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Taylor focuses her practice on providing regulatory advice on matters related to federal and state consumer protection, consumer finance, and payments laws, including those that apply to payment cards, lines of credit, installment loans, electronic payments, online banking, buy-now-pay-later transactions, retail installment contracts, rental-purchase transactions, and small business loans.

Yesterday, the Office of the Comptroller of the Currency (OCC) issued guidance to banks on managing the risks associated with “buy now, pay later” (BNPL) lending. Specifically, the bulletin addresses BNPL loans that are payable in four or fewer installments and carry no finance charges. The stated aim of the OCC’s guidance is to ensure that these loans are offered in a manner that is safe, sound, and compliant with applicable laws and regulations.

On November 30, Massachusetts Attorney General Andrea Joy Campbell announced proposed regulations that would require businesses to clearly disclose the total price of a product at the time it is presented to consumers, provide clear and accessible information on whether fees are optional or required, and simplify the process for cancelling trial offers and recurring charges. The proposed regulations are issued pursuant to the Attorney General’s rule-making power under the Massachusetts Consumer Protection Act. The stated purpose of the proposed regulations is to close gaps within the state’s consumer protection laws and to combat unfair and deceptive business practices related to fees charged across various industries.

On October 9, a Florida state senator introduced SB 146, which would add a new section to the Florida Consumer Finance Act (CFA), attempting to curb evasion of the CFA. SB 146 would treat all payments incident to the loan as interest, even if voluntary, and would adopt both predominant economic interest and totality of the circumstance tests for true lender purposes. SB 146 follows other states’ attempts to address true lender issues, including legislation passed in Minnesota, discussed here, and Connecticut, discussed here.

A California state court recently denied a preliminary injunction sought by the California Department of Financial Protection and Innovation (the DFPI) in its long-running litigation against Opportunity Financial (OppFi) contending that OppFi is the “true lender,” and therefore subject to usury limits, on loans originated by OppFi’s bank partner. The court found that on the factual record before it that the DFPI had not shown a reasonable probability of prevailing on the merits of its claim.

As discussed here, on June 29, Connecticut Governor Ned Lamont signed SB 1033, An Act Concerning Various Revisions to the Banking Statutes, into law. Among other things, the bill: (1) raised the small loan limit from $15,000 to $50,000; (2) expanded the Small Loan Act (SLA) licensure requirement to cover certain brokering and facilitating activities; (3) codified a predominant economic interest test for determining the “true lender” in the SLA; (4) broadened the definition of small loan to include income sharing agreements (ISAs), refund anticipation loans, and pension advances; (5) limited the Annual Percentage Rate (APR) on loans of $5,000 to $50,000 to 25%; (6) redefined APR as an all-in APR calculated similarly to the federal Military Lending Act (MLA); and (7) expanded the definition of finance charge to essentially capture all fees and charges, including optional fees. The revised SLA goes into effect on October 1, 2023.

When using artificial intelligence (AI) or complex credit models, can lenders rely on the checklist of reasons provided in Regulation B sample forms for adverse action notices? According to today’s guidance issued by the Consumer Financial Protection Bureau (CFPB or Bureau), the answer to that question is, in many circumstances, no.

On June 6, Nebraska Governor Jim Pillen signed into law Legislative Bill 92, which, among many other subjects, amends the Nebraska Installment Loan Act (the NILA). Previously, a license was required for a lender seeking to take advantage of the usury authority provided by the NILA and also for any person that holds or acquires any rights of ownership, servicing, or other forms of participation in a loan under the NILA. Legislative Bill 92 expands the scope of the licensing requirement to “any person that is not a financial institution who, at or after the time a [covered] loan is made by a financial institution, markets, owns in whole or in part, holds, acquires, services, or otherwise participates in such loan.” “Financial institution” is broadly defined to include all federally insured depository institutions. And the licensing requirement, by its terms, applies to entities providing limited services and/or purchasing limited interests (not just the predominant economic interest) in loans by financial institutions of $25,000 or less, with rates exceeding the Nebraska general usury limit.

On July 27, the Consumer Financial Protection Bureau (CFPB) released a new blog post, positing that cashflow data, broadly defined as the various inflows, outflows, and accumulated amounts in a consumer’s checking and savings accounts, may provide lenders with a better picture of a consumer’s ability to repay their loans than using a credit score.

On June 29, Connecticut Governor Ned Lamont signed SB 1033, An Act Concerning Various Revisions to the Banking Statutes, into law. As discussed here, with this bill, Connecticut joins several other states that have set strict rate caps on consumer loans, including Illinois, New Mexico, Colorado, and California, and those that expressly provide for a predominant economic interest test for true lender purposes. The law will take effect on October 1, 2023.

On June 26, Florida Governor Ron DeSantis signed the Florida Commercial Financing Disclosure Law (FCFDL). As discussed here, the FCFDL mandates that covered commercial financing companies provide consumer-like disclosures for certain commercial financing transactions. The law also defines and prohibits specific acts by brokers of those transactions, including the collection of advance fees.

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