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 September 26, the U.S. Department of the Treasury announced coordinated actions against illicit Russian virtual currency exchanges and a cybercrime facilitator. The Treasury’s Financial Crimes Enforcement Network identified PM2BTC, a Russian virtual currency exchanger linked to Sergey Sergeevich Ivanov, as a “primary money laundering concern.” Concurrently, the Office of Foreign Assets Control sanctioned Ivanov and Cryptex, a virtual currency exchange operating in Russia. These actions, part of a broader international effort, aim to disrupt Russian cybercrime services and protect U.S. national security by cutting off these entities from the U.S. financial system. For more information, click here.
- On September 25, the Federal Trade Commission (FTC) announced a crackdown on deceptive artificial intelligence (AI) claims and schemes through its new initiative, Operation AI Comply. The FTC has taken enforcement actions against five companies for allegedly using AI to engage in deceptive practices, including creating fake reviews and falsely promising substantial income through AI-powered tools. Among the companies targeted are DoNotPay, which purportedly falsely claimed to offer AI legal services, and Ascend Ecom, which allegedly defrauded consumers with promises of passive income from online storefronts. For more information, click here.
- On September 25, Visa introduced the Visa Tokenized Asset Platform (VTAP) to enable banks to issue fiat-backed tokens on the Ethereum blockchain. This platform is designed to digitize and automate the trading of real-world assets like commodities and bonds through smart contracts. Spain’s BBVA will be among the first to pilot this platform, with a live rollout planned for 2025. For more information, click here.
- On September 24, the Consumer Financial Protection Bureau (CFPB) announced a public comment process for the first application from an organization seeking recognition as an open banking standard-setter. The CFPB’s final rule issued in June 2024 outlined the qualifications for becoming a recognized industry standard setter body. These bodies will play a pivotal role in issuing standards for companies to comply under the forthcoming Personal Financial Data Rights Rule under Section 1033 of the Consumer Financial Protection Act. The CFPB is now seeking public comment on the first application for recognition as an open banking standard-setter, submitted by the Financial Data Exchange (FDX). For more information, click here.
- On September 24, the Securities and Exchange Commission (SEC) announced settled charges against TrueCoin LLC and TrustToken Inc. for fraudulent and unregistered sales of investment contracts involving the stablecoin TrueUSD (TUSD). The SEC’s complaint alleges that from November 2020 to April 2023, the companies falsely marketed TUSD as fully backed by U.S. dollars while investing a substantial portion of the backing assets in a speculative offshore fund. By September 2024, 99% of TUSD’s reserves were invested in this risky fund, exposing investors to significant undisclosed risks. Without admitting or denying the allegations, the companies consented to the entry of final judgments enjoining them from violating applicable provisions of the federal securities laws and to civil penalties of $163,766 each. TrueCoin also agreed to pay disgorgement of $340,930 with prejudgment interest of $31,538. The final judgments are subject to court approval. For more information, click here.
- On September 24, the CFPB released its annual report detailing the financial challenges faced by service members, veterans, and military families. In 2023, this group submitted nearly 84,600 complaints to the CFPB, representing a 27% increase from 2022 and a 98% increase from 2021. The report highlights issues with student loan servicing, transcript withholding by educational institutions, and a rise in scams targeting older veterans. For more information, click here.
- On September 24, the Commodity Futures Trading Commission (CFTC) filed charges against four entities for failing to register as futures commission merchants. The entities — cryptoiminerstrade.com, Expert Stocks Zone, FalconForexBot, and swiftminingexpert.com — allegedly offered binary options based on commodities like foreign currencies and cryptocurrencies without proper registration. Each complaint seeks an order for the entities to cease and desist from violating the Commodity Exchange Act and CFTC regulations. The CFTC advises the public to verify a company’s registration status through NFA BASIC before committing funds to avoid potential fraud. For more information, click here.
- On September 19, CFPB Director Rohit Chopra delivered prepared remarks at the Aspen Institute, addressing the abuse and misuse of personal data. Chopra highlighted concerns about data brokers selling sensitive information, which can be exploited by countries of concern to threaten national security. He referenced President Biden’s executive order on preventing access to Americans’ bulk sensitive personal data and emphasized the need for stricter enforcement of existing laws like the Fair Credit Reporting Act. The CFPB plans to propose a rule to give consumers more control over their data, aiming to limit the flow of sensitive information and protect against various forms of exploitation and abuse. For more information, click here.
- On September 19, USTelecom — The Broadband Association (USTelecom), a major telecommunications trade organization, sent a letter to the Federal Communications Commission expressing its concerns about the proposed enhancements to anti-robocall regulations. USTelecom’s primary contention is that the proposed rules, which aim to extend the do-not-originate (DNO) requirement, could inadvertently block legitimate calls, including emergency communications. The association argues that the current industry practices already effectively block calls from invalid, unallocated, and unused numbers, as well as numbers on the DNO list managed by the USTelecom-led Industry Traceback Group. For more information, click here.
- On September 19, the U.S. Attorney’s Office for the District of Columbia announced the unsealing of an indictment charging Malone Lam and Jeandiel Serrano with conspiracy to steal and launder over $230 million in cryptocurrency. The indictment alleges that since August 2024, the defendants conspired to access victim cryptocurrency accounts fraudulently and launder the stolen funds by moving the funds through various mixers and exchanges using “peel chains,” pass-through wallets, and virtual private networks to mask their true identities. For more information, click here.
State Activities:
- On October 1, several provisions of the Minnesota Debt Fairness Act take effect, including the provision prohibiting medical debt from being reported on a consumer report. For more information, click here.
- On September 24, California Governor Gavin Newsom signed a package of consumer protection laws into law, with three bills aimed directly at collection practices. SB 1286 expands the scope of the Rosenthal Fair Debt Collection Practices Act to include certain commercial debts. Under SB 1061 medical debt will no longer appear on consumer reports. The law also prohibits using medical debt listed on a consumer report as a negative factor when making credit decisions. AB 2837 establishes new service and execution requirements for wage garnishments and bank levies. For more information, click here.
- On September 24, California Governor Gavin Newsom signed a bill into law that prohibits state-chartered banks and credit unions from charging consumers nonsufficient funds fees when their transaction attempts are declined instantaneously or near instantaneously due to insufficient funds. This new legislation builds upon existing laws that regulate banks and credit unions and mandates annual reporting of revenue from overdraft and nonsufficient funds fees to the commissioner of Financial Protection and Innovation. For more information, click here.
- On September 22, Newsom signed AB3100 into law concerning the assumption of mortgage loans in cases of dissolution of marriage. The new legislation mandates that conventional home mortgage loans originated on or after January 1, 2027, and secured by owner-occupied residential properties with up to four dwelling units, must include provisions allowing an existing borrower to purchase the property interest of another borrower by assuming their portion of the mortgage. This is contingent upon the assuming borrower qualifying for the underlying loan as determined by the lender. For more information, click here.
- On September 16, Colorado Attorney General Philip Weiser filed a brief in the Tenth Circuit Court of Appeals challenging a district court decision that preliminarily enjoined Colorado’s enforcement of its Uniform Consumer Credit Code against state-chartered banks. The brief argues that the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) allows states to opt out of its preemptive effects, and Colorado has correctly exercised this option. Weiser contends that a loan is “made” in a state if either the lender or borrower is present in that state when the loan agreement is reached, thus subjecting the loan to state usury laws. For more information, click here.
