgate rules.
The California Department of Financial Protection and Innovation (DFPI) has once again modified its proposed rulemaking on earned wage access (EWA) products. As discussed here, this spring the Office of Administrative Law (OAL) rejected the proposed regulations for failure to comply with the clarity standard of the Administrative Procedure Act (APA) and failure to follow the required APA procedures. These new modifications attempt to address those concerns.
On July 1, amendments to Florida’s Consumer Finance Act took effect. Among other things, the amendments raise the maximum tiered interest rates on consumer finance loans, increase the grace period before late fees can be imposed from 10 to 12 days, require licensees to offer free credit education courses to borrowers at the time a loan is made, provide for the suspension of certain collection activities in the event of a disaster, and require branches of businesses making consumer finance loans to obtain a license.
On June 18, a Colorado federal court granted the plaintiff trade groups’ motion for a preliminary injunction, effectively halting the enforcement of Colorado’s H.B. 1229 with respect to loans made by out-of-state state-chartered banks.
Today, the Consumer Financial Protection Bureau (CFPB) announced that its so-called “Payday, Vehicle Title and Certain High-Cost Installment Loans” rule (Rule) will go into effect on March 30, 2025. While ostensibly aimed at higher-APR lending (e.g., loans with an APR above 36%), it also applies to most creditors, including banks, offering loans: (1) that are substantially repayable within 45 days or less; or (2) that have a bullet or balloon payment feature. It applies by its plain terms to a number of mainstream financial products and products marketed to high-net worth individuals, none of which the CFPB seems to have considered when promulgating the rule.
On May 28, the Federal Trade Commission (FTC) released its annual report to the Consumer Financial Protection Bureau (CFPB) detailing enforcement and educational activities undertaken in 2023. The report pertains to actions under the Truth in Lending Act (TILA) and Regulation Z, the Consumer Leasing Act (CLA) and Regulation M, and the Electronic Fund Transfer Act (EFTA) and Regulation E. Specifically, the report highlights FTC initiatives in areas such as automobile financing and leasing, electronic fund transfers, so-called junk fees, payday lending, and negative options.
The Consumer Financial Protection Bureau (CFPB or Bureau) has issued a circular warning covered persons that including unlawful or unenforceable terms and conditions in consumer contracts can violate the prohibition on deceptive acts or practices in the Consumer Financial Protection Act (CFPA).
Yesterday, the Consumer Financial Protection Bureau (CFPB or Bureau) issued an “interpretive rule,” subjecting “Buy Now, Pay Later” (BNPL) transactions to provisions of Regulation Z applicable to “credit cards.” Among other things, this classification would require BNPL and other lenders to extend many of the same legal protections and rights to consumers that apply to traditional credit cards, including the rights to dispute charges and demand refunds for returned products, and, potentially, receive periodic statements. The Bureau claims its authority to issue this interpretive rule — in lieu of a formal rulemaking — stems from the Truth in Lending Act (TILA) and Regulation Z, and its general authority to issue guidance as set forth in § 1022(b)(1) of the Consumer Financial Protection Act of 2010.
Kansas Governor Laura Kelly signed House Bill (HB) 2247 into law, bringing significant changes to the Kansas Mortgage Business Act and the Uniform Consumer Credit Code (UCCC). The changes brought about by HB 2247 will largely become effective on January 1, 2025. However, those changes standardizing threshold amounts consistent with federal law will become effective on July 1, 2024.