Like most industries today, Consumer Finance Services businesses are being significantly impacted by the novel coronavirus (COVID-19). Troutman Pepper has developed a dedicated COVID-19 Resource Center to guide clients through this unprecedented global health challenge. We regularly update this site with COVID-19 news and developments, recommendations from leading health organizations, and tools that businesses can use free of charge.

Our bank and loan servicing clients also face novel challenges affecting their industry due to COVID-19, particularly the ever-changing rules and regulations concerning evictions and foreclosures. We closely track these updates and have assembled an interactive tracker containing state orders and guidance documents regarding residential foreclosure and eviction moratoriums. You may access this interactive tool at https://covid19.troutman.com/.

To help you keep abreast of relevant activities, below find a breakdown of some of the biggest COVID-19 driven events at the federal and state levels to impact the Consumer Finance Services industry this past week:

Federal Activities

State Activities

Privacy and Cybersecurity Activities

Federal Activities:

• On October 8, the U.S. Department of Education announced the establishment of an Office of Enforcement within Federal Student Aid (FSA). According to the announcement, the new office will “strengthen oversight of and enforcement actions against postsecondary schools that participate in the federal student loan, grant, and work-study programs.” Former Consumer Financial Protection Bureau (CFPB) Enforcement Director Kristen Donoghue will lead the FSA’s Enforcement Office and will report directly to FSA Chief Operating Officer and former CFPB Director Richard Cordray. For more information, click here.

• On October 6, the Federal Trade Commission (FTC) sent a Notice of Penalty Offenses to 70 for-profit higher educational institutions based on certain acts or practices determined to be deceptive or unfair, including misrepresentations about the need or demand for consumers who graduated from the institution, employment prospects, the number or percentage of graduates who obtained employment, and typical or potential earnings for graduates. The announcement also stated that the FTC “is resurrecting its Penalty Offense Authority, found in Section 5 of the FTC Act.” For more information, click here.

• On October 6, the U.S. Department of Education announced a temporary period during which borrowers may receive credit for payments that previously did not qualify for public service loan forgiveness (PSLF) or temporary expanded PSLF (TEPSLF). The department will offer a time-limited waiver so student borrowers can count payments from all federal loan programs or repayment plans toward forgiveness, including previously ineligible loan types and payment plans. The department estimates the waiver will make roughly 22,000 borrowers immediately eligible to have their loans erased automatically. Likewise, another 27,000 could see their debts disappear if they can prove they worked in public service at the time they made payments deemed ineligible. For more information, click here.

• On October 5, the House of Representatives introduced a companion bill that would compensate whistleblowers who report instances of financial wrongdoing to the CFPB. Introduced by Rep. Al Green (D-TX), R.5484 is modeled after Senate bill S.2775, which was introduced last month by Sen. Catherine Cortez Masto (D-NV). The bills would reward whistleblowers with as much as 30% of a settlement award or up to $50,000 if the settlement is less than $1 million. For more information on H.R.5484, click here, and for more information on S.2775, click here.

• On October 4, the CFPB issued a notice, reminding consumers about the extended deadline for initial forbearance requests for Federal Housing Administration (FHA)-insured and Department of Veterans Affairs (VA) guaranteed loans. Previously set for September 30, the deadline for initial forbearance requests for FHA, VA, and U.S. Department of Agriculture will not occur until the COVID-19 national emergency is officially over. Currently, there is no deadline in place to request an initial COVID-19 hardship forbearance for consumers with loans backed by Fannie Mae or Freddie Mac. For more information, click here.

• On October 1, the CFPB published a set of Frequently Asked Questions (FAQs) on limited-content messages and the call frequency provisions in the Debt Collection Rule (Regulation F) that will go into effect on November 30. For more information, click here.

• On September 30, the CFPB published Data Point Report: Subprime Auto Loan Outcomes by Lender Type, examining interest rate and default risk trends across different types of subprime auto lenders. The report looks at how these metrics vary across different types of subprime auto lenders, finding that some types of subprime lenders charge their borrowers significantly higher interest rates than others, and the differences in default risk will unlikely fully explain the differences in interest rates. For more information, click here.

• On September 30, the CFPB issued an analysis of recent rules aimed at ensuring mortgage servicers provide options to potentially vulnerable borrowers exiting forbearance. The analysis notes that as of September, there are approximately 1.6 million borrowers exiting mortgage forbearance programs, and it suggests that many may be vulnerable to a heightened risk of harm that may have been exacerbated by the effects of the COVID-19 pandemic.

State Activities:

• The Maryland Office of the Commissioner of Financial Regulation recently announced that it will host a free “virtual information session for Maryland consumer debt collection agencies” on October 26 from 1:00 – 4:45 p.m. ET. In the information session, “[f]ederal and state regulators and industry thought leaders will discuss the new federal rules for debt collection, the Maryland Consumer Debt Collection Act, medical debt collection, debt buying, consumer privacy and data security, the State Examination System, the use of technology to improve operations and compliance.” For more information, click here.

• On October 6, New York Attorney General Letitia James announced the conviction of a contractor who allegedly defrauded homeowners by posing as a veteran and “lured unsuspecting homeowners who were looking to have home renovation projects completed during the COVID-19 pandemic.” The attorney general’s office began its investigation after “numerous homeowners filed complaints with the NYSP and the OAG’s Consumer Frauds and Protection Bureau.” For more information, click here.

• On October 4, California Governor Gavin Newsom signed into law amendments to California’s existing law on automatic subscription renewals. The law applies to all businesses that make automatic renewal or continuous services offers to California consumers. The amendments are effective July 1, 2022. For more information, click here.
• On October 1, California Attorney General Rob Bonta issued a reminder of protections under California law as the state’s eviction moratorium expires. Among other reminders, Attorney General Bonta reminded consumers of: (1) a website providing information and resources to Californians; (2) tenant’s rights under the COVID-19 Tenant Relief Act; (3) homeowners’ protections under the Homeowner Bill of Rights; and (4) a list of local governments’ laws that may continue to have eviction protections in place. For more information, click here.

Privacy and Cybersecurity Activities:

• On October 8, the FTC advised consumers to spot pandemic scams, specifically those relating to an “emergency broadband program.” The FTC shared that scammers are running ads on social media, offering individuals “help” to take advantage of free internet service in exchange for payment or personal information. However, the FTC reminded consumers that the actual government program is called the “Emergency Broadband Benefit Program,” which aims to assist consumers in signing up for internet due to the effects of the COVID-19 pandemic. “Government impersonators can look and sound like the real deal,” but there are several things consumers can do to stay one step ahead of scammers. For instance, the FTC reminded consumers to “apply through the FCC and its listed providers,” which can be found here. Also, the FTC warned consumers not to “pay upfront to get ‘free’ connected devices or services” because the actual program does not require payment to determine qualification. For those interested in reading the complete advisory, click here.

• Earlier last month, a defendant responded to the plaintiff’s amended complaint in Chapman v. Commonwealth of Pennsylvania et al. See 1:21-cv-00824 (M.D. Pa.). The complaint alleged that a data incident involving the loss of protected health information (PHI) used for COVID-19 contact tracing caused the plaintiff harm. For background, the plaintiff alleged that a data incident resulted in injury in the form of wasted time and money monitoring accounts, the future risk to identity theft, unwanted solicitations, and the loss of value in the plaintiff’s PHI. The defendant filed a motion to dismiss the plaintiff’s amended complaint, arguing that the plaintiff has not alleged an injury in fact sufficient to support Article III standing, and the plaintiff failed to state a valid claim upon which relief may be granted relating to negligence, publicity given to private life, and breach of implied warranty claims. For more information about contact tracing, we recommend you check out our Law360 article, where we discuss contact tracing’s privacy implications for app developers.