Consumer Financial Services

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More than two years after the Supreme Court released its ruling in Facebook v. Duguid, confirming the meaning of automatic telephone dialing systems (ATDS) under the Telephone Consumer Protection Act (TCPA), a plaintiff has filed a petition for a writ of certiorari to the Supreme Court to challenge the Ninth Circuit’s application of the Facebook decision. The Facebook ruling effectively closed the door on one of the broadest classes of TCPA-related litigation; since then, plaintiff-side advocates have worked ceaselessly, though largely unsuccessfully, to chip away at the ruling. If the Supreme Court accepts the appeal, this will represent a significant development in the ongoing saga of ATDS litigation.

Deceptive advertisements, market manipulation, misappropriation of customer funds, and “Ask Me Anything (AMA)” sessions served as the catalysts of a civil enforcement action the Federal Trade Commission (FTC) recently filed against bankrupt digital asset services provider Celsius Network LLC (Celsius) and its co-founders on July 13. This is a groundbreaking move by the FTC for two reasons. First, it marks the first time that the agency has filed suit against a digital asset-based company. Second, the FTC’s request for civil money penalties is predicated on a novel theory under the Gramm-Leach-Bliley Act (GLBA). Alongside the FTC, the Department of Justice has filed criminal charges against ex-CEO Alexander Mashinsky, and the Securities and Exchange Commission and the Commodity Futures Trading Commission have filed separate civil enforcement actions against Celsius.

On July 12, U.S. Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) reintroduced legislation, titled the Responsible Financial Innovation Act that would establish a comprehensive regulatory framework for crypto assets. This proposed bill expands on the bill the senators introduced in 2022 by adding new consumer protections and safeguards to further strengthen the industry against fraud and bad actors, among other additions.

On July 7, Missouri Governor Mike Parson signed SB 103 into law, which prohibits any person from offering earned wage access (EWA) services without registering with the Division of Finance and paying an annual $1,000 fee. The law also requires EWA providers to develop procedures for dealing with consumer questions and complaints, specifies notices required to be given to consumers, and regulates the types of fees that may be charged and the manner in which repayments may be pursued. The law further specifies requirements should the EWA provider solicit, charge, or receive tips or gratuities from consumers. Like Nevada, discussed here, the law specifies that EWA products are not loans or money transmissions under Missouri law. In March 2023, the California Department of Financial Protection and Innovation took the opposite position with respect to EWA products and proposed new regulations under the California Financing Law that would update the definition of loan to include EWA products, except for those offered by employers.

On June 29, 2023, the Federal Communications Commission (FCC or Commission) issued a notice of proposed rulemaking clarifying how consumers may revoke consent to receive calls or texts under the Telephone Consumer Protection Act (TCPA). The FCC is accepting comments on the proposed rule until July 31, 2023.

On June 28, a magistrate judge in the U.S. District Court for the Southern District of Ohio issued a report recommending that the defendant’s motion to dismiss be denied because the plaintiff had standing under the Telephone Consumer Protection Act (TCPA) even though the calls in question were not intended for the plaintiff.

On June 16, Nevada Governor Joe Lombardo signed into law Senate Bill 276, which significantly amended Nevada Revised Statute 649, otherwise known as the Nevada Collection Agencies Licensing Act (the Act). The Act regulates the activities of “collection agencies,” or any person “engaging, directly or indirectly, and as a primary or a secondary object business or pursuit, in the collection of or in soliciting or obtaining in any manner the payment of a claim owed or due or asserted to be owed or due to another.” Among other things, Senate Bill 276 expanded the exemptions from the collection agency licensing requirement to include entities that are not debt collectors under § 1692a(6)(A) – (F) of the Fair Debt Collection Practices Act (FDCPA). From a practical perspective, these expanded licensure exemptions should result in many first-party servicers no longer needing to obtain a Nevada collections license. Highlights of Senate Bill 276 include:

On June 29, the Federal Financial Institutions Examination Council (FFIEC) announced the availability of data on 2022 mortgage lending transactions reported under the Home Mortgage Disclosure Act (HMDA) by U.S. financial institutions, including banks, savings associations, credit unions, and mortgage companies. The Snapshot National Loan-Level Dataset contains the national HMDA datasets as of May 1, 2023. In March 2023, the FFIEC had made available Loan/Application Registers (LARs) for each HMDA filer of 2022 data, as well as a combined dataset for all filers, modified to protect borrower privacy.

Key observations about the 2022 HMDA data include the following:

On June 29, the Seventh Circuit Court of Appeals affirmed the Western District of Wisconsin’s decision that an entity created under tribal law was entitled to immunity as an arm of the tribe and dismissed claims characterized as personal capacity claims against individual employees of the tribal entity as being inherently asserted against the tribe itself (ruling available here). This ruling recognizes the important role that sovereign immunity plays in the structuring of economic ventures for tribal communities and demonstrates how a properly enacted tribal code can safeguard immunity protections.

Mindful of the impending retirement of many millions of investors in the “baby boomer” generation, which hold a substantial amount of the world’s wealth, the Financial Industry Regulatory Authority (FINRA) continues to heavily monitor its member firms supervision of their registered financial advisors who service vulnerable and elderly investor customers. For example, last month FINRA…