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 October 6, the Federal Trade Commission (FTC) announced that two providers of student loan debt relief are permanently banned from the debt relief industry. The FTC alleged that the defendants pretended to be affiliated with the Department of Education, charged illegal junk fees, and offered students loan forgiveness promises that were not fulfilled. For more information, click here.
• On October 5, the Federal Deposit Insurance Corporation (FDIC) issued a notice of proposed rulemaking (NPR) that would add an Appendix C to the FDIC’s regulation for safety and soundness standards 12 C.F.R. § 364 et seq. (Part 364). Appendix C is intended to promote strong corporate governance and risk management at FDIC-supervised institutions that have total consolidated assets of $10 billion or more (covered institutions) by proposing corporate governance and risk management guidelines. For more information, click here.
• On October 5, the Consumer Financial Protection Bureau (CFPB) announced the appointment of new members to the Consumer Advisory Board, Community Bank Advisory Council, Credit Union Advisory Council, and Academic Research Council. For more information, click here.
• On October 4, the Federal Trade Commission (FTC) held a roundtable to discuss the impact of artificial intelligence on creative fields. For more information, click here.
• On October 4, the Federal Reserve Board Governor Michelle Bowman issued remarks at the 2023 Community Banking Research Conference sponsored by the Federal Reserve System, the Conference of State Bank Supervisors, and the FDIC, where she spoke about the role of community banks in the U.S. banking system. For more information, click here.
• On October 4, President Biden announced the administration’s continued effort to address the student loan crisis by approving an additional 125,000 people for $9 billion in student debt relief. The related press release stated that this comes because of improvements made to the Income-Driven Repayment and Public Service Loan Forgiveness programs, as well as debt cancellation for borrowers with total or permanent disabilities. The total approved debt cancellation by the Biden Administration now amounts to $127 billion for nearly 3.6 million people. The administration has also launched affordable payment plans, increased Pell Grants, and has taken steps to protect borrowers from unaffordable debts. The administration is also pursuing alternative paths to provide debt relief under the Higher Education Act. For more information, click here.
• On October 4, 2023, Seth Frotman, general counsel and senior advisor to the director of the Consumer Financial Protection Bureau (CFPB), gave prepared remarks that focused on the need for state and federal cooperation on medical debt. Of interest from his prepared remarks:
  • “We are committed [to] working side by side with states to make the biggest possible impact” in regulating financial institutions;
  • The CFPB is “very concerned that many patients have trouble navigating and accessing” hospital financial assistance programs, believing that this lack of access leads to increases in debt collection;
  • The CFPB is also concerned with medical billing errors, citing that “more than four in ten [consumers] received an inaccurate bill, and nearly seven in ten were asked to pay a bill that should have been covered by insurance.” This leads to “debt collectors chasing people for medical bills with little basis to believe that they are collecting the right amount”;
  • Underscoring the issue of incorrect medical debt and medical billing errors, Frotman said, “Medical providers often send unpaid accounts to third-party debt collectors with little or no supporting documentation or access to providers’ records”;
  • The CFPB sees medical financial products — special-purpose credit cards and installment loans used to cover the cost of medical treatment — as an “area of growing concern with respect to medical debt”; and
  • The CFPB “is very concerned that the credit reporting of medical bills is being used inappropriately as a debt collection tool.” Frotman goes on to describe the practice as “coercive” and “problematic,” Noting that “[the CFPB] believe[s] this is a deliberate misuse of the credit reporting system, which is supposed to be used to assess credit risk, not as a debt collection tool.”
  For more information, click here.
• On October 3, the U.S. Supreme Court heard oral argument in Community Financial Services Association of America v. Consumer Financial Protection Bureau, which challenges the constitutionality of the CFPB. At oral argument, the U.S. Solicitor General observed that the lower court decision was the “first time any court in our nation’s history has held that Congress violated the Appropriations Clause by enacting a statute providing funding.” She noted that Congress has approved similar “standing appropriations” for agencies including the U.S. Customs Service, the U.S. Post Office, and the U.S. Mint. For more information, click here.
• On October 3, the Department of Justice (DOJ) announced the unsealing of indictments against China-based companies involved in drug-related crimes. In the related press release, the DOJ mentioned that the Office of Foreign Assets Control (OFAC) added 19 cryptocurrency addresses to its Specially Designated Nationals list because these addresses were associated with individuals and entities involved in illicit drug trafficking and the distribution of fentanyl and methamphetamine. For more information, click here.
• On October 3, the Acting Comptroller of the Currency Michael J. Hsu issued remarks via webcast at the BIS International Data Hub (IDH) 10th Anniversary Conference. Hsu discussed how the IDH’s work to gather and analyze data helps national authorities perform ongoing monitoring and analysis of key risks affecting the global financial system. He also highlighted how the IDH’s work supports greater financial stability. For more information, click here.
• During a conference held at the Brookings Institution on October 6, CFPB Director Rohit Chopra stated that the CFPB is considering applying the Electronic Fund Transfer Act (EFTA) to cryptocurrency platforms to enhance consumer protections, given recent hacking incidents in the crypto industry. Chopra stated that the goal is to address vulnerabilities in the crypto space, which include unauthorized transfers and the handling of user data, among others. Chopra also stated that the CFPB may release comprehensive guidelines to clarify EFTA obligations for digital currencies. For more information, click here.
• The CFPB has extended the deadline for small entity representatives (SERs) to submit their feedback on the Small Business Regulatory Enforcement Fairness Act (SBREFA) outline for the CFPB’s proposed FCRA rulemaking. The new deadline is November 6 for SERs to submit their written feedback. For more information, click here.

State Activities:

• On October 7, California Attorney General Rob Bonta issued a statement after Governor Gavin Newsom signed Senate Bill 478 into law. Bonta sponsored the bill, co-authored by Senator Bill Dood (D-Napa) and Senator Nancy Skinner (D-Berkeley), which will prohibit hidden fees commonly referred to as “junk fees” in the state beginning July 1, 2024. Bonta noted that “[t]hese deceptive fees . . . are bad for consumers and bad for competition,” and lauded the two authoring senators for their “commitment to protecting consumers.” For more information, click here.
• The New York City Department of Consumer and Work Protection (DCWP) recently issued a notice of public hearing and opportunity to comment on its proposed amendments to its rules relating to debt collectors. With the proposed changes, DCWP seeks to, among other things: (a) require collectors to maintain a log of all attempted and successful communications with a consumer, to include the time, date, medium used, and a summary of each communication; (b) limit attempts by collectors to no more than three communications or attempted communications within a seven-day period; (c) permit collectors to communicate with consumers via text or email provided that certain conditions are met; and (d) require that validation notices be delivered via U.S. mail or other delivery service, prohibiting the use of oral or electronic validation. Comments on the proposed amendments are due November 22, 2023. The public hearing will take place at 11A.M. on November 29, 2023 via phone and videoconference. For more information, click here.
• On September 29, Washington, D.C. Council bill PR25-0373 was assigned resolution number R25-0244. It became effective on September 19. In D.C., emergency legislation goes into effect immediately on signature by the mayor and is in effect for no longer than 90 days. Per the text of the bill, the legislation is necessary to prevent any potential gap in the law and protect homeowners from foreclosures as they continue to await approvals and payments from the Department of Housing and Community Development (DHCD). An emergency amendment, B25-0449, was also introduced by Councilmember White on the same day. It unanimously passed its final reading by a vote of 13-0 on the same day. For more information, click here.