Regulatory Enforcement + Compliance

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On June 6, the U.S. Department of the Treasury (Treasury) issued a request for information (RFI) seeking public input on the uses, opportunities, and risks presented by the use of artificial intelligence (AI) within the financial sector. Notably, the Treasury’s RFI comes three years after the issuance of a similar RFI by the federal banking agencies (Office of the Comptroller of the Currency, Federal Reserve Board, Federal Deposit Insurance Corporation), Consumer Financial Protection Bureau, and National Credit Union Administration on financial institutions’ use of AI, discussed here.

On May 31, the Ninth Circuit Court of Appeals published an opinion in Bristol SL Holdings, Inc. v. Cigna Health and Life Insurance Company, which has significant implications for the healthcare industry, most notably by clarifying the broad scope of the Employee Retirement Income Security Act’s (ERISA) preemption of state law causes of action arising from pre-service coverage communications between medical providers and health plan administrators.

Yesterday, the Consumer Financial Protection Bureau (CFPB or Bureau) announced it has finalized a rule outlining the qualifications to become a recognized industry Standard Setter body (Standard Setter Rule). These bodies will be instrumental in issuing standards that assist companies in complying with the forthcoming Personal Financial Data Rights Rule under Section 1033 of the Consumer Financial Protection Act (Section 1033 Rule). The Standard Setter Rule outlines the attributes that these bodies must exhibit to gain recognition from the CFPB. It also provides a comprehensive guide detailing the application process for recognition and the CFPB’s evaluation methodology.

The Consumer Financial Protection Bureau (CFPB or Bureau) has issued a circular warning covered persons that including unlawful or unenforceable terms and conditions in consumer contracts can violate the prohibition on deceptive acts or practices in the Consumer Financial Protection Act (CFPA).

On June 3, the Consumer Financial Protection Bureau (CFPB or Bureau) issued its final rule requiring covered nonbanks to register enforcement orders, and it is a doozy. Not only will covered nonbanks be required to register public orders issued by agencies and courts with the CFPB, but they will have to go back to 2017. And not only will the CFPB publish the orders, but a large subgroup will have to certify on a yearly basis their full compliance with the orders or make a self-disclosure to the CFPB of any compliance failures. This rule has obvious major consequences for any covered person caught in its web, making the exact ambit of the rule crucial. Given the final rule clocks in at a whopping 486 pages, this post will attempt to provide a roadmap through the rule, focusing on what is required and who is covered.

Yesterday, the lawsuit challenging the Consumer Financial Protection Bureau’s (CFPB or Bureau) credit card late fee rule (Final Rule) was ordered to be 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.) for the second time in as many months. The court’s decision was largely based on the same analysis as the first transfer order.

On May 23, the U.S. Supreme Court issued its decision in Coinbase, Inc. v. Suski et al., unanimously affirming the Ninth Circuit’s decision holding that when parties have agreed to two contracts — one sending arbitrability disputes to arbitration, and the other sending arbitrability disputes to the courts — a court must decide which contract governs. The decision teaches a cautionary lesson that parties with multiple contracts between them must keep issues of arbitrability consistent between the contracts.

On May 16, the Illinois legislature passed Senate Bill (SB) 2933. The bill amends the Illinois Consumer Fraud and Deceptive Business Practices Act making it unlawful for a consumer reporting agency (CRA) to create a consumer report containing any adverse information that the CRA knows or should know relates to medical debt incurred by the consumer or a collection action against the consumer to collect medical debt. The bill would also make it unlawful for a CRA to maintain a file on any consumer containing information relating to medical debt. The bill is currently awaiting Governor Pritzker’s signature.

Yesterday, the Consumer Financial Protection Bureau (CFPB or Bureau) issued an “interpretive rule,” subjecting “Buy Now, Pay Later” (BNPL) transactions to provisions of Regulation Z applicable to “credit cards.” Among other things, this classification would require BNPL and other lenders to extend many of the same legal protections and rights to consumers that apply to traditional credit cards, including the rights to dispute charges and demand refunds for returned products, and, potentially, receive periodic statements. The Bureau claims its authority to issue this interpretive rule — in lieu of a formal rulemaking — stems from the Truth in Lending Act (TILA) and Regulation Z, and its general authority to issue guidance as set forth in § 1022(b)(1) of the Consumer Financial Protection Act of 2010.

Kansas Governor Laura Kelly signed House Bill (HB) 2247 into law, bringing significant changes to the Kansas Mortgage Business Act and the Uniform Consumer Credit Code (UCCC). The changes brought about by HB 2247 will largely become effective on January 1, 2025. However, those changes standardizing threshold amounts consistent with federal law will become effective on July 1, 2024.