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 October 27, the Federal Trade Commission (FTC) announced that it approved an amendment to the Safeguards Rule that would require nonbanking institutions to report certain data breaches and other security events to the agency. The FTC’s Safeguards Rule requires nonbanking financial institutions, such as mortgage brokers, motor vehicle dealers, and payday lenders, to develop, implement, and maintain a comprehensive security program to keep their customers’ information safe. For more information, click here.
• On October 26, Senator Cynthia M. Lummis and Representative French Hill wrote a letter to Attorney General (AG) Merrick Garland to draw the Department of Justice’s attention to reports about illicit finance activities involving Binance, an unregulated crypto asset exchange based in the Seychelles and Cayman Islands, and Tether, a payment stablecoin issuer based in the British Virgin Islands and Hong Kong. The letter urges the Department of Justice to investigate these entities and take appropriate legal action for their alleged involvement in facilitating illicit finance, terrorism financing, and violations of sanctions and anti-money laundering laws. The letter emphasizes the importance of distinguishing between responsible crypto asset intermediaries and those involved in illicit activities, with a focus on countering terrorism financing in light of recent events. For more information, click here.
• On October 26, a House Financial Services subcommittee drafted legislative proposals related to the buy now, pay later (BNPL) and earned wage access (EWA) market. This bill would instruct the Consumer Financial Protection Bureau (CFPB) and the Government Accountability Office to conduct a study on BNPL and EWA services to help determine the degree to which consumers are utilizing both services for retail purchases. For more information, click here.
• On October 26, CFPB Enforcement Director Eric Halperin gave prepared remarks at the National Consumer Law Center (NCLC) Consumer Rights Litigation Conference. Among the three priority areas Halperin identified as important to the CFPB, he mentioned what he called “predatory lending and abusiveness.” For more information, click here.
• On October 26, the U.S. District Court for the Southern District of Texas granted motions filed by three groups of trade association intervenors to extend the court’s existing injunction against the CFPB’s enforcement of its final rule under § 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Final Rule) to cover all small business lenders nationwide. A discussion of the preliminary injunction issued by that Texas federal court on July 31 can be found here. The injunction will dissolve if the U.S. Supreme Court reverses a Fifth Circuit decision, which found the CFPB’s funding structure unconstitutional. The court’s ruling follows a period of mounting pressure on the Texas federal court and the CFPB by banks and financial institution trade associations advocating for the nationwide extension of a July 31 injunction, which enjoined the CFPB from implementing and enforcing the Final Rule against the plaintiffs and their members. For more information, click here.
• On October 25, the CFPB released its biennial report to Congress on the consumer credit card market. The report found that in 2022 credit card companies charged consumers more than $105 billion in interest and more than $25 billion in fees. Total outstanding credit card debt eclipsed $1 trillion for the first time since the CFPB began collecting this data. The report highlights areas of concern, including more consumers carrying balances month to month, with many falling deeper into debt over time, while credit card company profits remained significantly above pre-pandemic levels. For more information, click here.
• On October 25, the Federal Reserve Board (the Fed) requested comment on a proposal to lower the maximum interchange fee that a large debit card issuer can receive for a debit card transaction. The proposal would also establish a regular process for updating the maximum amount every other year going forward. For more information, click here.
• On October 25, the Fed announced a proposed rule that would lower the maximum interchange fee that a debit card issuer with at least $10 billion in total consolidated assets can receive for a debit card transaction and would also establish a regular process for updating the maximum fee amount every other year going forward. For more information, click here.
• On October 24, the Office of the Comptroller of the Currency (OCC), the Fed, and the Federal Deposit Insurance Corporation (FDIC) issued a final rule to strengthen and modernize regulations implementing the Community Reinvestment Act (CRA) to better achieve the purposes of the law. The CRA is a landmark law enacted in 1977 to address systemic inequities in access to credit. The CRA encourages federally insured banks to help meet the credit needs of the communities in which they do business, especially low- and moderate-income communities, consistent with safe and sound operations. The final rule and other supporting materials (including a press release and fact sheet) can be found on each agency’s respective website — OCC, Federal Reserve, FDIC.
• On October 24, the Fed, OCC, and FDIC issued final interagency guidance titled Principles for Climate-Related Financial Risk Management for Large Financial Institutions. The jointly issued principles provide a high-level framework for the safe and sound management of exposures to climate-related financial risks. The agencies believe that climate-related financial risks, including physical and transition risks, can manifest within traditional risk areas, including credit, market, liquidity, operational, and legal risks. For more information, click here.
• On October 24, Financial Institutions and Monetary Policy Subcommittee Chairman Andy Barr (KY-06) and House Financial Services Committee Chairman Patrick McHenry (NC-10) sent a letter to the Government Accountability Office (GAO). The letter asks the GAO to examine the role U.S. federal banking agencies played in their work at the Basel Committee on Banking Supervision to develop the recent Basel III Endgame proposal, which calls for massive increases in capital requirements for already well-capitalized U.S. financial institutions. For more information, click here.
• On October 24, the Conference of State Bank Supervisors issued a release informing that state regulators have offer licensees tips to prepare for Nationwide Multistate Licensing System (NMLS) annual renewals. The press release states that regulators encourage individuals and businesses in the mortgage, money transmission, debt collection and consumer financial services industry to start preparing now for the NMLS annual license renewal, starting November 1. Tips provided by regulators for licensees to prepare for NMLS renewal include updating NMLS record; resetting NMLS password; providing a current email address; reviewing state-specific renewal requirements; and accessing free, on-demand renewal training. For more information, click here.
• On October 24, the FDIC issued a proposal that would revise 12 C.F.R. part 303, subpart L, and part 308, subpart M, thereby updating the FDIC’s regulations concerning Section 19 of the Federal Deposit Insurance Act to conform with the Fair Hiring in Banking Act. Comments will be accepted for 60 days after publication in the Federal Register. For more information, click here.
• Recently, the World Bank initiated the first issuance of digital securities on Euroclear’s newly launched Digital Securities platform. The World Bank said it has raised 100 million euros ($105.9 million) from the three-year digital bond, dedicated to backing its sustainable development projects, with the bond making its debut on the Luxembourg Stock Exchange. For more information, click here.

State Activities:

• The California Department of Financial Protection and Innovation (DFPI) recently released a guide to educate new Americans about consumer debt. The guide distinguishes between “good debt,” such as a home or education loan, and “not-so-good debt,” such as debt borrowed to cover everyday expenses. The guide also gives new American consumers insight into managing short and long-term debt and provides some quick tips for avoiding scams. For more information, click here.
• On October 27, Maryland AG Anthony G. Brown, in connection with the U.S. Commodity Futures Trading Commission (CFTC) and 29 other state regulators, reached a settlement with a precious metals dealer, resolving allegations that the company engaged in a fraudulent $68 million investment scheme that targeted the retirement accounts of several elderly individuals. Specifically, the lawsuit against the company alleges that the company used deceit and fear to convince elderly investors that their retirement accounts were at risk, and encouraged the investors to purchase the company’s fraudulently priced precious metals as a safer alternative. According to the consent order, the company charged an average fee of 51 to 71% on the precious metals, which was considerably higher than the 23% to 42% fees advertised as “operating margins” in the company’s customer agreements. As part of the settlement, the company is now subject to a permanent injunction that prevents it from violating several federal and state laws. The appropriate amount for the company to pay affected investors for restitution and the amount of the civil penalties the company will pay will be determined as part of the next phase of the litigation. For more information, click here.
• On October 25, A6672A was signed by Governor Kathy Hochul (D). The bill amends the civil practice law and rules to require an action to collect a student loan debt owed to the state of New York to be filed in the debtor’s county of residence. For more information, click here.
• On October 23, Iowa AG Brenna Bird (R) announced a settlement with a company that provides leasing solutions to retailers for the company’s alleged deceptive advertising and leasing practices. Bird joined 41 other AGs in a multistate investigation, which found that the company deceived consumers into signing leases for goods instead of installment plans or credit sales. The “missing disclosures and complicated structure” of the leases allegedly confused consumers, leading to them paying two to three times the purchase price of the goods. The company is permanently banned from engaging in future leasing activities. All existing leases will be canceled, and consumers may keep the products they leased without any further financial obligation to the company. For more information, click here.
• On October 23, the DFPI announced that it issued enforcement actions against four entities for unlicensed debt collection activity under the Debt Collection Licensing Act and unfair, deceptive, or abusive acts or practices in violation of the California Consumer Financial Protection Law and related federal laws and regulations. The DFPI ordered these entities to desist and refrain from engaging in unlawful and deceptive practices, such as: failing to identify themselves as debt collectors; making false and misleading statements about payment requirements; threatening unlawful action because of nonpayment of a debt; contacting the consumer at a prohibited time of day; making false claims of pending lawsuits or legal process; making false claims about the character, amount, or legal status of the debt; failing to provide a “validation notice” as required by federal law; and threatening to sue on time-barred debt in violation of federal regulations. For more information, click here.