Troutman Pepper Weekly Consumer Financial Services COVID-19 Newsletter - April 2021 #3

Troutman Pepper

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 are closely tracking 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:

Federal Activities

State Activities

Privacy and Cybersecurity Activities

Federal Activities:

  • On April 19, the Consumer Financial Protection Bureau (CFPB) announced that the 30-day comment period on the CFPB’s proposal to delay the effective date of Regulation F, its Debt Collection Rule, is open. Scheduled to take effect on November 30, the CFPB said it is seeking to delay the rule’s effective date to January 29, 2022 in order to give companies more time to comply due to the COVID-19 pandemic. Comments must be submitted on or before May 19. For more information, click here.
  • On April 15, the Conference of State Bank Supervisors (CSBS) announced that it is seeking input from Nationwide Multistate Licensing System (NMLS) industry users on proposed requirements that will drive a standardized approach to the licensing process in the modernized NMLS. Comments can be submitted through May 31. Under the proposed requirements, all companies must provide and meet a set of standardized requirements, which would include demographic and other basic information currently provided through the NMLA company form, branch form, and individual form. Companies also would be required to submit business-specific requirements, which pertain to information related to licensing a business. The third requirement involves license-specific requirements. For more information, click here.
  • On April 15, the Federal Trade Commission (FTC) announced the first enforcement action taken under the new COVID-19 Consumer Protection Act (COVID-19 CPA), which imposes monetary penalties on violators. The case, brought by both the Department of Justice and the FTC, was filed against a Missouri chiropractor and alleges that his company violated both the COVID-19 CPA and the FTC Act by “deceptively marketing vitamin D and zinc products as proven immunity boosters that effectively treat or prevent COVID-19.” The complaint alleges that the “defendants don’t have scientific evidence to back up their treatment or prevention claims, much less the claims that their products are as good as (or superior to) approved COVID-19 vaccines.” For more information, click here.
  • On April 13, the Federal Communications Commission’s Acting Chairwoman Jessica Rosenworcel announced that the agency undertook a number of actions related to blocking illegal and unwanted robocalls, including sending cease and desist letters to two carriers that appear to be transmitting multiple unlawful robocall campaigns and seeking updated information from all carriers and developers of call-blocking tools to learn more about the tools available to consumers and their effectiveness. For more information, click here.
  • On April 13, U.S. Senator Ted Cruz introduced the Financial Institution Customer Protection Act of 2021, which seeks to prohibit financial institutions from denying services to law-abiding businesses, such as companies in the accounts receivable management industry. The bill would prohibit financial institutions from terminating specific customer accounts or groups of customer accounts unless the institution had a material reason for taking such action and that the reason is not based on reputation risk to the institution. Financial institutions would only be allowed to terminate accounts if the customer poses a threat to national security; is involved in terrorist financing; or is on the state-sponsored terrorism list. For more information, click here.
  • On April 12, the Federal Reserve Board (Board) announced that it is accepting applications for membership on the Community Advisory Council (CAC). Formed in 2015, the CAC advises the Board on issues affecting consumers and communities and complements two of the Board’s other advisory councils whose members represent depository institutions — the Federal Advisory Council and the Community Depository Institutions Advisory Council. For more information, click here.

State Activities:

  • On April 14, Illinois Governor J.B. Pritzker issued an executive order extending the suspension of garnishment, deduction of wages, and post-judgment citations to discover assets through April 30. The new executive order extends protections originally put in place on April 14, 2020 by Executive Order 2020-25. For more information, click here.
  • On April 14, the Texas House considered HB 4266, a bill relating to credit repair services performed by a credit services organization, in public hearing. Among other provisions, the bill (1) prevents credit services organizations from discussing a consumer with a credit reporting agency, debt buyer, or debt collector; and (2) prevents credit services organizations from impersonating a consumer when communicating with a credit reporting agency, debt buyer, or debt collector. For more information, click here.
  • On April 13, the Michigan Department of Licensing and Regulatory Affairs began issuing new licensing numbers to licensees ahead of the department’s new online licensing and regulatory database called the Michigan Professional Licensing User System. All licensed professionals will be transferred to the new system over the next few years. Licensees can see if they’ve been issued a new number and find more information here.
  • On April 13, Minnesota Attorney General Keith Ellison announced that his office has obtained a settlement that requires a California student loan debt relief company that illegally collected fees from customers and misrepresented its services to consumers to cease operating in Minnesota and to provide full refunds to its Minnesota consumers. Additionally, the company is alleged to have falsely promised consumers student loan forgiveness when only the federal government can forgive federal student loans. The attorney general further alleges that the company enrolled consumers in federal repayment programs that consumers can enroll themselves in for free, then pocketed both initial and monthly fees for doing so. The company was operating without registering as a debt settlement service provider as required by Minnesota law. For more information, click here.

Privacy and Cybersecurity Activities:

  • On April 14, Massachusetts Attorney General Maura Healey reminded consumers not to share personal information to unknown individuals via phone or email,” especially when seeking COVID-19 related relief through the Federal Emergency Management Agency’s (FEMA) Funeral Reimbursement Program. Healey’s warning comes at the heels of FEMA’s “fraud alert,” where it announced that “scammers have been reaching out to people who suffered a loss during the pandemic and offering to register them for funeral assistance.” Regulators remind consumers that:
    • FEMA will not initiate contact with anyone by phone or email;
    • Only the person who incurred the expenses may apply for funds; and
    • FEMA has not authorized any company to assist consumers in completing applications.

To learn more, click here. To read the FTC’s related announcement, click here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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