On March 11, the U.S. Court of Appeals for the Fourth Circuit affirmed the district court’s denial of a motion to compel arbitration in two class-action lawsuits. The decision potentially has far-reaching implications for the enforceability of arbitration clauses in consumer contracts, particularly those involving unilateral modification provisions.
Credit Card Late Fee Rule Litigation: CFPB Indicates “Resolution is Feasible”
In a significant development in the credit card late fee rule litigation, the Consumer Financial Protection Bureau (CFPB) has filed a status report indicating that it is actively working towards a resolution. This update follows last month’s court’s order, which required the CFPB to explain its plans for proceeding with the case.
Texas Federal Court Orders CFPB to File Status Report Following Leadership Change
Today, the U.S. District Court for the Northern District of Texas issued an order in Chamber of Commerce of the United States of America v. Consumer Financial Protection Bureau (CFPB or Bureau) in light of recent changes within the Bureau’s leadership.
Senators Sanders and Hawley Propose Legislation Capping Credit Card Interest Rates
On February 4, Senators Bernie Sanders (I-Vt.) and Josh Hawley (R-Mo.) introduced bipartisan legislation aimed at immediately capping credit card interest rates at 10% for a period of five years. This initiative follows a recent Forbes report indicating that the average credit card interest rate stands at 28.6%.
CFPB Issues Compliance Aid on Electronic Fund Transfers
On January 15, the Consumer Financial Protection Bureau (CFPB or Bureau) issued a Compliance Aid to clarify the requirements under the Electronic Fund Transfer Act (EFTA) and Regulation E. Electronic Fund Transfers (EFTs) are defined as “any transfer of funds that is initiated through an electronic terminal, telephone, computer, or magnetic tape for the purpose of ordering, instructing, or authorizing a financial institution to debit or credit a consumer’s account.” The Compliance Aid, presented in a Frequently Asked Questions (FAQs) format, addresses various aspects of EFTs, including coverage, financial institutions’ obligations, and error resolution processes.
CFPB Highlights Fair Lending Risks in Advanced Credit Scoring Models
Last week, the Consumer Financial Protection Bureau (CFPB or Bureau) released its latest Supervisory Highlights report, focusing on the use of advanced technologies in credit scoring models. This edition of Supervisory Highlights concerns select examinations of institutions that use credit scoring models, including models built with advanced technology commonly marketed as AI/ML technology, when making credit decisions. The report repeated the CFPB’s previous statements that there is “no ‘advanced technology’ exception” to federal consumer protection laws (which, to our knowledge, no industry participant has suggested to exist) and asserted that financial institutions will need to improve their practices to ensure compliance with the Equal Credit Opportunity Act (ECOA) and Regulation B. This includes actively searching for less discriminatory alternatives, critically evaluating the use of alternative data, and rigorously testing and validating adverse action reasons.
CFPB Releases Semiannual Regulatory Agenda Amid House Financial Services Committee Leaders’ Calls to Halt Rulemaking
This article was republished on insideARM on January 2, 2025.
This week, the Consumer Financial Protection Bureau (CFPB or Bureau) released its semiannual regulatory agenda, outlining its planned rulemaking initiatives. This agenda includes a mix of rules in the pre-rulemaking, proposed rule, and final rule stages, covering a wide range of topics from medical debt reporting to financial data transparency. The CFPB releases regulatory agendas twice a year in voluntary conjunction with a broader initiative led by the Office of Budget and Management to publish a Unified Agenda of Regulatory and Deregulatory actions across the federal government.
CFPB Finalizes Rule on Overdraft Fees for Large Financial Institutions
On December 12, the Consumer Financial Protection Bureau (CFPB or Bureau) announced the finalization of its rule addressing overdraft fees. The rule targets financial institutions with more than $10 billion in assets, imposing new restrictions and requirements on how these institutions manage and charge for overdraft services. However, with the upcoming change in administration, questions remain as to whether the final rule will ever take effect.
NCUA Issues Guidance to Federal Credit Unions on Overdraft and NSF Fee Practices
On December 10, the National Credit Union Administration (NCUA) issued a letter to all federally insured credit unions, highlighting the risks associated with certain overdraft and non-sufficient funds (NSF) fee practices. The letter emphasizes the potential harm to consumers and the heightened risks to credit unions, including reputational, consumer compliance, third-party, and litigation risks, resulting
Google Challenges CFPB’s Supervisory Designation
On December 6, the Consumer Financial Protection Bureau (CFPB or Bureau) announced an order asserting supervisory authority over Google Payment Corp. (GPC), a subsidiary of Google LLC. This decision was based on alleged “risks to consumers” associated with GPC’s retired peer-to-peer (P2P) payment product. The CFPB’s order, however, does not assert that GPC violated any laws or engaged in wrongdoing. Instead, it relies on a relatively small number of unverified consumer complaints to justify future examinations, even though GPC stopped offering the product.