To keep you informed of recent activities, below are several of the most significant federal and state events that have influenced the Consumer Financial Services industry over the past week:

Federal Activities

State Activities

Federal Activities:

• On December 4, the Federal Trade Commission (FTC) announced it will hold a virtual informal hearing on January 16, 2024, on the proposed amendments to the Negative Option Rule as part of its review of the proposed “Click to Cancel” rulemaking. For more information, click here.
• On December 1, the House of Representatives approved a resolution to repeal a Consumer Financial Protection Bureau (CFPB) rule that mandated banks to gather data on loan applications from women-owned, minority-owned, and small businesses to help lenders identify business development needs and opportunities. For more information, click here.
• On December 1, the Office of the Comptroller of the Currency (OCC) announced that it is soliciting academic research papers on depositor behavior, bank liquidity, and run risk in the banking system for submission by January 15, 2024. The OCC will invite authors of selected papers to present to OCC staff and invited academic and government researchers at OCC Headquarters in Washington, D.C., on June 5-7, 2024. Authors of selected papers will be notified by March 1, 2024, and will have the option of presenting their papers virtually. For more information, click here.
• On December 1, the OCC announced that it is publishing its assessment rates for the 2024 calendar year. The OCC is maintaining the 2023 rates in the general assessment, independent trust, and independent credit card fee schedules, and is not adjusting assessment rates for inflation. For more information, click here.
• On November 30 CFPB Director Rohit Chopra testified during the Senate Banking Committee’s hearing on the CFPB’s Semi-Annual Report to Congress. The Senate Banking Committee questioned Chopra on the CFPB’s oversight of financial institutions providing benefits under the Servicemembers Civil Relief Act (SCRA), medical debt collection, so-called “junk fees,” and the increasing popularity of buy now, pay later (BNPL) products. For more information, click here.
• On November 30, crypto exchange Binance announced it has introduced a pilot program enabling banks to store trading collateral off-exchange, a move aimed at reducing counterparty risk. The initiative allows institutions to hold collateral at a third-party bank rather than depositing it on the exchange, a practice common in traditional financial markets. This arrangement also allows investors to adjust their crypto-asset allocation based on their risk tolerance, with collateral held in cash or Treasury bonds, enabling institutions to earn yields while trading. Binance has been developing this program for over a year and plans to expand it further, addressing institutional investors’ concerns about counterparty risk, which refers to the potential default on contractual obligations by one party in a transaction. The initiative follows similar efforts by other exchanges, such as Deribit’s partnership with MPC wallet provider Fireblocks, to allow traders to perform swaps without depositing on the exchange. For more information, click here.
• On November 29, the Federal Deposit Insurance Corporation (FDIC) reported that FDIC-insured institutions reported net income of $68.4 billion in the third quart of 2023. For more information, click here.
• On November 29, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on Sinbad.io, a virtual currency mixer used as a money-laundering tool by the Lazarus Group (a state-sponsored cyber hacking group from the Democratic People’s Republic of Korea (DPRK)). Sinbad.io has processed millions of dollars from Lazarus Group’s cyber heists, including the notorious Horizon Bridge and Axie Infinity heists, and is also used by cybercriminals to obscure transactions linked to illicit activities. This action follows previous sanctions against other virtual currency mixers and traders facilitating the conversion of stolen virtual currency for DPRK actors. Sinbad.io, believed to be a successor to the previously sanctioned Blender.io, has been instrumental in laundering significant portions of stolen virtual currency from various heists. The Lazarus Group, sanctioned by OFAC in 2019, has reportedly stolen more than $2 billion in digital assets. The sanctions against Sinbad.io are part of efforts to counter threats to the national security, foreign policy, or economic health or financial stability of the U.S. As a result, all property and interests of Sinbad.io in the U.S. must be blocked and reported to OFAC, and any dealings involving this entity are generally prohibited. For more information, click here.
• On November 28, the Office of Inspector General for the FDIC delivered a material loss review report. The report’s objectives were twofold: first, to determine why a bank’s issues led to a material loss to the deposit insurance fund; and second, to review the FDIC’s supervision of the bank and make recommendations to prevent similar losses in the future. The report outlined 11 recommendations for the FDIC to implement to improve its supervision process over the banking sector. For more information, click here.
• On November 28, the FTC announced that it is sending more than $3 million in refunds to businesses that paid for memberships to HomeAdvisor, Inc., a company affiliated with Angi (fka, Angie’s List). The agency is also sending claim forms to businesses that are eligible for additional refunds. The refunds stem from FTC allegations that HomeAdvisor used deceptive marketing tactics when selling home improvement project leads to service providers, including small businesses operating in the “gig” economy. For more information, click here.
• On November 27, the California Department of Financial Protection and Innovation (DFPI) released a report detailing consumer complaints related to cryptocurrency gathered via its online portal. The Q3 2023 Consumer Services Office report highlighted common issues such as scams involving transfers of digital assets to fraudulent platforms, loss of funds due to transfers to unknown wallets, and sham crypto investments. Other issues included additional investments made to scammers after an initial return, concerns about account activity on legitimate crypto platforms, and scam approaches via text and social media. The DFPI also provided advice on how consumers can safeguard against these scams, emphasizing that if an offer appears too good to be true, it likely is. For more information, click here.
• On November 21, the CFPB announced that it approved an application that marks the first step for piloting disclosures for construction loans. Under this program, the CFPB authorizes parameters for in-market testing of alternatives to required disclosures. Real-world disclosure testing is often more accurate than lab testing, and this effort can help the CFPB by informing the need for possible regulatory changes. For more information, click here.
• On November 17, the Department of Veterans Affairs requested that mortgage servicers pause foreclosures of VA-guaranteed loans through May 31, 2024, and extended the COVID-19 Refund Modification program through May 31, 2024. For more information, click here.

State Activities:

• On December 4, Florida Attorney General (AG) Ashley Moody filed civil actions against two solar companies, alleging the companies violated the state’s consumer protection laws. Specifically, Moody alleges that one of the companies sold consumers solar panels, promising solar-energy benefits and rapid project completion deadlines. However, Moody alleges that the company misled consumers about the solar panel system installation process and incentives or credits. Moody alleges the other company used pressure tactics to sell its products to consumers and misrepresented projected savings, the quality of equipment, and tax rebates. Moody is seeking permanent injunctions to prevent the companies from making unfounded or misleading claims, or engaging in misleading business practices related to the solar systems. For more information, click here.
• On November 28, Massachusetts AG Andrea Joy Campbell announced an $8.75 million settlement against a rent-to-own retailer, resolving claims that the company violated Massachusetts’s consumer protection laws. Based on its investigation, Campbell alleges that the company filed applications for criminal theft and larceny against consumers as a means of coercing them to make additional payments. The investigation further revealed that the company violated the AG’s debt collection regulations by excessively calling consumers’ residences, places of employment, and personal phones, disregarding regulations limiting such contact with consumers to twice in a seven-day period. According to Campbell, the company also failed to properly notify consumers regarding repossession attempts before appearing at their homes to confiscate furniture, often resulting in physical altercations with customers. The settlement, which the AG secured by way of an assurance of discontinuance, requires the company to pay $8.75 million to the commonwealth and make drastic changes to its business practices, including no longer filing criminal complaints against consumers to secure payment. For more information, click here.
• On November 28, New York AG Letitia James issued a warning, advising consumers to take precautions to protect their personal information following a data breach at a medical transcription company. The breach impacted nearly nine million patients and the comprised data includes some social security numbers as well as insurance and clinical information. James provided several precautions consumers can take to shield against identity theft, including: (a) monitoring their credit; (b) possibly placing a credit freeze on their credit reports; (c) placing a fraud alert on their credit report; (d) obtaining copies of their medical records; (e) contesting unrecognized medical billing; and (f) informing their insurance providers of any suspected fraud. For more information, click here.