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 April 7, U.S. District Judge Katherine Polk Failla denied the Consumer Financial Protection Bureau (CFPB or Bureau) and the State of New York’s motion to lift the stay placed in Consumer Financial Protection Bureau and the People of the State of New York v. MoneyGram International, Inc. and MoneyGram Payment Systems, Inc. Case No. 22-cv-3256 (KPF). The plaintiffs argued that changed circumstances supported lifting the stay because the Second Circuit issued an opinion, answering the question at the heart of this court’s stay order: Whether the Bureau’s statutory funding mechanism violates the Constitution. In CFPB v. Law Offices of Crystal Moroney, P.C., the Second Circuit held that the method Congress used to fund the Bureau “does not offend the Appropriations Clause.” See — F.4th —, 2023 WL 2604254, at *4 (2d Cir. Mar. 23, 2023). The plaintiffs further argued that because the Second Circuit issued a binding decision resolving the relevant constitutional question in the CFPB’s favor, this court should lift the stay. The case remains stayed. For more information, click here.
• On April 6, the U.S. Department of the Treasury published the world’s first illicit finance risk assessment concerning decentralized finance, which refers to smart contract empowered distributed ledger technology that enables parties to transfer noncustodial financial products in a peer-to-peer fashion without the need for a centralized intermediary. For more information, click here.
• On April 5, the European Central Bank issued a blog post titled, “Mind the Gap: We Need Better Oversight of Crypto Activities, ” which discusses the current and widespread digital asset-related regulatory gaps and the need for each individual region of the world to establish “sound regulation and supervision” of digital asset activities before an interconnected, global regulatory regime can be solidified. For more information, click here.
• On April 5, the U.S. Department of Housing and Urban Development announced the implementation of federal disaster relief for the state of Arkansas to assist state and local recovery efforts for areas affected by severe storms and tornadoes on March 31. For more information, click here.
• On April 5, the Federal Deposit Insurance Corporation (FDIC) issued the March 2023 Consumer Compliance Supervisory Highlights, intended to enhance transparency regarding the FDIC’s consumer compliance supervisory activities and to provide a high-level overview of consumer compliance issues identified in 2022 through the FDIC’s supervision of state nonmember banks and thrifts. For more information, click here.
• On April 5, the U.S. Department of the Treasury’s Office of Foreign Assets Control took action to designate Genesis Market, one of the world’s largest illicit marketplaces, for its part in the theft and sale of device credentials and related sensitive information. For more information, click here.
• On April 5, the FDIC announced a series of steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Arkansas affected by severe storms and tornadoes. The FDIC encouraged banks to work constructively with borrowers experiencing difficulties beyond their control. Banks that extend repayment terms, restructure existing loans, or ease terms for new loans in a manner consistent with sound banking practices can contribute to the health of the local community and serve the long-term interests of the lending institution. Banks may receive favorable Community Reinvestment Act consideration for community development loans, investments, and services in support of disaster recovery. For more information, click here.
• On April 4, the Federal Housing Administration (FHA) posted a draft mortgagee letter, proposing changes to the Home Equity Conversion Mortgage (HECM) program and documentation requirements for the HECM Assignment Claim Type 22 submission criteria. The proposal would allow servicers to begin submitting required claim documentation for FHA review when the mortgage reaches 97% of the maximum claim amount (MCA) versus 97.5% of MCA allowed today. FHA proposed this change to expedite the payment of claim funds when the mortgage reaches 98% of the MCA to mortgage servicers in light of current market liquidity considerations. For more information, click here.
• On April 3, the Department of Justice (DOJ) issued a press release, announcing its seizure of over $112 million in virtual currency linked to “pig butchering” scams, which entail a fraudulent actor progressively gaining the trust of a fraud victim through an online communications platform before persuading the victim to make an investment into the fraudulent actor’s illegitimate virtual currency trading website. According to the DOJ, investment fraud caused the highest losses of any scam reported by the public to the Federal Investigation Bureau’s Internet Crimes Complaint Center, totaling $3.31 billion. For more information, click here.
• On March 30, the Office of the Comptroller of the Currency announced the establishment of its Office of Financial Technology and the selection of Prashant Bhardwaj to lead the office as deputy comptroller and chief financial technology officer, effective April 10. For more information, click here.
• On March 30, during an interview with NBC, U.S. Senator Elizabeth Warren (D-MA) declared that “it is time for [the U.S.] to move in [the] direction” of creating a U.S. central bank digital currency — a digital representation of legal tender issued by a country’s central bank. For more information, click here.
• On March 29, the National Futures Association (NFA) issued a notice to its members relating to the recently adopted NFA Compliance Rule 2-51, which requires NFA members to engage in just and equitable spot digital asset commodity trading practices with one another and imposes certain anti-fraud and supervisory requirements. This rule also enables the NFA to “discipline a Member or take other action to protect the public if a Member commits fraud or similar misconduct with respect to its spot digital asset commodity activities.” For more information, click here.
• On March 28, the European Parliament’s Economic and Monetary Affairs and Civil Liberties committees voted in favor of new anti-money laundering and terrorist financing regulation, which seeks to impose a $1,000 cap on crypto-asset transfer “payments that can be accepted by persons providing goods or services.” This cap applies to crypto-asset transfers facilitated using self-custodial wallets where a person cannot be identified. For more information, click here.
• On March 27, Congressman Bob Good (R-VA) and Senator Bill Cassidy (R-LA) announced that they will lead the joint resolution of disapproval under the Congressional Review Act to overturn President Biden’s student loan forgiveness program after the Government Accountability Office recently ruled the action was eligible for congressional action. For more information, click here.

State Activities:

• On April 7, the Washington Legislature passed HB 1311, a bill that will require credit repair services to obtain written authorization from a consumer before communicating with a consumer reporting agency, creditor, or collection agency. If enacted, collection agencies and creditors will not be required to communicate with credit repair services if (1) the account has been paid, settled, or otherwise resolve; (2) the account has been removed from the consumer’s credit report; (3) the collection agency has provided verification information under Section 1692g(b) of the Fair Debt Collection Practices Act; or (4) the collection agency “reasonably determines” the dispute is frivolous or irrelevant. Washington’s governor must now approve or veto the bill. For more information, click here.
• On April 5, the Washington State Senate passed HB 1051, pertaining to robocalling and telephone scams. Among other things, the new law — similar to the TCPA — allows Washington consumers to hold third parties liable for knowing violations. Additionally, the law prohibits a person from initiating, or causing the initiation of, telephone solicitations to a telephone number on the federal Do Not Call Registry. The new law also raises the damages for violations of Chapter 19.86 RCW from $100 to $1,000. Furthermore, the new law provides that a person injured by a “commercial solicitation” by an automatic dialing and announcing device is considered a per se violation of the state’s Consumer Protection Act (WCPA) and permits an injured person to recover damages provided by the WCPA, including actual damages or statutory damages of $1,000 per violation, whichever is greater. Effective July 4, the new law also amends several definitions of RCW 80.36.390, the state’s telephone solicitation statute. For more information, click here.
• On April 5, the Montana State Auditor and Commissioner of Securities and Insurance Troy Downing announced that his office followed the footsteps of the Texas State Securities Board and the Alabama Securities Commission in filing a civil enforcement action against a Romanian-based cryptocurrency trading platform YieldTrust.ai (YieldTrust) and its owner Stefan Ciopraga for offering artificial intelligence-based investments in the form of securities without being registered with the appropriate state authorities. YieldTrust leveraged a trading bot called YieldBot that uses “quantum artificial intelligence” to make its own trading decisions, which purportedly resulted in “daily profits of up to 2.2%.” Notably, each of the state regulators cited to an audit that uncovered that the YieldBot smart contract was “dangerous.” For more information, click here.
• On April 4, while delivering event remarks, New York Department of Financial Services (NYDFS) Superintendent Adrienne Harris discussed the NYDFS’ recent closure of Signature Bank and provided additional clarity regarding concerns that the bank’s closure resulted from coordinated efforts to de-bank the digital asset industry: “The idea that taking possession of Signature was about crypto, or that this is Choke Point 2.0 is really ludicrous.” For more information, click here.
• On March 23, Colorado Governor Jared Polis signed SB 23-015 into law, prohibiting providers from conditioning the extension of credit, credit terms, or vehicle sale/lease terms upon the purchase of a vehicle value protection agreement (VPA). A VPA is a contract that affords a vehicle owner certain benefits when the owner replaces the vehicle at trade-in, when the vehicle is stolen, or after an event that lowers the value of the vehicle. For a VPA to issue, an agreement must (1) provide benefit to the consumer upon trade-in, total loss, or unrecovered theft of a covered vehicle; (2) identify the administrator or provider, the seller, the consumer, and the terms of sale; (3) guarantee the provider’s obligations by an insurance policy; and (4) notify the consumer of the agreement’s terms, including cancellation terms. VPAs are not considered insurance or subject to regulation as insurance if offered in compliance with the bill. For more information, click here.