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

Federal Activities

State Activities

Federal Activities:

• On July 28, Heartland Tri-State Bank of Elkhart (Heartland) was closed by the Kansas Office of the State Bank Commissioner, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver of Heartland. According to the FDIC, Heartland had approximately $139 million in total assets and $130 million in total deposits. Dream First Bank, National Association, has agreed to assume all the deposits of Heartland and almost all of Heartland’s failed bank assets. For more information, click here.
• On July 27, the Financial Innovation and Technology for the 21st Century Act passed the House Committee on Agriculture. The bill previously passed the House Committee on Financial Services on July 26. Originally introduced in the House on July 20, the bill seeks to create a comprehensive regulatory framework for the digital asset industry. For example, the bill distinguishes a “digital asset” from a “digital commodity,” empowering the Securities and Exchange Commission (SEC) to regulate the former and the Commodity Futures Trading Commission (CFTC) to regulate the latter. For more information, click here.
• On July 27, the Senate passed its version of the National Defense Authorization Act (NDAA) bill, which includes a provision that tightens oversight over financial institutions engaged in crypto trading and takes aim at crypto mixers and “anonymity-enhancing” crypto assets. Next, the Senate and House will need to reach a compromise between their versions of the bill. An amendment in the NDAA to update the Fair Debt Collection Practices for Servicemembers Act passed in the Senate by a vote of 95-2. The amendment, led by U.S. Senator Raphael Warnock (D-GA), focuses on communication in connection with debt collection and prohibitions that a debt collector may not “threaten to have the covered member reduced in rank; threaten to have the covered member’s security clearance revoked; or threaten to have the covered member prosecuted.” For more information, click here.
• On July 27, the Consumer Financial Protection Bureau (CFPB) published a blog post addressing landlords and tenants. Per the blog, the U.S. Department of Housing and Urban Development (HUD), the Federal Housing Finance Agency (FHFA), and the U.S. Department of Agriculture are reminding landlords of their obligation to inform tenants and prospective tenants of their rights: “When landlords use information from a consumer report, like a rental background check, against a tenant, the Fair Credit Reporting Act (FCRA) requires landlords to tell the tenant of their decision and how the tenant can contact the company that created the background check.” As the agencies state, providing this information in writing is the best way to ensure that tenants get the information they need, and for landlords to demonstrate they are meeting their legal obligations. On July 26, the Senate Committee on Banking, Housing, and Urban Affairs held a hearing focusing on “junk fees.” Pennsylvania Attorney General (AG) Michelle A. Henry; Director of Housing Advocacy, Atlanta Legal Aid Society Lindsey Siegel; and Managing Director of Patomak Global Partners Brian Johnson (speaking on his own behalf), provided testimony. Junk fees have been top of mind for several federal regulators, including the CFPB. For more information, click here.
• On July 27, the FDIC’s board of directors announced proposed interagency amendments to the regulatory capital requirements for large banking organizations with at least $100 billion in assets, as well as certain banking organizations with significant trading activity. For more information, click here.
• On July 26, the CFPB published its Summer 2023 Supervisory Highlights report. Per the report, examiners found multiple instances of unfair or abusive acts or practices by servicers. Examiners found that debt collectors continued collection attempts for work-related medical debt after receiving sufficient information to render the debt uncollectible under state worker’s compensation law. The debt collectors violated the Fair Debt Collection Practices Act (FDCPA) by collecting an amount not permitted by law or agreement; by falsely representing the character, amount, or legal status of a debt; by engaging in conduct, which had the natural consequence of harassing, oppressing, or abusing the consumer; and by using false, deceptive, or misleading representations in connection with the collection of a debt. For more information, click here.
• On July 26, the CFPB published a blog focused on consumer credit scores. The blog argues that cashflow data — “various inflows, outflows, and accumulated amounts in checking and savings accounts” — may provide lenders more information about how applicants manage current obligations than they could learn from applicants’ credit repayment histories alone. For more information, click here.
• On July 25, Director of the CFPB Rohit Chopra, gave prepared remarks discussing protections for renters. Per Chopra’s remarks, renters face “junk fees and other aggressive tactics.” Chopra also argued that large corporate property managers working for private equity funds are also more likely to deploy new technologies, including artificial intelligence and social scoring: “AI has been creeping into the rental process and can lead to rent hikes and denial of housing. The social scoring of these algorithms produces what one company calls ‘high-quality tenants’ — an opaque term that may keep out families that could afford the rent every month but may not fit the algorithm’s definition.” Chopra also said, “When these algorithms produce thumbs up or thumbs down decisions, without a second look, without applicant review, and without consideration of what information is true and what is false, the landlord, property manager, or tenant screening company may be breaking the law.” For more information, click here.
• On July 26, the majority of U.S. lawmakers voted in favor of the Financial Innovation and Technology for the 21st Century Act, as well as the Blockchain Regulatory Certainty Act, which would establish rules for crypto firms on when to register with either the CFTC or the SEC. For more information, click here.
• On July 25, a large credit reporting agency revealed to investors in regulatory filings that it’s facing a probe by the CFPB. In its Form 10-Q report for the quarterly period ending June 30, the consumer credit reporting agency revealed that it received a civil investigative demand from the CFPB this month as part of a probe into data accuracy and dispute handling at Equifax’s human resources compliance business, Workforce Solutions, to see if the company had been complying with the FCRA, a federal statute regulating the credit reporting industry. For more information, click here.
• On July 24, the Department of Education (DOE) issued a final interpretation to clarify that the Higher Education Act (HEA) preempts state laws and other applicable federal laws “only in limited and discrete respects.” Specifically, the final interpretation revises and clarifies the DOE’s position on the legality of state laws and regulations regarding certain aspects of the federal student loan servicing, including preventing unfair or deceptive practices, correcting misapplied payments, or addressing servicers’ refusals to communicate with borrowers. For more information, click here.
• On July 24, the FDIC released a letter after it observed that some insured depository institutions (IDIs) are not reporting estimated uninsured deposits in accordance with the instructions to the Consolidated Reports of Condition and Income (Call Report). For example, some institutions incorrectly reduced the amount reported to the extent that the uninsured deposits are collateralized by pledged assets. Additionally, some institutions incorrectly reduced the amount reported on Schedule RC-O by excluding intercompany deposit balances of subsidiaries. For more information, click here.
• On July 20, Federal Trade Commission (FTC) and the U.S. Department of Health and Human Services’ Office for Civil Rights issued a joint letter, cautioning hospitals and telehealth providers about the privacy and security risks related to the use of online tracking technologies integrated into their websites or mobile apps that may be impermissibly disclosing consumers’ sensitive personal health data to third parties. For more information, click here.
• The Conference of State Bank Supervisors (CSBS) recently released comprehensive standards for data security in financial institutions. CSBS Nonbank Model Data Security Law leverages the FTC Safeguards Rule to establish a robust framework to ensure that nonbank financial institutions have the necessary measures in place to mitigate cyber threats, prevent data breaches, and uphold the integrity of the financial system. By prioritizing data security, state regulators ensure these institutions are taking the appropriate action to protect themselves and their customers against evolving risks, thereby fostering a secure and resilient state financial system. For more information, click here.

State Activities:

• On July 28, California Governor Rob Bonta issued a statement on the final permanent injunction that officially ended the Northeast Alliance between American Airlines and JetBlue. The injunction was entered by a U.S. District Court for the District of Massachusetts and relates to an anticompetitive joint venture between the two airlines. The venture would have permitted the airlines to operate as a single carrier with respect to certain routes, effectively threatening competition with the industry. The Northeast Alliance posed the greatest threat to the California cities of Los Angeles, San Francisco, San Diego, Long Beach, Burbank, Ontario, Oakland, Sacramento, San Jose, and Santa Ana. Bonta, along with the U.S. Department of Justice and a coalition of other states, sued the airlines because of the Northeast Alliance on September 21, 2021, and on May 19, 2023, the court ruled that the venture violated the federal Sherman Act. For more information, click here.
• On July 26, the Texas Office of the Attorney General (OAG) secured a $10.76 million judgment against BINT Operations LLC (Blessings in No Time) and its owners, LaShonda and Marlon Moore, ending a lawsuit alleging the company and its owners perpetuated an illegal pyramid scheme. According to the lawsuit, the company marketed itself as a faith-based wealth building organization that promised to “bless” consumers with large sums of money during the COVID-19 pandemic in exchange for up-front monetary contributions. The company allegedly promised participants up to an 800% return on their investments. The lawsuit alleges that the company and its owners scammed approximately 8,000 consumers throughout Texas and the U.S. The OAG initially filed the lawsuit in June 2021, and as part of the judgment, between $450,000 and $2.5 million of the judgment will be paid into a Texas-administered fund designed to assist victims of the scheme. For more information, click here.
• On July 25, California AG Rob Bonta issued a legal alert to remind all employers of the state-law restrictions on employer-driven debt. Employer-driven debt is a term referring to debt incurred by individuals through employment arrangements. This can include arrangements where an employer provides training, equipment, or supplies to a worker, but requires the worker to reimburse the employer for these expenses if the worker leaves their job before a certain date. For more information, click here.
• On July 21, the Council of the District of Columbia approved PR25-0323 with resolution number R25-0220. The public resolution, which took effect July 11, declares the existence of an emergency with respect to the need to preserve and continue foreclosure protections for homeowners who applied for funding from the District of Columbia’s Homeowner Assistance Fund (DC HAF) program before September 30, 2022, and whose applications remain under review, pending approval, pending payment, or under appeal. The resolution also requires that notices continue to be sent to homeowners informing them of the DC HAF program prior to a foreclosure action. As part of the introduced public resolution, Councilmember Robert C. White, Jr. also introduced an emergency and temporary amendment, B25-0363 and B25-0364 For more information, click here.