Troutman Pepper Consumer Financial Services Weekly Bulletin – September 2022 | Troutman pepper
To help you keep abreast of relevant activities, below is a breakdown of some of the biggest federal and state level events impacting the consumer financial services industry in the past week:
- On September 1, the Consumer Financial Protection Bureau (CFPB) released the first in a series of reports on the finances of consumers living in rural areas. Focusing on rural Appalachia, the CFPB report finds that nearly 24% of rural Appalachia have medical debt in collection, compared to just 17% nationally. Additionally, rural Appalachia with medical debt collections have more than double the delinquency rates for other credit products compared to those without medical debt collections in each category. For more information, click here.
- On September 1, the American Arbitration Association (AAA) updated its Commercial Arbitration Rules and Mediation Procedures, concluding a two-year internal review. The Amendments provide greater procedural discretion to arbitrators, further streamline expedited arbitrations, modify controversy amount requirements for certain avenues of arbitration, and provide express confidentiality protections, among other things. For more information, click here.
- On August 30, House Subcommittee on Economic and Consumer Policy Chairman Raja Krishnamoorthi (D-IL) sent letters to four federal agencies (the U.S. Department of the Treasury, the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Federal Trade Commission) and five digital asset exchanges, requesting information on the measures taken by these agencies and exchanges to combat cryptocurrency fraud. For more information, click here.
- On August 29, the Federal Reserve announced that it had reduced the timeline for the launch of the FedNow service to mid-2023, specifically targeting a production rollout of the service between May and July. This further defines the previously communicated 2023 launch window for the planned instant payments service and comes as the FedNow pilot program prepares to enter technical testing for the service starting this month. For more information, click here.
- On August 29, the Federal Bureau of Investigation released a public service announcement, warning consumer investors of the risks and vulnerabilities of smart contracts, which transact on decentralized finance (DeFi) protocols. For more information, click here.
- On August 29, the U.S. Department of Education announced that it would repay all remaining federal student loans for borrowers who enrolled at any Westwood College location (including enrollment in the online program of Westwood) between January 1, 2002 and November 17, 2015, when it stopped recruiting new borrowers before it closed in 2016. The department analyzed evidence related to Westwood and concluded that the school had engaged in widespread misrepresentation of the value of its credentials to the employment prospects of participants and graduates, thereby entitling all borrowers who attended during the period described above to a full loan discharge. For more information, click here.
- On August 26, the Bank Policy Institute (BPI) and the American Bankers Association (ABA) wrote a letter to Acting Chief of the Office of the Comptroller of the Currency (OCC), Michael Hsu, in response to the August 10 letter. of Senators Elizabeth Warren, Dick Durbin, Bernie Sanders and Sheldon Whitehouse who addressed the OCC’s interpretive letters, allowing banks to engage in certain traditional banking activities using modernized technologies. The Congressional letter said that in light of “recent turmoil in the crypto market, … OCC crypto actions may have exposed the banking system to unnecessary risk” and asks that the OCC withdraws “existing interpretive letters that allowed banks to engage in certain crypto-related activities. The BPI and the ABA letter stated that “recent events in the crypto market were completely unrelated to the banks’ involvement in traditional banking activities described in the OCC’s interpretive letters. Thus, their cancellation would not improve the protection of bank investors, consumers or the financial system in the context of cryptocurrency activities. On the contrary, the cancellation of these letters would only serve to undermine the ability of banks to take advantage of modernized technologies to offer traditional banking products and services to customers more reliably, more securely and more efficiently. For more information, click here.
- On September 1, California lawmakers passed the Digital Financial Assets Act (AB 2269). If signed by Governor Newsom, the bill will take effect in January 2025 and will require digital asset exchanges and crypto-related companies to acquire a business license issued by the California Department of Financial Protection. and Innovation. For more information, click here.
- On August 30, California lawmakers passed a unique child privacy measure. The legislation, known as the California Age-Appropriate Design Code Act, explicitly mandates the “privacy, safety and well-being of children over commercial interests” by technology platforms when those interests conflict with users under the age of 18. With this landmark legislation, California lawmakers seek to set the standard for other state legislatures on the issue. For more information, click here.
- On August 29, Washington State Insurance Commissioner Mike Kreidler accepted defeat when a Superior Court judge ruled against a rule, barring insurers from using consumers’ credit histories to set the price of insurance policies. Although the court found that Kreidler followed rule-making procedures under state law, it determined that Kreidler exceeded his authority and ruled that the practice was legal. Kreidler decided not to appeal the court’s decision. For more information, click here.
- On August 29, an Illinois resident filed a lawsuit against a well-known social media company, alleging that the company failed to disclose its policies for collecting and storing biometric data. The lawsuit also alleges that the company failed to obtain express written permission from users before storing the data. The lawsuit, a proposed class action lawsuit filed in federal court in Illinois, claims that the company’s conduct violated Illinois biometric information privacy law. For more information, click here.