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:
Privacy and Cybersecurity Activities
- On July 9, the U.S. Department of Education announced the approval of over 1,800 “borrower defense to repayment” (borrower defense) claims for borrowers who attended three institutions: Westwood College, Marinello Schools of Beauty, and the Court Reporting Institute. These borrowers will receive 100% loan discharges, resulting in approximately $55.6 million in relief. This brings total loan cancellation based on borrower defense by the Biden administration to over $1.5 billion for nearly 92,000 borrowers. For more information, click here.
- On July 9, President Joe Biden issued an executive order, requiring federal regulators to increase scrutiny of mergers and acquisition within the banking industry. Specifically, the order “encourages” federal regulators “responsible for banking (the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency) to update guidelines on banking mergers to provide more robust scrutiny of mergers.” Also, the order “[e]ncourages the Consumer Financial Protection Bureau (CFPB) to issue rules allowing customers to download their banking data and take it with them.” For more information, click here.
- On June 30, the CFPB released a blog post regarding trends of commercial reporting on consumer credit. New research examines the relationship and trends in commercial and consumer credit for small businesses, with an in-depth look at the frequency and types of commercial credit commonly found on consumer credit reports and the often-inconsistent reporting practices and strategies, which can have significant implications for borrowers. For more information, click here.
- On June 28, the Financial Crimes Enforcement Network (FinCEN) issued “A Report to Congress – Assessment of No-Action Letters in Accordance with Section 6305 of the Anti-Money Laundering Act of 2020” (Assessment). The Assessment concludes that FinCEN should undertake a rulemaking to establish a no-action letter process to supplement the existing forms of regulatory guidance and relief that may currently be requested from FinCEN. For more information, click here.
- On July 14, Colorado’s attorney general (AG) will hold a virtual meeting to discuss new draft rules on student loan servicing and collections. In the meeting, the AG’s office will “solicit feedback on the fees, timing of document and information requirements, and alternative registration process for rulemaking under the Colorado Student Loan Equity Act from interested parties.” For more information, click here.
- On July 8, New York Attorney General Letitia James announced the voluntary dismissal of a lawsuit challenging the Office of the Comptroller of the Currency’s true lender rule after President Biden signed a congressional resolution into law rescinding the previous administration’s rule. Per the press release, “[t] he rescinded rule would have preempted the application of state usury laws to loans funded by, or naming as the lender, a national bank regulated by the OCC, even when national banks held no substantial financial interest in the loans.” For more information, click here.
- On July 5, a new Massachusetts law went into effect, requiring licenses for any business servicing student loans within the state. The law also requires the state’s AG to hire a student loan ombudsman, who would resolve student complaints, monitor student loan servicers, and educate borrowers. For more information, click here.
- On June 30, Georgia Governor Brian Kemp issued an executive order for continued COVID-19 regulatory suspensions. Among the order’s provisions, the requirement that notarial acts occur in the physical presence of a notary, as well as the requirement that certain other legal documents are signed with a witness physically present remain suspended. For more information, click here.
Privacy and Cybersecurity Activities:
- On July 7, The New York Times reported that amid the alarming spread of COVID-19’s Delta variant, New York City is “scaling back its efforts to monitor the spread of the coronavirus.” Top doctors and researchers suggest that efforts to monitor the spread of the virus are decreasing because of an increased focus on vaccination efforts. They warn, however, that cities and states should not abandon monitoring tools since vaccination rates are still not ideal in some locations. Despite easing up on COVID-19 monitoring, New York City noted that it has more tools, such as “in home testing of people identified as close contacts of people who test positive.” To learn more about contact tracing, please click here. To read more about how New York is handling the Delta variant, click here.
- On July 7, The New York Times reported that wearable fitness trackers, such as Fitbit and Apple Watch, “could help detect early signs of COVID-19 symptoms.” Extensive research took place during the pandemic on fitness tracker capability to not only detect COVID-19, but also track patient recovery to provide more insight into the long-term effects of COVID-19. To read more, click here. While the study’s participants voluntarily provided access to health information, many people fear that their data may be accessed without consent through such fitness tracking devices. In 2019, for example, when Google acquired Fitbit, many Fitbit users opted to dispose of their devices in worry that “[Google] may soon have access to their most intimate health information.” To read more, click here.