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As discussed here, in a recent letter, the Chairman of the National Credit Union Administration (NCUA) outlined the agency’s supervisory priorities for 2024. In this post, we delve deeper into the area of consumer protection oversight.

Recently, Lead Bank and its loan servicer Hyphen, LLC, an online lending platform operating Helix Financial, filed a motion to dismiss a purported class action alleging violations of the Georgia Installment Loan Act (GILA) and Georgia racketeering law arising out of a consumer installment or “payday loan.” Specifically, the plaintiff alleged that the loan agreement between herself and Lead Bank was “nothing more than a façade, and a temporary one at that” in an attempt to evade Georgia’s restrictions on payday lending.

In Career Counseling, Inc. v. Amerifactors Financial Group, LLC, the U.S. Court of Appeals for the Fourth Circuit upheld a district court’s decision denying class certification in a Telephone Consumer Protection Act (TCPA) case on the basis that the plaintiff failed to satisfy Rule 23’s “implicit further requirement of ascertainability.” The Fourth Circuit also upheld summary judgment against the defendant as to the individual claim finding the defendant was indeed the “sender” of the fax at issue. Each finding is discussed more fully below.

Recently, Arizona, Kentucky, and Hawaii have jumped on the bandwagon to regulate earned wage access (EWA) products and services. Arizona’s proposed bill makes clear that EWA services are not considered to be loans or money transmissions, and voluntary tips or gratuities are not finance charges. It further requires EWA providers to be licensed, provide mandatory disclosures to consumers, and to submit an annual report detailing yearly revenue from EWA products. Kentucky’s legislation also makes clear that EWA services are not consumer loans or deferred deposit transactions, and regulates any consideration or gratuity requested as part of the transaction. Hawaii’s bill amends the interest and usury law by defining “debt,” “finance charge,” and “credit” to include EWA products, and requires “annual percentage rate” to be calculated pursuant to the Truth in Lending Act (TILA). Each proposal is discussed below.

We are pleased to share our annual review of regulatory and legal developments in the consumer financial services industry. With active federal and state legislatures, consumer financial services providers faced a challenging 2023. Courts across the country issued rulings that will have immediate and lasting impacts on the industry. Our team of more than 140 professionals has prepared this concise, yet thorough analysis of the most important issues and trends throughout our industry. We not only examined what happened in 2023, but also what to expect — and how to prepare — for the months ahead.

On January 15, the American Arbitration Association (AAA) issued amended Mass Arbitration Supplementary Rules and new Consumer Mass Arbitration and Mediation Fee Schedules (collectively, the New Rules). The New Rules will apply to all mass arbitration cases filed on or after January 15, but not to any mass arbitrations filed prior to that date. The New Rules aim to reduce friction and enhance process efficiency. However, unless the New Rules are supplemented by a well-constructed pre-dispute arbitration agreement, they will not solve the principal problems posed by mass arbitrations.

According to a recent year-in-review report by WebRecon, reversing the trend of the last two years, filings under the Telephone Consumer Protection Act (TCPA) increased in 2023 as compared to 2022. Likewise, complaints filed with the Consumer Financial Protection Bureau (CFPB) were up for the year. Fair Credit Reporting Act (FCRA) and Fair Debt Collection Practices Act (FDCPA) filings, however, were both down from the previous year. In all, the FCRA maintained its lead in the number of filings, followed by the FDCPA, and with the TCPA in third place.

The debt purchaser in In re McIntosh argued that because it was enforcing a debt that was not listed correctly on the debtor’s bankruptcy schedules, it was entitled to assume the debt had not been discharged. The U.S. Bankruptcy Court for the Southern District of Florida disagreed and entered an award of sanctions in the total amount of $64,686.93 — including $10,000 for emotional distress and over $21,000 in punitive damages.