On July 18, 2024, the Consumer Financial Protection Bureau (“CFPB” or the “Bureau”) issued a proposed interpretive rule (the “Proposed Rule”) purporting to clarify the application of the Truth in Lending Act (“TILA”) and Regulation Z to earned wage access (“EWA”) programs. Unlike other interpretive rules issued by the Bureau, including the interpretive rule on the application of certain TILA and Regulation Z “credit card” provisions to buy now, pay later products, the Proposed Rule is styled as a proposal and request for comment that will not become effective until after the CFPB considers comments and issues a final interpretive rule. In this blog post, we discuss the important features of the Proposed Rule.Continue Reading A New Play in EWA? CFPB Issues Proposed Interpretive Rule On Earned Wage Access
Truth in Lending Act/Regulation Z
CFPB Interpretive Rule Exposes Some BNPL Programs to Credit Card Requirements
On May 22, the Consumer Financial Protection Bureau (“CFPB”) issued an interpretive rule purportedly clarifying the breadth of the term “credit card” for Truth in Lending Act (“TILA”)/Regulation Z purposes in the buy-now/pay-later (“BNPL”) context (the “Interpretive Rule”). The clarification asserts that “digital user accounts” that permit consumers to access credit in the course of a retail purchase are “credit cards,” subjecting the “card issuer” to certain additional disclosure and substantive obligations under Federal law. The Interpretive Rule would become effective 60 days after publication in the Federal Register. The CFPB is accepting comments on the Interpretive Rule through August 1, 2024, notwithstanding that the Bureau’s position is that notice-and-comment rulemaking is unnecessary for its interpretation to become effective.Continue Reading CFPB Interpretive Rule Exposes Some BNPL Programs to Credit Card Requirements
CFPB Credit Card Late Fee Rule Stayed . . . For Now
On May 10, the United States District Court for the Northern District of Texas granted the credit card industry at least a temporary reprieve from a CFPB rulemaking that would have restricted late fees on consumer credit cards significantly (as described in more detail in our prior Legal Update).Continue Reading CFPB Credit Card Late Fee Rule Stayed . . . For Now
CFPB Finalizes Credit Card Late Fee Restrictions—Litigation Immediately Follows
On March 5, the Consumer Financial Protection Bureau (the “Bureau”) issued a Final Rule that would significantly restrict late fees that consumer credit card issuers may charge to a mere $8.
Within two days, the Final Rule faced a challenge in the Northern District of Texas by a coalition of trade groups including the United…
CFPB: Compensation Cannot Vary for Brokered Out Loans
In the CFPB’s new Supervisory Highlights, the agency concludes that paying individual mortgage loan originators differently for loan products that are brokered out to another lender, as compared to loans that are originated in-house, is a violation of Regulation Z’s Loan Originator Compensation Rule.
The CFPB’s Highlights describe a lender that makes certain mortgage…
The CFPB Sticks to Its Guns, Finding State Commercial Finance Disclosure Laws Not Preempted in Final Determination
The US Consumer Financial Protection Bureau has finalized its December 2022 preliminary determination that commercial finance disclosure laws recently enacted in California, New York, Utah and Virginia are not preempted by the federal Truth in Lending Act. The CFPB’s final determination confirms for a wide range of small business financers and brokers that they are…
CFPB Preliminarily Determines State Commercial Financing Disclosure Laws Not Preempted by Truth in Lending Act
Small business lenders hoping for federal intervention will be disappointed to learn that the Consumer Financial Protection Bureau (CFPB) has reached a preliminary determination that New York’s new commercial financing disclosure law is not preempted by the federal Truth in Lending Act (TILA). The CFPB’s public notice indicates that it initially takes the same view…
CFPB to Rethink QMs Again
Apparently time flies when you’re Director Chopra of the Consumer Financial Protection Bureau (“CFPB”). On June 17, Director Chopra issued a blog post titled “Rethinking the Approach to Regulations,” indicating that the agency will move toward “simpler and clearer rules” that are easy to understand and enforce. As part of that effort, the…
CFPB Finds that Income Share Agreements are Credit Products
On September 7, 2021, the CFPB announced that it had entered into a consent order with an education finance nonprofit (“nonprofit”) in connection with the nonprofit’s offering of income share agreements (“ISAs”). In the consent order, the CFPB asserted that ISAs are extensions of credit covered by the Consumer Financial Protection Act and the Truth in Lending Act (“TILA”) as well as TILA’s requirements with respect to “private education loans.” Because the CFPB asserts in the consent order that it views the nonprofit’s ISAs as credit, the CFPB takes the position that they are also subject to numerous other federal consumer financial protection laws that impose requirements and restrictions on student loan products. This consent order has significant implications for those in the ISA market, as it indicates how the CFPB views re-characterization for ISAs and similar products.
Continue Reading CFPB Finds that Income Share Agreements are Credit Products
Reminder: LO Comp Cannot Vary Based on Product Type
A mortgage loan product is a bundle of loan terms. That is what the Consumer Financial Protection Bureau (CFPB) reminds us in its latest Supervisory Highlights.
The CFPB first used that phrase back in 2013, but you may have missed it. It appeared in the fine print of footnote 82 in the CFPB’s lengthy…