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 16, the U.S. Department of the Treasury’s semiannual regulatory agenda revealed a federal initiative to revise the definition of “money” to enhance reporting requirements for cryptocurrency transactions. Collaborating with the Federal Reserve and the Financial Crimes Enforcement Network, the effort aims to align crypto regulations with those for fiat currency under the Bank Secrecy Act. The proposal will cover convertible virtual currency and digital assets with legal tender status, including central bank digital currencies. Scheduled for September 2025, this move seeks to improve transparency and combat illicit activities in the crypto space. For more information, click here.
• On August 15, Chairman of the House Financial Services Committee Patrick McHenry (R-NC), along with other Republican members of the committee, sent a comment letter to Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra in response to the CFPB’s proposed rule, which would prohibit reporting medical debt on consumer credit reports. The letter argues that the proposed rule will negatively impact the accuracy and completeness of credit reports, undermine underwriting processes, and increase financial system risks. It asserts that medical debt information is crucial for assessing a consumer’s financial situation and that the CFPB’s proposal lacks sufficient data and analysis to justify the change. The letter highlights potential negative consequences, such as increased mortgage defaults, higher health care costs, and restricted access to credit for high-risk borrowers. The authors urge the CFPB to reconsider the proposed rule. For more information, click here.
• On August 15, the Office of the Comptroller of the Currency (OCC) released its annual update to the Bank Accounting Advisory Series (BAAS). The BAAS contains staff responses to frequently asked questions from the banking industry and bank examiners on a variety of accounting topics and promotes consistent application of accounting standards and regulatory reporting among national banks and federal savings associations. For more information, click here.
• On August 13, the Financial Industry Regulatory Authority (FINRA) highlighted potential issues in its members’ crypto asset dealings, emphasizing the need for proactive compliance. While the update does not introduce new regulations, it underscores the importance of addressing regulatory and compliance challenges in crypto activities. FINRA has already taken action against members for failures in disclosing outside business activities, record-keeping, and addressing illicit fund ties. It also noted potential violations, including misrepresentation of securities laws, due diligence failures, and inadequate anti-money laundering programs. Following a 2023 survey of 600 member firms, FINRA found 390 had crypto ties, often indirectly through associated persons or affiliates. FINRA urges firms to prioritize compliance in areas like cybersecurity, anti-money laundering, and due diligence. For more information, click here.
• On August 13, the CFPB released an advisory opinion and research report on a form of home seller financing that is often referred to as contract for deed. The advisory opinion affirms that federal home lending rules and laws cover contracts for deed and provide key consumer protections. For more information, click here.
• On August 12, the CFPB submitted a comment in response to the Request for Information on Uses Opportunities, and Risks of AI in the Financial Services Sector. For more information, click here.
• On August 12, the Securities and Exchange Commission (SEC) charged a multilevel marketing and crypto investment company, NovaTech Ltd, for a fraudulent scheme that raised more than $650 million from more than 200,000 investors worldwide. The scheme, which operated from 2019 to 2023, falsely promised safe investments and high returns, but primarily used funds to pay existing investors and commissions, with principals siphoning off millions. Meanwhile, the Commodity Futures Trading Commission (CFTC) awarded $1 million to a whistleblower for providing crucial information that led to a digital asset enforcement action. Digital asset cases have become a significant focus for the CFTC, reflecting the rise in related scams. For more information, click here.
• On August 9, the Federal Deposit Insurance Corporation (FDIC) issued a Financial Institution Letter regarding the classification of interactive teller machines as domestic branches or remote service units. Section 18(d) of the Federal Deposit Insurance Act (FDI Act) (12 U.S.C. § 1828(d)) requires a state nonmember bank to obtain the FDIC’s consent before establishing a domestic branch. Section 3(o) of the FDI Act (12 U.S.C. § 1813(o)) specifically excludes automated teller machines (ATMs) and remote service units (RSUs) from the definition of domestic branch. For more information, click here.
• On August 8, the CFPB proposed a stipulated final judgment and order to the U.S. District Court for the Central District of California against Credit Repair Cloud and its CEO, Daniel Rosen. If approved, this order would settle the CFPB’s allegations that Credit Repair Cloud and Rosen violated the Telemarketing Sales Rule and the Consumer Financial Protection Act, and the order would approve a $1 million fine for Credit Repair Cloud and $2 million for Rosen. For more information, click here.
• On August 8, the Philadelphia branch of the U.S. Central Bank issued a consent agreement with Customers Bancorp Inc. to address deficiencies in their digital asset services and instant payments platform. The agreement highlights significant anti-money laundering and compliance issues, including violations of the Bank Secrecy Act and regulations from the U.S. Department of the Treasury and the Office of Foreign Assets Control. The bank must submit various written plans to enhance oversight, risk management, and compliance programs, and provide quarterly progress reports. An independent review of transaction monitoring is also required. For more information, click here.
• On August 1, 20 state attorneys general (AG) sent a letter addressed to U.S. Treasury Secretary Janet Yellen objecting to the Treasury’s recent letter which characterized state laws aimed at protecting individuals from de-banking as harmful to national security. For more information, click here.

State Activities:

• On August 13, New York AG Leticia James, along with the Connecticut and New Jersey AGs, announced a $4.5 million settlement with a biotech company, resolving allegations that the company failed to adequately protect consumers’ personal and private health data. According to the AG, hackers were able to access the company’s networks last year by using two employee login credentials. The AG further discovered that the login credentials were being shared among five different employees, and that the credentials for one of the accounts had not been changed in 10 years. After accessing the network, the cyber-attackers were able to steal files and data containing patient information for 2.4 million patients, including names, addresses, dates of birth, phone numbers, Social Security numbers, and medical treatment/diagnosis information. In addition to paying $4.5 million, $2.8 million of which will be paid to New York, the company must also adopt measures to strengthen its cybersecurity practices. For more information, click here.
• On August 12, New York City’s Department of Consumer and Worker Protection (DCWP) finalized debt collection rules amended in response to changes in federal regulations by the CFPB. The rules will expand current record retention and reporting requirements for collection agencies and revise validation and verification procedures. For medical debt, information about the debt cannot be reported to a consumer reporting agency, and this information must be disclosed to the consumer in the validation notice. For more information, click here.
• On August 12, California AG Rob Bonta sent a letter to the CFPB announcing his support of a proposed rule related to reporting of medical debt on credit reports. The rule, if adopted, would prohibit the reporting of medical debt on credit reports and is expected to provide relief for millions of Americans. In the letter, Bonta underscores the negative impact that the reporting of medical debt can have on consumers. Bonta also advocates for expansion of the definition of the medical debt to include all forms of payments made to health care providers. This definition would include, for example, credit card debt an individual incurs to pay off a medical bill. According to Bonta, there “is no need for medical debt to appear on credit reports as it is not a good predictor of repayment, and it pushes more and more people into a harmful debt cycle that is very difficult to escape.” For more information, click here.
• On August 9, Illinois Governor J.B. Pritzker approved SB 3412, establishing the state’s Uniform Money Transmission Modernization Act (MTMA). This act supersedes the state’s Transmitters of Money Act and prohibits a person from engaging in the business of money transmission or from advertising, soliciting, or holding oneself out as providing money transmission unless the person is licensed under the MTMA. The MTMA was designed to ensure uniformity among states and reduce unnecessary regulatory burden, protect the public from financial crime, standardize they types of activities that are subject to or exempt from licensing, and modernize the safety and soundness requirements to ensure the protection of consumer funds. The MTMA includes certain reporting and recordkeeping requirements for licensees and establishes a consumer protection fund to provide restitution to consumers who suffer monetary loss arising from a transaction regulated by the MTMA. For more information, click here.
• On August 9, Governor Pritzker signed HB4926. The bill prohibits a landlord from charging a prospective tenant an application screening fee if the prospective tenant provides a reusable tenant screening report that meets the following criteria:
  • The report was prepared within the previous 30 days by a consumer credit reporting agency at the request and expense of a prospective tenant;
  • The report is made directly available to a landlord for use in the rental application process or is provided through a third-party website that regularly engages in the business of providing a reusable tenant screening report and complies with all state and federal laws pertaining to use and disclosure of information contained in a consumer report by a consumer credit reporting agency; and
  • The report is available to the landlord at no cost to access or use.
  The landlord may require the prospective tenant to state, in writing, that there has not been a material change to the information in the reusable tenant screening report. In the definition of “reusable tenant screening report,” the bill explicitly adds that it is a written report prepared by a consumer credit reporting agency. It also provides that the report must include a verification of the “source of income” (as opposed to “employment) of the prospective tenant. It also provides that the report must include all of the criteria consistently being used by the landlord in the screening of prospective tenants. It additionally provides that nothing in the new provisions prohibits a landlord from collecting and processing an application in addition to the report provided, as long as the prospective tenant is not charged an application screening fee for this additional report. The bill is effective on January 1, 2025. For more information, click here.
• As of July 1, Vermont revised its money transmission law, joining states adopting the MTMA. This law significantly expands regulatory oversight of the virtual currency industry. It mandates that all virtual currency business activities, including kiosk operations, require money transmission licenses unless exempted. Activities include exchanging, storing, and transmitting virtual currency. The law emphasizes “control” of virtual currency, particularly the control of private keys. Businesses must adhere to strict recordkeeping and consumer disclosure requirements. Kiosk operators must register ATMs, obtain approval, and comply with transaction limits and fee caps. Vermont’s law reflects a growing trend of state-specific virtual currency regulations. For more information, click here.