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.
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:
Last week, the Consumer Financial Protection Bureau (CFPB or Bureau) filed a complaint against SoLo Funds, Inc., a fintech company operating a small-dollar, short-term lending platform. The CFPB alleges that SoLo Funds engaged in deceptive practices related to the total cost of loans, servicing, and collection of void and uncollectible loans in violation of the Consumer Financial Protection Act (CFPA) and engaged in providing consumer reports governed by the Fair Credit Reporting Act (FCRA) but failed to ensure the maximum possible accuracy of those consumer reports.
Yesterday, the U.S. Supreme Court issued its long-awaited decision in Community Financial Services Association of America, Limited (CFSA) v. Consumer Financial Protection Bureau (CFPB or Bureau) holding that the CFPB’s special funding structure does not violate the appropriations clause of the Constitution. The 7-2 majority held the Dodd-Frank Act, which provides the CFPB’s funding structure, satisfies the appropriations clause because it “authorizes the Bureau to draw public funds from a particular source — ‘the combined earnings of the Federal Reserve System’ — in an amount not exceeding an inflation-adjusted cap. And it specifies the objects for which the Bureau can use those funds — to ‘pay the expenses of the Bureau in carrying out its duties and responsibilities.’” The Supreme Court further found that the “Bureau’s funding mechanism [] fits comfortably within the historical appropriations practice …” Justices Samuel Alito and Neil Gorsuch dissented from the decision.
The Court of Appeals of Indiana recently upheld a lower court’s decision that a debt buyer who purchased a portfolio of defaulted student loans and placed an account with a collection agency qualifies as a “debt collector” under both Indiana state law and the Fair Debt Collection Practices Act (FDCPA).
Today, the U.S. Supreme Court issued a unanimous decision in Smith v. Spizzirri holding that § 3 of the Federal Arbitration Act (FAA) requires district courts to issue an order staying a federal case pending the outcome of arbitration, rather than dismiss the case when a motion to compel arbitration is granted. This decision resolves a circuit split where previously the Second, Third, Sixth, Seventh, Tenth, and Eleventh Circuits had held that the plain text of § 3 mandates a stay of the proceedings whereas the First, Fifth, Eighth, and Ninth Circuits had held that district courts have the discretion to dismiss the proceedings if the entire dispute was subject to arbitration.
In Holden v. Holiday Inn Club Vacations Inc., the U.S. Court of Appeals for the Eleventh Circuit recently upheld a consolidated district court ruling granting summary judgment for the defendant furnisher in two Fair Credit Reporting Act (FCRA) actions centering on whether the consumers’ disputes with the furnisher were actionable. While the Eleventh Circuit declined to impose a bright-line rule that only FCRA claims based on factual disputes are actionable, it affirmed the district courts’ summary judgment ruling, finding that for consumer disputes to be actionable against furnishers, the alleged inaccuracy must be “objectively and readily verifiable.”
In Soliman v. Subway Franchisee Advertising Fund Trust, Ltd, the plaintiff alleged that the defendant violated the Telephone Consumer Protection Act (TCPA) by sending a text message to her cell phone using an automatic telephone dialing system (ATDS) and which utilized an “artificial or prerecorded voice.” The Second Circuit affirmed the district court’s decision to dismiss the case because the TCPA did not apply.
On May 2, the U.S. Department of Housing and Urban Development (HUD) released two sets of guidance addressing the applicability of the Fair Housing Act (FHA) to two areas where, in the agency’s view, algorithmic processes and artificial intelligence (AI) pose particular concerns: tenant screening and advertising of housing opportunities through online platforms that use targeted ads. The purpose of HUD’s guidance is to make housing providers, tenant screening companies, advertisers, and online platforms aware that the FHA applies to tenant screening and housing advertising, including when algorithms and AI are used to perform those functions.
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: