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 August 28, the Federal Trade Commission (FTC) published a consumer alert titled, “Did Someone Insist You Pay Them With Cryptocurrency?,” which provides consumers with tips to spot digital asset-related scams. According to the FTC, “[n]o legitimate business or government agency is going to demand you to pay with cryptocurrency … [t]hat’s always a scam.” For more information, click here.
• On August 28, the Securities and Exchange Commission (SEC) entered a consent order with podcast studio Impact Theory, LLC (Impact Theory) for offering non-fungible tokens (NFTs) called Founder’s Keys (KeyNFTs) as unregistered securities, and allegedly raising approximately $29.9 million worth of Ether (ETH) from hundreds of investors. With respect to the KeyNFTs, the SEC specifically contends that “[p]urchasers in the KeyNFT offeriung had a reasonable expectation of obtaining a future profit on Impact Theory’s managerial and entrepreneurial efforts.” To market the KeyNFTs, the SEC alleges that Impact Theory hosted several live speaking events on social media platform Discord, and made statements such as “[t]his is like being offered to invest in a booming company when they’re a Series A.” For more information, click here.
• On August 24, it was announced that the U.S. Department of Housing and Urban Development Secretary Marcia L. Fudge, Acting Comptroller of the Currency Michael J. Hsu, Federal Housing Finance Agency Director Sandra L. Thompson, and CFPB Director Rohit Chopra will participate in a roundtable discussion on September 12, at 3:00 p.m. EDT regarding the availability of special purpose credit programs to help meet the credit needs of eligible individuals. The event will be open to the public via livestream. For more information, click here.
• On August 23, the Department of Justice (DOJ) unsealed an indictment charging Roman Storm and Roman Semenov, co-founders of digital asset mixer Tornado Cash, with conspiracy to commit money laundering, conspiracy to commit sanctions violations, and conspiracy to operate an unlicensed money transmitting business. The SEC alleges that Tornado Cash laundered more than $1 billion in criminal proceeds. For more information, click here.
• On August 23, the SEC filed a civil enforcement action against John A. DeSalvo, an ex-police officer and founder of the Blazar Token. According to the SEC, DeSalvo touted the Blazar Token as a digital asset that “would eventually replace traditional state pension systems.” The SEC further alleges that DeSalvo launched the Blazar Token as an initial coin offering in November 2021 and raised a total amount of $623,888 from approximately 222 investors until Blazar Token’s collapse in May 2022. For more information, click here.
• On August 23, the Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Centre (DFCRC) published a report of findings of its joint project pertaining to potential use cases for a central bank digital currency (CBDC) in Australia. Notably, the RBA and DFCRC did not construct this project as a CBDC pilot. Instead, the pilot CBDC used in this project was issued as a real claim on the RBA. For more information, click here.
• On August 22, the Biden administration announced SAVE, a new repayment plan that will save the typical borrower around $1,000 a year. Tens of millions of Americans will be eligible to save money by enrolling at www.studentaid.gov/save, lowering their monthly plans in advance of payments resuming later this fall. For more information, click here.
• On August 22, the Bank of International Settlements issued a white paper titled, “Financial Stability Risks From Cryptoassets in Emerging Market Economies,” which discusses possible financial risk catalysts of the digital asset market within emerging market economies: (1) the economic and financial landscape, (2) technological penetration, and (3) regulatory stance. For more information, click here.
• On August 23, the FTC announced that it is sending notices to more than 9,000 people that they may be eligible for compensation stemming from its settlement with home security company Vivint Smart Home, Inc. over charges that the company misused credit reports to help customers obtain financing. For more information, click here.
• On August 22, the CFPB filed an opposition to a motion made by a group of intervenors seeking to expand the scope of a preliminary injunction issued by the U.S. District Court for the Southern District of Texas, which enjoined the CFPB from implementing its “Small Business Lending Rule.” For more information, click here.
• On August 22, Representative Maxine Waters sent a letter to the Government Accountability Office (GAO) expressing concerns about instances in which the use of artificial intelligence (AI) and other housing and property technology (PropTech), such as automated valuation models (AVMs), online housing platforms, tenant screening companies, and rent-setting companies, have been shown to lead to increased housing costs, discrimination, and other barriers to fair and affordable housing. In the letter, Waters asks the GAO to study and assess the effects that AI and PropTech may have on consumers and the U.S. housing market, and report their findings to Congress, along with any policy recommendations, as appropriate. To better understand this issue, Waters has requested the GAO to study and assess how such entities are currently using AI, including machine learning (ML) and generative AI, in their services, and how these technologies are being assessed for compliance with appropriate anti-trust, fair housing, and fair lending laws. For more information, click here.
• On August 21, the FTC announced that it had stopped a company, which it believed facilitated an operation “to prey on students seeking debt relief.” The FTC charged that the defendants pretended to be affiliated with the U.S. Department of Education (DOE), used deceptive loan forgiveness promises, and falsely claimed they were offering relief under the “Biden Loan Forgiveness” plan to lure students and collect millions in illegal upfront fees. The FTC further contended that the defendants falsely promised to lower or eliminate students’ loan payments, pretended to be affiliated with the DOE, and convinced students to stop communicating with their federal loan servicers. The defendants told consumers that they must pay a fee for services that are available for free through the DOE, including that consumers must pay a fee, or make purported loan payments, to obtain federal student loan forgiveness under the “Biden Loan Forgiveness” or some similar name (which consumers have understood to refer to the Biden administration’s Student Loan Debt Relief Plan). For more information, click here.
• On August 21, the Office of the Comptroller of the Currency (OCC) issued a proclamation allowing national banks, federal savings associations, and federal branches and agencies of foreign banks to close offices in areas of California, Nevada, and Arizona affected by Tropical Storm Hilary. For more information, click here.
• On August 21, the FTC announced charges against Express Enrollment LLC (also dba SLFD Processing) and Intercontinental Solutions LLC (also dba Apex Doc Processing LLC), operated by Marco Manzi, Ivan Esquivel, and Robert Kissinger, alleging that the defendants pretended to be affiliated with the DOE, used deceptive loan forgiveness promises, and falsely claimed they were offering relief under the “Biden Loan Forgiveness” plan to lure students and collect millions in illegal upfront fees. For more information, click here.
• On August 18, members of the House and the Senate issued a letter to the FTC with various inquiries related to the FTC’s preservation of agency records. The letter notes that the FTC “has struggled to comply” with the Federal Records Act citing a February 2022 memo from the FTC inspector general issuing two recommendations for improving records management. The letter further indicates that the FTC has not provided explanations for instances of document deletion and has asked for responses by the end of the month to identify (i) what records have been deleted and why; (ii) how the FTC is working to company with retention requirements; (iii) whether it has notified National Archives and Records Administration of any deleted records; and (iv) how it has addressed prior recommendations. For more information, click here.
• On August 18, the Cybersecurity and Infrastructure Security Agency (CISA) published a blog post reminding readers that AI is a type of software system, and businesses that are considering using AI in their business functions must consider the security of the customers as a core business requirement, not just a technical feature, and prioritize security throughout the whole lifecycle of the product, from inception of the idea to planning for the system’s end-of-life. For more information, click here.
• On August 17, the Federal Reserve Board announced an enforcement action against Farmington State Bank, of Farmington, WA, and its holding company, FBH Corporation. In 2022, Farmington improperly changed its business plan without notifying the bank’s supervisors and obtaining prior approval for those changes. Farmington has previously announced that it will voluntarily sell its loans and deposits to the Bank of Eastern Oregon. For more information, click here.
• On August 17, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Hawaii Department of Commerce and Consumer Affairs’ Division of Financial Institutions, the National Credit Union Administration, and the OCC, (collectively, the agencies), recognized the serious impact of the recent Hawaii wildfires on the customers and operations of many financial institutions and will provide appropriate regulatory assistance to affected institutions subject to their supervision. The agencies encourage institutions operating in the affected areas to meet the financial services needs of their communities. For more information, click here.

State Activities:

• On August 2, the State of California Department of Financial Innovation and Protection approved the final regulation for implementing and interpreting certain sections of the California Consumer Financial Protection Law (CCFPL) related to commercial financial products and services. After considering comments and releasing three rounds of modifications to Sections 1060, 1061, and 1062, the final regulation will, among other things, bring protections to small businesses seeking loans, by (i) defining and prohibiting unfair, deceptive, and abusive acts and practices in the offering or provision of commercial financing to small businesses, nonprofits, and family farms; and (ii) establishing data collection and reporting requirements. For more information, click here.