b'For more information, please visit www.lenderlawwatch.com or www.enforcementwatch.coma discriminatory effectthus setting a much higherfrom calling a consumer more than seven times withinrule mandates PayPal make disclosures concerningtrend will only halt (and abruptly, if so) if there is a standard for Fair Housing Act plaintiffs. If this newa seven-day period, require additional information befees that PayPal does not charge and misrepresent thechange in administration in 2021 after this Novembers standard is adopted, it will likely limit or deter futurecontained in debt validation notices, and generallyactual fees paid by most customers, which is likely topresidential election, or perhaps if Democrats are disparate impact actions. prohibit collectors from attempting to communicatemislead or confuse consumers. The action is currentlyable to take control of both houses. And while 2019 CFPB Further Delays Implementation of the Paydaywith consumers through public-facing social media orpending in the U.S. District Court for the District ofdid not demonstrate the expected uptick in publicly Lending Rule. The Bureau formally announced inthrough emails to the consumers work email address.Columbia, and will certainly be worth monitoring thisannounced enforcement activity by the states, we June that it would delay the compliance deadline forThe CFPB is expected to issue its final rule in earlycoming year. expect to see an increase this coming year as recently-the mandatory underwriting provisions of the Payday2020. Privacy and Data Security. This past year saw theelected and appointed Democratic attorneys general Lending Rule until November 2020. Under theseCFPB Surprises with Auto Lending Abusivenesspassage of several landmark privacy laws intendedand state agency heads have the opportunity to further provisions of the rule, lenders would be requiredClaim. Despite its retreat from auto lendingto give consumers more control over their personalimplement their agendas and finalize or close out yet-to consider a borrowers ability to repay beforeenforcement in 2019, the CFPB was not shy in findinginformation and restrict the permissible use ofto-be-announced investigations or actions that were providing certain small-dollar loans and conduct a fullauto lenders sale of guaranteed asset protection (GAP)consumer data. The European Union took the leadinitiated this year.payment test to show that the borrower can affordproducts an abusive practice. Following the resignationon this growing initiative when it adopted the GDPR.We further anticipate that both state and federal the loan and his or her existing financial obligations.of the CFPBs Director Cordray, we expected a declineCalifornia has since followed suit and enacted aagencies will continue to focus on politically popular Then in November 2019, the Bureau released itsin the CFPBs use of abusive authority in enforcementsweeping new privacy law, the CCPA, which went intoenforcement targets, such as student and auto lending revised Rulemaking Agenda and noted that it was stillactions. Yet in its Summer 2019 Supervisory Highlight,effect January 1, 2020. The CCPA extends GDPR-likeand debt collection. Financial industry participants, like reviewing the approximately 190,000 public commentsCFPB examiners observed several instances in whichprotections and creates a private right of action forparticipants in any industry, should also be aware that received concerning the rule, and intends to take finallenders sold GAP products to consumers with lowdata breaches. In 2018 and 2019, the first enforcementprivacy enforcement will likely continue to be an area of action by April 2020. loan-to-value ratios whom lenders knew would notactions were brought for violations of GDPR in thefederal and state focus with the ever-present threat of CFPB Relaxes HMDA Reporting Requirements forbenefit from GAP products. The CFPB believed thisEuropean Union. Issues ranged from failure to properlydata breaches.Small Lenders. In October, the CFPB issued a finalconduct violated the CFPA and constituted an abusiveprocess personal data, to insufficient information2020 should also finally bring implementation of rule under HMDA clarifying partial exceptions topractice under its UDAAP provisions because lenderssecurity protections. In the U.S., enforcers targetedseveral anticipated final rules from the CFPB, including HMDA reporting requirements and extending thetook unreasonable advantage of consumers lack ofcompanies subject to data breaches that allegedlyrules for the FDCPA in early 2020 and the long-existing reporting threshold for open-end lines ofunderstanding of the material risks, costs, or conditionsfailed to protect consumers personal information.deferred Payday Rule beginning in November 2020.credit. The new rule requires companies to report onof GAP products.Although there is still much that remains to be seen on such loans only if they meet a threshold of originatingOCCs FinTech Charter. In 2018, the OCC announcedhow Californias sweeping new privacy law will impactLast but certainly not least, the Supreme Court is 500 open-end lines of credit in each of the past twoit would begin accepting applications from FinTechconsumers, businesses, and regulators, it is possibleexpected to issue a much anticipated decision in years. The CFPB also clarified rules governing certaincompanies engaged in the business of banking forthat the law is a precursor to other states adoptingSeila Law that should resolve once and for all whether partial exemptions for smaller lenders provided by thespecial purpose national bank charters. Charteredsimilar laws, and potentially a federal privacy law. the CFPB is unconstitutional and, if so, the effect that Economic Growth, Regulatory Relief, and Consumercompanies would be able to lend, facilitate payments,should have on past, current, and future Bureau actions. Protection Act. According to the Bureau, theseavoid state licensing and registration requirements, andLOOKING AHEAD TO 2020: OURWe expect that the opinion will be issued in June changes were implemented to provide relief to smallerexport interest rates between states. Yet, this pastPREDICTIONS 2020. The Court will also decide the constitutionality banks and credit unions while also still providing theOctober, the Southern District of New York struck downof the Telephone Consumer Protection Act (TCPA) in a information the CFPB needs to monitor lenders underthe charter. The ruling is currently on appeal to theConsistent with our predictions last year, based on whatdecision that will have many in the industry hoping for the HMDA. Second Circuit. we have observed and continue to hear, we expect thata constructive sea change to this favorite tool of the federal agencies will continue to slow or steady theirplaintiffs bar. CFPB Issues Proposed FDCPA Rulemaking. InPayPal Sues CFPB Over Prepaid Card Rule. Shortlyenforcement activity in 2020. This continued downward May, the CFPB issued its much-anticipated Notice ofafter the CFPBs changes to its Prepaid Rule went Proposed Rulemaking to implement the FDCPA. Theinto effect, PayPal filed suit challenging the recently-Bureaus stated purpose for the proposed rules, whichamended Prepaid Card Rules application to digital would be placed in the existing Regulation F, is to setwallets. PayPal alleges the Rule is arbitrary and clear, bright-line limits on the number of calls debtcapricious and exceeds the scope of the Bureaus collectors may place to reach consumers on a weeklyauthority under the Electronic Funds Transfer Act basis, and to clarify how collectors may communicate(EFTA) because the Bureau subject[ed] both offerings lawfully using newer technologies, such as voicemails,to the same regulatory disclosures regime even emails and text messages, among other things. Forthough a prepaid card is materially different from a example, the proposed rule would prohibit a collectordigital wallet. PayPal alleges, for example, that the 10 11'