b'For more information, please visit www.lenderlawwatch.com or www.enforcementwatch.comFINTECH2019 brought exciting and cutting-edge developments to the evolving world of FinTech. Goodwin monitored the resulting regulatory scrutiny, and developing litigation in this space.KEY TRENDSCircuit. Should the District Courts ruling be reversed, In 2019, FinTech companies continued to enjoyfinancial entities that do not receive deposits, like exponential growthbut not without challenges. payday lenders and other FinTech firms, would be able Among these has been continued regulatoryto obtain a federal charter and be regulated almost uncertainty, and enforcement challenges.Regulatorsexclusively by the OCC and not state agencies, such as have struggled to identify how to regulate FinTechthe NYDFS. See Lacewell v. Office of the Comptroller of companies innovative products.They often timesthe Currency, (No. 19-4271).attempt to apply traditional financial services regulatoryPayPals Prepaid Accounts Rule Challenge. In structures to non-traditional FinTech companies. ThisDecember, PayPal filed suit against the CFPB under the has resulted in an increase in litigation centered aroundPrepaid Accounts Under the EFTA (Regulation E) and the regulation and enforcement of the industry.the TILA (Regulation Z) Rule (Prepaid Accounts Rule) in PayPal, Inc. v. Consumer Financial Protection Bureau, 2019 HIGHLIGHTS et al., (No. 19-37) (D.D.C.). PayPal challenges the CFPBs conclusion that digital wallets operate the same way as Litigation Over the OCCs FinTech Charter. In 2018,general purpose reloadable debit cards and should be the New York Department of Financial Servicesregulated in the same manner. PayPal argues that the (NYDFS) and the Conference of State Bank Supervisorsapplication of the Prepaid Accounts Rule to its digital renewed litigation challenging the OCCs authority towallet fails to make sense, since it mandates PayPal charter and supervise special purpose national banksmake disclosures concerning fees that PayPal does not that do not accept deposits. In October 2019, the U.S.charge and misrepresent the actual fees paid by most District Court for the Southern District of New Yorkcustomers and places unreasonable restrictions on struck down the OCCs FinTech charter, concluding thatthe ability of consumers to link certain credit accounts the NYDFS and other state banking regulators shouldto their service. PayPal requested a finding that the provide the regulatory oversight and enforcement ofPrepaid Accounts Rules application to PayPal is non-depository financial service providers. The courtunconstitutional, and requested it be vacated, declared found that the OCC failed to identify a persuasivearbitrary, an abuse of discretion, and unconstitutional as reason to deviate from ordinary administrative lawa whole.procedure and entered a final judgment against the OCC. In December, the OCC Appealed to the Second WHAT TO WATCHContinued regulatory expansion into the FinTech spaceEmerging litigation defending against and challenging regulatory enforcement.34 35'