According to a recent report by WebRecon, court filings under the Fair Debt Collection Practices Act (FDCPA) and Telephone Consumer Protection Act (TCPA) were down for the month of February while court filings under the Fair Credit Reporting Act (FCRA) and complaints filed with the Consumer Financial Protection Bureau (CFPB) were up. Year-to-date everything is still up by double digits compared to 2023.
On April 2, the U.S. Court of Appeals for the Fifth Circuit issued an order staying the district court’s decision to transfer the lawsuit challenging the Consumer Financial Protection Bureau’s (CFPB) credit card late fee rule from the Northern District of Texas to the District Court for the District of Columbia (D.D.C). As discussed here, on March 28, 2024, the district court had transferred the case to D.D.C. finding an “attenuated nexus” to the Fort Worth Division since, according to the district court, only one of the six plaintiffs had even a remote tie to the division. The Fifth Circuit’s stay is in effect until 5:00 pm on Friday, April 5, 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:
On March 22, a group of 39 states, Puerto Rico, and the District of Columbia (participating states) entered an interim consent order against Sigue Corporation, a licensed money transmitter corporation, ordering it to cease operations due to deteriorating financial conditions. Sigue reported approximately $4.9 million in outstanding liabilities related to regulated money transmission transactions originating in the participating states and New York. The corporation is currently in the process of surrendering its money transmission licenses and winding-down.
Can remittance transfer providers be held liable under the Consumer Financial Protection Act (CFPA) when marketing about the speed and cost of their services? According to a March 27 Circular issued by the Consumer Financial Protection Bureau (CFPB or Bureau), the answer to that question is yes, if the marketing is deceptive. Specifically, according to the CFPB, providers may be liable under the CFPA for deceptive marketing practices if they market: remittance transfers as being delivered within a certain time frame when transfers actually take longer; remittance transfers as “no fee” when in fact the provider charges fees; promotional fees or promotional exchange rates for remittance transfers without sufficiently clarifying when an offer is temporary; and remittance transfers as “free” if they are not in fact free.
Yesterday, the lawsuit challenging the Consumer Financial Protection Bureau’s (CFPB or Bureau) credit card late fee rule (Final Rule) was transferred from the U.S. District Court for the Northern District of Texas to the District Court for the District of Columbia (D.D.C.).
In Scott v. Collecto, Inc., the plaintiff filed a complaint in state court alleging a violation of the Fair Debt Collection Practices Act (FDCPA) and common law negligence based on the defendant’s use of a letter vendor to send the plaintiff a demand. The County Court of Florida found that the plaintiff failed to allege an injury sufficient to establish standing.
Yesterday, three trade organizations filed a complaint in Colorado federal court challenging H.B. 1229, Colorado’s effort to limit interest charges by out-of-state financial institutions, which is set to take effect on July 1, 2024. As discussed here, in June 2023, Colorado passed H.B. 1229, limiting certain charges on consumer loans and simultaneously opting Colorado out of §§ 521-523 of the Depository Institutions Deregulation and Monetary Control Act (DIDMCA). Sections 521-523 of DIDMCA empower state banks, insured state and federal savings associations and state credit unions to charge the interest allowed by the state where they are located, regardless of where the borrower is located and regardless of conflicting state law (i.e., “export” their home state’s interest-rate authority). However, § 525 of DIDMCA enables states to opt out of this rate authority with respect to loans made in the opt-out state.
In Martinez v. Celtic Bank, the Southern District of New York recently denied a motion for summary judgment finding that a jury could consider an investigation reckless when a furnisher fails to review any records other than a payment history in response to a dispute that an account was erroneously reported as delinquent.