Please check out the latest edition of our UDAAP Round-Up — a periodic review of federal activities regarding the prohibition on unfair, deceptive, or abusive acts or practices (“UDAAPs”) in the consumer financial services space. In this edition, we cover notable policy, enforcement, and supervisory developments from October 2022 through March 2023
Pennsylvania Targets Rent-to-Own Company Over Practices
Posted in Abusive Acts and Practices, Enforcement, Rent-to-Own, State Updates, UDAAP
Pennsylvania Attorney General Michelle Henry just announced an $11 million settlement with a rent-to-own provider resolving allegations of deceptive and predatory financing practices. The May 15, 2023, settlement, which is awaiting court approval, resolves allegations that Snap Finance LLC and its affiliates (“Snap”) disguised the nature of financing products it offered, concealed outstanding balances, engaged in deceptive collection practices, and used a web portal that allowed retailers to sign consumers up for financing without their knowledge, among other claims.…
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CFPB Addresses RESPA Compliance for Digital Comparison-Shopping Platforms
Can online lead generation be done compliantly under Section 8 of the Real Estate Settlement Procedures Act? The answer is yes, but it is important to navigate the impermissible activities recently identified by the Consumer Financial Protection Bureau. On February 7, 2023, the CFPB issued long-awaited guidance in an advisory opinion addressing how it interprets…
Court Dismisses CFPB Suit Against Townstone
Today, in another legal blow to the CFPB, a federal court in Illinois dismissed the Bureau’s redlining lawsuit against Townstone Financial (“Townstone”) and its owner.
The Bureau made waves back in 2020 when it filed the lawsuit, which was the first public redlining action brought by the Bureau against a non-bank mortgage lender. While the…
Chopra’s First Year – A Statistical View
Much has been written about Rohit Chopra’s tenure as Director of the Consumer Financial Protection Bureau (CFPB or Bureau). While many expected an aggressive enforcement posture, in part because of an aggressive hiring spree in enforcement, his tenure has been marked more by an aggressive use of guidance and exhortation. Recently released statistics bear this…
Iowa Targets Out-of-State Bank Partner for Usury, Shedding Light on State’s Interpretation of DIDMCA Opt-Out
Posted in DIDMCA, Enforcement, Preemption, State Updates, Usury
State-chartered banks lending to Iowa residents will want to take note of an Assurance of Discontinuance entered into in December between the State of Iowa and an out-of-state bank to settle claims that the bank charged usurious rates of interest to Iowa consumers. The settlement also highlights the Iowa Attorney General’s interpretation of the state’s…
Vindication for the CFPB But Lack of Guidance on True Lender Issues
In a ruling with important implications for the Consumer Financial Protection Bureau (Bureau or CFPB), the Ninth Circuit has revived the CFPB’s claims for substantial civil penalties and restitution in a lawsuit that was first filed some seven years ago. In a May 23, 2022 opinion, the court reversed and remanded a district court…
Marketplace Lender’s Lawsuit Against California DFPI Challenges “True Lender” Recharacterization
Marketplace lender Opportunity Financial, LLC has gone on the offensive against the California Department of Financial Protection and Innovation to protect its bank partnership program against challenge on a “true lender” theory. On March 7, 2022, OppFi filed suit against the DFPI to ask the state court to declare that FinWise Bank, a Utah-chartered bank,…
CFPB Issues Revised Administrative Litigation Procedures, Signaling Possible Increase in In-House Adjudications
The upshot, for busy people:
- The Consumer Financial Protection Bureau (CFPB) can sue companies in federal court or in its in-house administrative proceedings. Although the CFPB regularly announces settlements styled as administrative proceedings, it has rarely held administrative trials or other contested enforcement proceedings in that forum.
- On February 22, 2022, and without an accompanying press release, the CFPB published in the Federal Register a number of changes to its in-house adjudication procedures. Some changes are administrative—how to count days, etc. But others clarify and expand the powers Director Rohit Chopra has to shape proceedings, including to bifurcate remedial and liability determinations and to decide all dispositive motions.
- These procedural changes don’t alter any of the CFPB’s substantive rules. But these changes do signal that the agency may start bringing enforcement cases in-house, where Director Chopra will decide what does and does not violate the law.
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CFPB Wins Reversal of Dismissal – And Key Ruling on Securitization Trusts
Earlier this week, the Consumer Financial Protection Bureau (“CFPB”) won an important court ruling in a long-running case against student loan securitization trusts. The case has a long (and for the CFPB, somewhat ignoble) history. The CFPB first filed suit against 15 Delaware statutory student loan securitization trusts (the “Trusts”) in September 2017. The complaint…