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 February 3, while delivering remarks before the American Bar Association, Commodity Futures Trading Commission Commissioner Rostin Benham noted that the “cryptoverse is not a closed system” and “[r]egulation is necessary to protect consumers and to prevent failures which cannot predictably be contained within any boundaries across the domestic and global financial markets.” For more information, click here.
• On February 2, the U.S. Securities and Exchange Commission (SEC) announced that Brian Sewell and his company, Rockwell Capital Management, agreed to settle fraud charges in connection with a scheme that targeted students taking Sewell’s online crypto trading course, known as the American Bitcoin Academy. The SEC alleges that the fraudulent scheme cost 15 students $1.5 million. For more information, click here.
• On February 2, House Representatives Patrick McHenry, French Hill, and Andy Barr sent a letter to Federal Deposit Insurance Corporation (FDIC) Chairman Martin Gruenberg, expressing concern about a shift in regulatory posture having a chilling effect on banks’ engagement with fintech. For more information, click here.
• On February 1, U.S. Congressmen Mike Flood (R-NE) and Wiley Nickel (D-NC) introduced a resolution under the Congressional Review Act (CRA) to repeal the SEC’s Staff Accounting Bulletin 121 (SAB 121). U.S. Senator Cynthia Lummis (R-WY) has introduced a companion measure in the Senate. SAB 121 prevents banks from providing custodial services to digital assets investors by requiring them to keep those assets on-balance sheet. For more information, click here.
• On February 1, the Office of the Comptroller of the Currency (OCC) released a list of Community Reinvestment Act (CRA) performance evaluations that became public during the period of January 1 through January 31. The list contains only national banks, federal savings associations, and insured federal branches of foreign banks that have received ratings. The possible ratings are outstanding, satisfactory, needs to improve, and substantial noncompliance. For more information, click here.
• On January 31, the U.S. District Court for the Northern District of Illinois finalized, in actions brought by the Federal Trade Commission (FTC), a permanent injunction and monetary judgment against a telemarketing company and certain individuals for violating the FTC Act, 15 U.S.C. § 45, and the Telemarketing and Consumer Fraud and Abuse Prevention Act. The court ordered the defendants to pay $28.7 million in civil penalties and permanently banned the defendants from participating in telemarketing, or assisting and facilitating others engaged in telemarketing to consumers. For more information, click here.
• On January 31, Federal Communications Commission (FCC) Chairwoman Jessica Rosenworcel proposed that the FCC recognize calls made with artificial intelligence (AI) -generated voices as “artificial” voices under the Telephone Consumer Protection Act (TCPA), which would make voice cloning technology used in common robocalls scams targeting consumers illegal. The FCC will provide new tools to state attorneys general (AG) across the U.S. to go after bad actors behind these nefarious robocalls and hold them accountable under the law. For more information, click here.
• On January 30, House Representatives Patrick McHenry, Mike Flood, and French Hill on the House Financial Services Committee sent a letter to CFPB Director Rohit Copra, asking for the CFPB to revisit a number of aspects of its proposed rule that would give it the power to regulate a handful of tech companies that manage and facilitate millions of transactions per year. For more information, click here.
• On January 29, the OCC requested comment on a proposal to update its rules for business combinations involving national banks and federal savings associations. The proposal also includes a policy statement to clarify the OCC’s review of applications under the Bank Merger Act (BMA). For more information, click here.
• On January 29, the SEC announced that it filed an enforcement action against Xue Lee and Brenda Chunga for their involvement in a fraudulent crypto asset pyramid scheme known as HyperFund that raised more than $1.7 billion from investors worldwide. In a parallel action, the U.S. Attorney’s Office for the District of Maryland filed criminal charges against Lee and Chunga. For more information about the SEC’s action, click here. For more information about the Department of Justice’s (DOJ) action, click here.
• On January 29, the White House issued a Fact Sheet on AI actions following President’ Biden’s Executive Order aimed at managing the risk of AI. For more information, click here.
• On January 25, the SEC’s Office of Investor Education and Advocacy, the North American Securities Administrators Association (NASAA), and the Financial Industry Regulatory Authority (FINRA) jointly issued an investor article to make investors aware of the increase of investment frauds involving the purported use of AI and other emerging technologies. For more information, click here.
• On January 22, the FTC issued an Opinion and Final Order that Intuit Inc., the maker of TurboTax tax filing software, engaged in deceptive advertising in violation of the FTC Act and deceived consumers when it allegedly ran ads for “free” tax products and services for which many consumers were ineligible. For more information, click here.

State Activities:

• On February 2, Connecticut Governor Ned Lamont announced a plan to eliminate approximately $650 million in medical debt for approximately 250,000 residents. The relief applies to residents with medical debt equal to 5% or more of their annual income or whose household income is up to 400% of the federal poverty level. The state has earmarked $6.5 million in funds from the 2021 American Rescue Plan to aid in purchasing residents’ debt. While several local governments across the nation have already implemented such relief, Connecticut is recognized as the first state to have taken such action. Other states are expected to follow suit. The State of New Jersey has also already set aside funds in preparation for forgiving medical debt for some of its residents. For more information, click here.
• On January 26, California Governor Rob Bonta announced an investigative sweep targeting businesses with popular streaming apps and devices. Bonta is sending letters to these companies, alleging that they have violated the state’s Consumer Privacy Act (CCPA). This sweep primarily focuses on enforcing compliance with the CCPA’s opt-out requirements for businesses that sell or share consumer data. Under the CCPA, such businesses must provide consumers with the right to opt out of having their personal information and data sold or shared, and the process for opting out should be easy for consumers to accomplish. Additionally, if a consumer is logged into their account when they submit an opt-out request, regulated companies are expected to honor the consumer’s selection across devices. Companies should also make it easy for consumers to access the company’s privacy policy that discusses the consumer’s CCPA rights. For more information, click here.
• On January 26, North Carolina AG Josh Stein released the state’s 2023 data breach report. In North Carolina, businesses that experience data breaches are required by law to report such breaches (and the compromised information) to the state’s DOJ. In 2023, according to the report, more than 4.9 million North Carolinians were affected by a total of 2,033 data breaches that occurred throughout the year. In addition to releasing the report, Stein provided a list of helpful tips for how consumers can protected themselves from data breaches, including, among other things: (a) regularly updating antivirus and security software; (b) reviewing emails closely before taking any action; (c) using strong passwords and changing them regularly; and (d) refraining from making purchases, accessing bank accounts, or logging into any websites containing personal information while connected to public Wi-Fi. For more information, click here.
• On January 25, the Hawai’i Department of Commerce and Consumer Affairs Division of Financial Institutions (DFI) and the Hawai’i Technology Department Corporation (HTDC) jointly announced that its Digital Currency Innovation Lab (DCIL) is scheduled to conclude on June 30. The DCIL was initiated in 2020 to explore the landscape of digital currency activity within the state, while assessing the regulatory framework required for companies specializing in digital currency. For more information, click here.
• On January 18, Colorado Securities Commissioner Tung Chan filed civil fraud charges against Eligio and Kaitlyn Regalado of Denver, INDXcoin, LLC, Kingdom Wealth Exchange LLC, and others for alleged violations of the anti-fraud, licensing, and registration provisions of the Colorado Securities Act. According to the press release, Eli and Kaitlyn Regalado created, marketed, and sold a cryptocurrency known as “INDXcoin” to members of the Christian community. From June 2022 to April 2023, INDXcoin raised approximately $3.2 million from more than 300 individuals. For more information, click here.