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 15, the Consumer Financial Protection Bureau (CFPB) took action against a medical debt collector, Commonwealth Financial Systems, for allegedly trying to collect unverified medical debts after consumers disputed the validity of the debts. Under this order, the company will cease operations and pay a $95,000 penalty to the CFPB’s victims relief fund. For more information, click here.
• On December 15, the Securities and Exchange Commission (SEC) denied Coinbase’s Petition for Rulemaking, which was submitted to the SEC on July 20, 2022, as “currently unwarranted.” Coinbase’s petition requested the SEC to propose and adopt rules to, among other things, “identify which digital assets are securities.” According to the statement issued by SEC Commissioner Gary Gensler, “the existing securities regime appropriately governs crypto asset securities.” For more information, click here and here.
• On December 14, the Bank of International Settlements (BIS) issued a consultive whitepaper, drafted by the Basel Committee, to amend certain digital asset standards related to stablecoins. For example, the whitepaper discusses how the quality of a stablecoin issuer’s reserve asset composition, and its ability to meet redemption requests, will determine whether a particular stablecoin meets the conditions to be included in the Group 1b category and be subjected to existing bank capital requirements. On the other hand, Group 2 stablecoins will be subjected to a new highly conservative capital treatment. For more information, click here.
• On December 14, Acting Comptroller of the Currency Michael J. Hsu issued a statement at the Financial Stability Oversight Council (FSOC) meeting on the FSOC’s Annual Report. For more information, click here.
• On December 13, by a vote of 4-1, the Federal Communications Commission (FCC) adopted new rules aimed at “closing the ‘lead generator’ robocall/robotexts loophole.” Specifically, the rule requires telemarketers to obtain consumer consent to receive robocalls and robotexts one seller/brand at a time, instead of allowing a single consent to apply to multiple telemarketers. This is also known as one-to-one consent. The order does not specifically define “robocall” or “robotext.” For more information, click here.
• On December 13, the U.S. Department of Treasury’s Office of Foreign Asset Control (OFAC) announced that it has entered a consent order with California-based digital asset exchange, CoinList Markets LLC (CoinList). The consent order alleges that CoinList processed 989 transactions on behalf of users located in Crimea between April 2020 and May 2022, in violation of OFAC’s Russia/Ukraine sanctions. As part of the settlement and to avoid potential civil liability, CoinList agreed to pay $1,207,830. For more information, click here.
• On December 12, the U.S. District Court of the Southern District of New York denied bankrupt digital asset services company Celsius Network Inc.’s motion to dismiss the Federal Trade Commission’s (FTC) enforcement action against it for allegedly misrepresenting that consumers’ digital asset deposits maintained on Celsius’ platform were protected by insurance issued by the Federal Deposit Insurance Corporation (FDIC). For more information, click here.
• On December 12, the FTC announced that it had finalized a new rule — the Combating Auto Retail Scams (CARS) Rule — addressing two types of illegal tactics consumers allegedly face when buying a car: bait-and-switch tactics and hidden junk fees. For more information, click here.
• On December 12, the Basel Committee on Banking Supervision published a consultative document to propose targeted adjustments to its 2016 standard on interest rate risk in the banking book (IRRBB). The adjustments are intended to fulfill a commitment to periodically update the calibration of the interest rate shock factors used in the standard. For more information, click here.
• On December 12, Jonathan McKernan, a member of the FDIC Board of Directors, issued remarks about its Endgame proposal’s reliance on Basel Committee decisions. For more information, click here.
• On December 12, the Office of the Comptroller of the Currency (OCC) reported on the performance of first-lien mortgages in the federal banking system during the third quarter of 2023. The OCC Mortgage Metrics Report, Third Quarter 2023 showed that 97.3% of mortgages included in the report were current and performing at the end of the quarter, the same as the previous quarter. Performance improved compared to third quarter of 2022, when 97.2% of mortgages were current and performing. For more information, click here.
• On December 11, the OCC published its 2023 Annual Report. The OCC Annual Report provides Congress with an overview of the condition of the federal banking system, discusses the OCC’s strategic priorities and initiatives, and shares the agency’s financial management and condition. For more information, click here.
• On December 9, stablecoin issuer Tether, announced that, in collaboration with OFAC, it has initiated a voluntary digital asset wallet-freezing policy to combat activity connected with sanctioned persons on OFAC’s Specially Designated Nationals list. For more information, click here.
• On December 7, U.S. Senators Mark. R. Warner (D-VA), Mike Rounds (R-SD), Jack Reed (D-RI). and Mitt Romney (R-UT) introduced bipartisan legislation to expand sanctions to foreign entities supporting all U.S.-designated terrorist groups, including through digital asset transactions. This bill also contains a provision from the Crypto-Asset National Security Enhancement and Enforcement (CANSEE) Act, which provides authority to the Financial Crimes Enforcement Network (FinCEN) to restrict transactions with “primary money laundering concerns” that do not involve a U.S. correspondent bank account. For more information, click here.
• On December 7, the U.S. District Court for the Eastern District of Louisiana dismissed a lawsuit brought by the FDIC against the chairman, president, and CEO, and board members of First NBC Bank President and CEO Ashton J. Ryan, Jr. after the parties reached a confidential settlement. The complaint alleged that Ryan and others conspired to defraud First NBC Bank through a variety of schemes, including by disguising the true financial status of certain borrowers and their troubled loans, concealing the true financial condition of the bank from the board of directors, auditors, and examiners. For more information, click here.

State Activities:

• On December 13, New York Governor Kathy Hochul signed S4907. The bill will add a new article, Article 49-A, Medical Debt Reporting, to the state’s Public Health Law. The new law prohibits consumer reporting agencies from reporting or maintaining in consumer files any information about medical debts. Per the bill, any contract between a collection entity and a hospital, health care professional, or ambulance service for the purchase or collection of medical debt must contain a provision that prohibits the reporting of any portion of such medical debt to a consumer reporting agency. For more information, click here.
• On December 12, the Office of the New York State Attorney General (NYAG) announced its entry into a consent order with foreign digital asset exchange KuCoin (KuCoin) for alleging acting as unregistered securities broker and/or commodities-broker-dealer by offering, selling, and purchasing “securities and commodities” like “ETH, LUNA, and UST.” Notably, the consent order requires KuCoin to “terminate access to its services for users in the State of New York … and … close … relevant accounts of NY users no later than 120 days after the [e]ffective [d]ate” of the consent order.” For more information, click here.
• On December 12, the California Department of Financial Protection and Innovation (DFPI) issued a press release concerning the digital asset kiosk operator-related provisions within its new Digital Financial Assets Law, which is slated to become fully effective on July 1, 2025. However, digital asset kiosk operators must begin to comply with certain requirements by as early as January 1, 2024, including but not limited to, complying with daily transactions limits. For more information, click here.

• On December 12, Minnesota Attorney General Keith Ellison announced that his office obtained a settlement with a California student loan debt relief company. The company is alleged to have illegally collected fees from customers and misrepresented its services to consumers. The settlement requires the company to cease operating in Minnesota and provide full refunds to its Minnesota consumers. For more information, click here.
• On December 10, a new law designed to protect consumers’ accrued credit card points took effect in New York. Under the law, credit card companies must take additional steps to prevent consumers from losing credit card points they have earned when rewards programs are modified or terminated. Credit card issuers will have 45 days to provide notice to consumers when their credit card account or rewards program is canceled or is otherwise modified in a way that is less favorable to the consumer. The consumer will then have a 90-day grace period to redeem account rewards in accordance with the program’s original terms and conditions. For more information, click here.
• On December 7, the New York Supreme Court denied a request seeking review of the New York Department of Financial Services’ (NYDFS) January 18 amendment to the state’s regulation governing the maximum rates that check-cashing businesses may charge their customers, and dismissed allegations raising the regulation’s unconstitutionality. The petitioners alleged that the amendment, which reduced the percentage rate that check-cashing facilities may charge their consumers from 2.27% to 2.2% for most checks, and 1.5% for government-issued checks, and limited the time before a check-cashing facility could seek the establishment of a new rate, was “arbitrary and capricious” and “effected an unconstitutional deprivation of property without due process of law.” In rejecting the petitioners’ arguments, the court found that the regulation had a rational basis and was supported by the administrative record. The court also found that NYDFS complied with the procedural requirements of the state’s Administrative Procedure Act (Act), agreeing with NYDFS that a court should not “annul a rule or regulation that was promulgated in ‘substantial compliance’ with the requirements of [the Act].” Additionally, the court found that the regulation did not deprive the petitioners of property without procedural or substantive due process. For more information, click here.
• In its December bulletin, California’s DFPI stated that it will be requiring debt collectors that are licensed prior to January 1, 2024, to file an annual report by March 15, 2024, for the year 2023. The requirements for the annual report can be found in California Financial Code section 100021(a) (1) – (4), (6), and (7). The annual report must be filed through the DFPI portal. A draft of the report will be sent mid-December to the designated email set up in the licensee’s portal account. Licensees will be able to input the reports from January 1, 2024, through midnight, March 15, 2024.
• DFPI also reminded covered entities that Financial Code section 521 requires state-chartered banks and credit unions to report the revenue they received from fees on nonsufficient funds and overdraft charges during the calendar year on an annual basis. These reports are due by March 1, 2024, to allow the DFPI to publish the information on its website by March 31. On December 29, the DFPI will send an email with a report link to the designated email address of each reporting institution. For more information, click here.