Consumer Financial Services

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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 November 21, the U.S. Department of Justice (DOJ) unsealed its criminal indictment against Binance.com (Binance), the world’s largest cryptocurrency exchange, and its CEO, Changpeng “CZ” Zhao (CZ). The indictment against Binance contains three charges: (1) conspiracy to violate the Bank Secrecy Act (BSA) by failing to implement and maintain an effective anti-money laundering (AML) program; (2) conducting an unlicensed money services business; and (3) willful violation of the International Emergency Economic Powers Act (IEEPA). On the same day, at a press conference also attended by Treasury Secretary Janet Yellen and Commodity Futures Trading Commission (CFTC) Chairman Russ Behnam, Attorney General Merrick Garland announced Binance pled guilty to all charges, and the DOJ is requiring Binance to pay approximately $4.3 billion in criminal penalties and forfeiture. CZ also pled guilty to violating the BSA by failing to maintain an effective AML program. As a result, he must resign as Binance’s CEO and is awaiting criminal sentencing.

Last week, a district court in Nevada held that an undated, model form debt validation notice does not violate the Fair Debt Collection Practices Act (FDCPA). In Bergida v. PlusFour, Inc., the defendant sent a debt validation letter to the plaintiff that followed the model form provided by the Consumer Financial Protection Bureau (CFPB). The letter was not dated. The plaintiff claimed the letter violated FDCPA §§ 1692d, e, f, and g because she could not determine what date was “today” and “now,” which allegedly misled her about the status of the debt, confused her, made the letter seem illegitimate and suspicious, and caused her to spend time and money trying to figure out whether the debt was valid. When considering the defendant’s motion to dismiss, the court applied the least sophisticated debtor standard and found that the plaintiff failed to state a claim.

Earlier this year, a district court for the Middle District of Florida upheld a jury award of $225,000 in punitive damages in a debt collection case finding the defendant’s conduct “reprehensible” based on the physical harm caused to the plaintiff, the defendant’s indifference or reckless disregard of the harm it caused to the plaintiff, the plaintiff’s financial vulnerability, and the defendant’s repeated actions.

The Securities and Exchange Commission’s Division of Examinations has outlined its 2024 Examination Priorities, with a significant focus on cryptocurrency, emerging technology, and Anti-Money Laundering (AML) laws. This has important implications for financial services. Our Regulatory Oversight blog has the details; key highlights are below.

A U.S. District Court in the Western District of Wisconsin recently denied both the defendant and plaintiff’s summary judgment motions in a Fair Credit Reporting Act (FCRA) case, holding that the reasonableness of the defendant’s investigation of the plaintiff’s identity theft claim was a triable issue.

On October 12, the U.S. Court of Appeals for the Third Circuit issued a decision rejecting a district court’s finding that the so-called informational injury doctrine established Article III standing for the named plaintiff and putative class in a class action brought under the Fair Debt Collection Practices Act (FDCPA).

On October 17, following Washington Attorney General (AG) Bob Ferguson’s unsuccessful consumer protection action against thrift store chain, Savers Value Village Inc. (Savers), the Washington Superior Court of King County granted Savers’ motion for attorney’s fees and costs in the amount of $4.3 million. This substantial award — which is allowable under the Washington Consumer Protection Act (WA CPA) — represents a substantial recoupment of Savers’ attorneys’ fees spent to defend the almost decade-long litigation.

The Connecticut Banking Commissioner (Commissioner), acting through the Consumer Credit Division of the Department of Banking (the Division), conducted an investigation into the Law Offices of David M. Katz, discovering that in 2018 and 2019 the firm had engaged in in unlicensed collection activity involving about 10,000 Connecticut accounts with a total balance of $1.4…

In Moore v. Merchants & Medical Credit Corp., Inc., the plaintiff initiated litigation in state court alleging a violation of the Fair Debt Collection Practices Act (FDCPA) based on the defendant’s use of a letter vendor to send the plaintiff a demand. After removal, the U.S. district court for the Middle District of Pennsylvania found that the plaintiff failed to allege a harm sufficient to confer federal jurisdiction and remanded the case to the original Pennsylvania state court.