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 August 12, the Federal Trade Commission (FTC) has approved publication of a Federal Register notice announcing a final new oversight rule pertaining to nonbudget aspects of the operations of the Horseracing Integrity and Safety Authority. For more information, click here.
• On August 9, the Court of Appeals for the Eighth Circuit issued a preliminary injunction against President Biden’s SAVE income-driven repayment plan, which was designed to reduce monthly payments and expedite debt relief for approximately eight million student loan borrowers. For more information, click here.
• On August 9, the U.S. Court of Appeals for the Sixth Circuit issued an opinion holding that a group of plaintiffs possessed standing to litigate the constitutionality of Congress’ recent amendment to 26 U.S.C. § 6050I. This amendment requires persons who receive more than $10,000 in cash (inclusive of digital assets) to report certain personal information to the Internal Revenue Service (IRS) such as the name, address, and social security number of the person from whom the cash was received. Among other theories, the plaintiffs argued that Congress’ amendment violated the Fourth Amendment of the U.S. Constitution because there is a “reasonable expectation of privacy” in digital asset-based transactions due to the pseudonymity of blockchain technology. The Sixth Circuit held that this Fourth Amendment argument was ripe for adjudication and remanded the matter to the district court. For more information, click here.
• On August 8, the Consumer Financial Protection Bureau (CFPB) filed a proposed order to resolve its lawsuit against Credit Repair Cloud and its CEO Daniel A. Rosen for allegedly providing substantial assistance or support to credit repair businesses that charge illegal advance fees to consumers. The proposed order, if entered by the court, would impose a $2 million civil penalty against Rosen and a $1 million civil penalty against Credit Repair Cloud. The order would also require the company and Rosen to take steps to ensure credit repair companies using Credit Repair Cloud stop charging consumers illegal advance fees. For more information, click here.
• On August 7, the Federal Communications Commission (FCC) proposed new consumer protections against artificial intelligence (AI)-generated robocalls and robotexts. The proposal seeks comment on the definition of AI-generated calls, requiring callers to disclose their use of AI-generated calls and text messages, supporting technologies that alert and protect consumers from unwanted and illegal AI robocalls, and protecting positive uses of AI to help people with disabilities utilize the telephone networks. For more information, click here.
• On August 7, the CFPB issued an issue spotlight finding that some residential solar lenders are allegedly misleading homeowners about the terms and costs of their loans, misrepresenting the energy savings they will deliver, and cramming markup fees into borrowers’ loan balances. For more information, click here.
• On August 7, in response to the Securities and Exchange Commission’s (SEC) motion for remedies and entry of judgment in the SEC v. Ripple Labs, Inc. lawsuit, the Southern District of New York entered an order imposing a $125.035 million fine on Ripple Labs, Inc. (Ripple) due to its sale of XRP to institutional investors (institutional sales). At summary judgment, the court held that Ripple’s institutional sales constituted “investment contracts” under the U.S. Supreme Court’s Howey Test, whereas Ripple’s programmatic selling of XRP — blind bid/ask transactions occurring on digital asset exchanges — did not. Originally, the SEC sought $1 billion in disgorgement and $900 million in civil money penalties from Ripple. For more information, click here.
• On August 5, the FTC announced an update in its lawsuit against the scammers behind a credit repair scheme. The lawsuit names Financial Education Services (FES), United Wealth Services, Inc, VR Tech LLC, VR Tech Management, CM Rent Inc., and Youth Financial Literacy Foundation, and their owners, Parimal Naik, Michael Toloff, Christopher Toloff, and Gerald Thompson. The complaint alleged that these parties deceived consumers about their credit repair products and charged them upfront for the service. In addition, the pyramid scheme made overinflated income claims that consumers could make tens of thousands of dollars recruiting others into FES. The proposed settlements in the case will lead to more than $12 million being turned over to the FTC for use in providing refunds to affected consumers. For more information, click here.
• On August 5, the National Consumer Law Center (NCLC) and the Center for Survivor Agency and Justice (CSAJ) petitioned the CFPB to initiate rulemaking under the Fair Credit Reporting Act (FCRA) to protect victims of coerced debt. They propose amending the definitions of “identity theft” and “identity theft report” to include situations where consent was not effectively given due to force, threat, fraud, or coercion. They also recommend allowing victims of coerced debt to use the identity theft block provision and ensuring no consumer reporting agency can refuse this block. For more information, click here.
• On August 5, the Federal Deposit Insurance Corporation (FDIC) issued its list of state nonmember banks recently evaluated for compliance with the Community Reinvestment Act. The list covers evaluation ratings that the FDIC assigned to institutions in May 2024. For more information, click here.
• On August 2, the Office of the Comptroller of the Currency (OCC), theFederal Reserve System (Fed), the FDIC, the National Credit Union Administration (NCUA), the CFPB, the Federal Housing Finance Agency (FHFA), the Commodity Futures Trading Commission (CFTC), the SEC, and Treasury released an interagency notice of proposed rulemaking (NPRM) to establish data standards across these agencies for “certain collections of information reported to each Agency by financial entities” and “the data collected from the Agencies on behalf of the Financial Stability Oversight Council,” as mandated by the Financial Data Transparency Act of 2022. For more information, click here.
• On August 2, the Federal Housing Administration (FHA) published a final rule, which updates the Department of Housing and Urban Development’s (HUD) current regulation (24 CFR 203.604) that requires mortgagees to meet in person with borrowers who are in default on their mortgage payments. The final rule allows for the use of electronic and other remote methods of communication to satisfy HUD’s requirement to meet with a borrower who is in default. For more information, click here.
• On July 31, the U.S. House Committee on Financial Services wrote to Fed Chair Jerome Powell, urging him to withdraw and re-propose the Basel III Endgame proposal. For more information, click here.
• On July 31, a bipartisan group of Congress members sent a letter to CFPB Director Rohit Chopra raising concerns regarding CFPB’s proposed 1033 Rule, which relates to consumer financial data privacy. The letter address concerns regarding the proposed limitations on data use beyond the consumer’s “requested product or service” could impact the development of fraud detection products and other new financial products and services. For more information, click here.
• On July 30, the FDIC approved a NPRM to amend the agency’s regulations under the Change in Bank Control Act. The proposed rule would require the provision of advance notice to the FDIC for certain acquisitions of voting securities of FDIC-supervised institutions, at a level sufficient to trigger a presumption of control under the regulations, whether such investments are made directly in the institution or indirectly through a holding company. For more information, click here.
• On July 30, the FDIC approved final joint guidance to help certain large banks further develop their resolution plans. The final guidance is largely similar to the proposed guidance from August 2023 and incorporates some changes in response to comments received. The FDIC developed the guidance jointly with the Fed. For more information, click here.

State Activities:

• On August 9, New York Attorney General (AG) Letitia James announced a $1.5 million settlement with a digital marketing company, resolving allegations that the company misled several New Yorkers seeking mental health services, substance abuse treatment, and senior living facilities. The digital marketing company is typically hired by third-party companies to attract customers to purchase their products or services. In this instance, the marketing company allegedly maintained several sites that contained information for health care facilities throughout the state. However, the contact information listed in the directories led consumers to contact the marketing company’s clients, instead of the facilities that were listed on the websites. As a part of the settlement, the company must pay $1.5 million to New York and revise its websites to eliminate deceptive content. For more information, click here.
• On August 9, California Governor Gavin Newsom announced a new state initiative in collaboration with software company NVIDIA to expand AI resources for students, educators, and workers. The initiative focuses primarily on individuals in community colleges and aims to: (1) train students, educators, and workers; (2) promote innovation and support job creation; and (3) apply AI to improve the lives of Californians. This collaboration is touted as the first of its kind and is designed to, among other things, to provide community colleges with new AI resources (such as curriculum and certifications, hardware and software, and AI labs and workshops) to broaden career pathways for students, educators, and workers. For more information, click here.
• On August 5, James issued a report discussing the potential benefits and risks associated with AI. The report was generated after the conclusion of a symposium, which itself was organized by James, that joined several officials, academics, policymakers, advocates, and industry representatives to create strategies for minimizing the risks associated with AI technology, while still encouraging cutting-edge innovation throughout the state. The symposium focused on a ranged of critical topics, including data privacy, automated decision making, potential health care uses for AI, and information and misinformation sharing. Among other things, the report notes that the health care field presents a unique opportunity for applying AI to improve lives. Examples of these improvements include, but are not limited to advanced disease detection, monitoring trends in public health, and streamlining administrative tasks. For more information, click here.