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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 June 14, the Consumer Financial Protection Bureau (CFPB) announced that its so-called “Payday, Vehicle Title and Certain High-Cost Installment Loans” rule (Rule) will go into effect on March 30, 2025. While ostensibly aimed at higher-APR lending (e.g., loans with an APR above 36%), it also applies to most creditors, including banks, offering loans: (1) that are substantially repayable within 45 days or less; or (2) that have a bullet or balloon payment feature. The rule, by its plain terms, applies to a number of mainstream financial products and products marketed to high-net worth individuals, none of which the CFPB seems to have considered when promulgating the rule. For more information, click here.
• On June 13, U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler told senators that the agency could rewrite a pair of proposals governing broker-dealers’ use of artificial intelligence (AI) and the handling of customers’ cryptocurrency. According to Gensler, the SEC has a robust comment file on predictive data analytics rule, including comments from a lot of people for, and a lot of people against it, which had raised different issues about the scope of the rule. Gensler added that the SEC is considering the possibility of reopening or reproposing the so-called “safeguarding rule,” which would require investment advisers and fund managers to place customers’ crypto with a qualified custodian.
• On June 12, Director of the CFPB Rohit Chopra gave the agency’s semi-annual report to Congress. Chopra highlighted several key points regarding medical debt, including the CFPB’s plan to prevent debt collectors from using credit reporting, to pressure patients into paying allegedly inflated or erroneous bills. For more information, click here.
• On June 11, the CFPB proposed a rule that would remove medical bills from most credit reports, increase privacy protections, help to increase credit scores and loan approvals, and prevent debt collectors from using the credit reporting system to coerce people to pay. The proposal would stop credit reporting companies from sharing medical debts with lenders and prohibit lenders from making lending decisions based on medical information. The proposed rule is part of the CFPB’s efforts to address the burden of medical debt and coercive credit reporting practices. For more information, click here.
• On June 7, the Board of Governors of the Federal Reserve System (Board) invited comments on a proposal to extend for three years, without revision, the Recordkeeping and Disclosure Requirements Associated with CFPB’s Regulation Z (FR Z; OMB No. 7100-0199). Comments must be submitted on or before August 6. For more information, click here.
• On June 6, Acting Comptroller of the Currency Michael J. Hsu issued remarks in support of the 2024 conference on AI and Financial Stability. He also issued remarks in support of the Financial Health Network Emerge Conference on consumer financial health. For more information, click here and here.
• On June 6, the U.S. Department of the Treasury (Treasury) released a request for information on the Uses, Opportunities, and Risks of AI in the Financial Services Sector. Building on Treasury’s recent work on cybersecurity and fraud in AI and recent initiatives by other federal agencies, Treasury is seeking public comment on the uses of AI in the financial services sector and the opportunities and risks presented by developments and applications of AI within the sector. For more information, click here.
• On June 5, the CFPB finalized a rule outlining the qualifications to become a recognized industry standard setting body, which can issue standards that companies can use to help them comply with the CFPB’s upcoming Personal Financial Data Rights Rule. The rule identifies the attributes that standard setting bodies must demonstrate in order to be recognized by the CFPB. The rule also includes a step-by-step guide for how standard setters can apply for recognition and how the CFPB will evaluate applications. For more information, click here.
• On May 29, the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac (the enterprises) will enhance their Flex Modification policies to allow more borrowers facing longer-term hardships to achieve meaningful payment reductions. The updated Flex Modification policies will promote sustainable homeownership and the safety and soundness of the enterprises. Flex Modification is the enterprises’ loan modification offering that provides a home retention solution for eligible borrowers facing a permanent hardship who can no longer afford to make their regular monthly mortgage payments. For more information, click here.

State Activities:

• On June 13, California Attorney General (AG) Rob Bonta, along with several other state AGs, submitted a letter to the CFPB in support of a final rule designed to detect and deter corporate offenders that have broken consumer laws and are subject to federal, state, or local government or court orders. The rule requires nonbank entities offering consumer financial products to inform the CFPB if they become subject to an order issued by federal, state, or local regulator, or a court related to violations of consumer protection laws. When the CFPB receives such information, it will make the information available to regulators, businesses, and the public through a searchable online registry. The AGs applaud the rule in their letter, noting that state AGs benefit greatly from the ability to identify problems and engage in early prevention. As Bonta put it, “Knowledge is power.” For more information, click here.
• On June 6, Connecticut Governor Ned Lamont approved HB 5211. Among other things, the bill amends the definitions of “permissible investment” and “receipt” under the state’s money transmission statutes. The bill also requires money transmission licensees to maintain a plan and account regarding winding down operations and to meet certain conditions in order to terminate such licensee’s businesses. Additionally, the bill caps the amount that owners or operators of virtual currency kiosks are permitted to charge for certain services and eliminates certain limitations on a customer’s ability to cancel certain virtual currency transactions. The bill requires money transmission licensees (and their authorized delegates) to provide receipts to senders. The bill also permits the banking commissioner to adopt, amend, and rescind regulations, forms, and orders governing the business use of nonfungible tokens. For more information, click here.
• On June 6, Colorado Governor Jared Polis approved HB 1380 related to unfair and deceptive trade practices within the state. Among other things, the bill prohibits a debt collector or collection agency that is not a creditor or debt buyer from being a named plaintiff in a legal action unless certain conditions are met: (i) the name of the plaintiff in the case caption must be listed as the name of the original creditor or assignor and the name of the debt collector or collection agency, in that order; (ii) the debt collector or collection agency must have complete and effective assignment, including complete settlement authority and authority to resolve the litigation; and (iii) the debt collector or collection agency must ensure — in instances where there are multiple original creditors or assignors in a legal action — that each entity is listed in the case caption as a separate plaintiff and that their inclusion in the action complies with rules regarding permissive joinder. The bill also requires a debt management services provider to obtain a consumer’s consent when using the internet or other electronic means to meet its compliance requirements. Providers must obtain such consent at the time of satisfying the requirements. For more information, click here.
• On June 6, New York AG Letitia James announced legal actions against two companies, alleging they ran billion-dollar pyramid schemes targeting immigrant communities. The complaint claims that these schemes defrauded hundreds of thousands of investors, including over 11,000 New Yorkers, out of more than a billion dollars in crypto-assets. The companies allegedly preyed on immigrant communities, particularly New Yorkers of Haitian descent, using prayer groups and social media to promise high returns. One company purportedly offered returns from cryptocurrency mining but collapsed in 2019 without delivering profits. The founders then started a new company, which also promised high returns. From 2019 to 2023, investors deposited over $1 billion in cryptocurrency, but less than $26 million was used for trading before the company’s collapse in May 2023. The AG seeks a permanent ban on the companies and individuals from conducting securities or commodities business in New York, along with disgorgement and damages for the victims. For more information, click here.
• On June 5, the California Department of Financial Protection and Innovation (DFPI) issued desist and refrain orders against two crypto-asset companies for allegedly offering unqualified securities under the California’s Corporate Securities Law (CSL). The first order targeted a UK- incorporated company accused of selling unpermitted, interest-bearing securities through its website. The second order was against another firm offering similar crypto asset interest-bearing accounts since 2023, also unqualified under the CSL. Both firms are required to stop selling securities in California until they meet the CSL requirements. For more information, click here.