Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36For more information, please visit or 6 7 Several Landmark Supreme Court Cases, Including: Spokeo v. Robins, No. 13-1339 (May 16, 2016), holding in a FCRA suit that an alleged injury must be both particularized and concrete, and the Ninth Circuit’s opinion (concluding that the plaintiff’s allegation of a bare statutory violation sufficiently alleged an injury) was incomplete without analysis of whether such a supposed injury was concrete enough. The case is on remand before the Ninth Circuit and has fueled debate about whether viola- tions of certain consumer finance statutes, without more, are sufficient to allege an injury. Campbell-Ewald Co. v. Gomez, No. 14-857 (Jan. 20, 2016), holding that an unaccepted offer of settle- ment is a legal nullity and does not moot a case, including in a putative class action. The Court did leave a door open for defendants when it stated that it was not deciding whether the outcome would be different if the defendant actually ten- dered the offered settlement amount to the plaintiff through a court or other enforceable mechanism. Several New Rules Proposed or Implemented by the CFPB: Fair Debt Collection Practices Act (FDCPA). While it has not yet issued a notice of proposed rulemak- ing for debt collection, the CFPB took steps toward overhauling FDCPA regulation. In July 2016, it released an outline of proposals it is considering, and Director Cordray reiterated in December 2016 the Bureau’s plan to release new regulations soon. A proposed rule likely will include some form of mandatory substantiation of debt prior to collection efforts, increased continuity of collection efforts when the debt is transferred, enhanced validation notices, additional protections concerning time- barred debts, and greater limitations on communi- cations with consumers. Payday, Vehicle Title, and Certain High-Cost In- stallment Loans. As we predicted in our 2015 Year- in-Review publication, the CFPB issued a notice of proposed rulemaking in July 2016 for a proposed rule to establish additional consumer protections for products the Bureau alleges are “debt trap dan- gers.” The proposed rule will dramatically change the terms on which these products can be offered to consumers, with the most notable change being the introduction of a “full-payment” test that lend- ers have argued is impractical given the nature of the products, and which may substantially reduce the availability of credit for some borrowers. Prepaid Cards. The CFPB finalized its prepaid-card rule on October 5, 2016. Effective October 1, 2017, providers of prepaid accounts will have to comply with a comprehensive set of new rules that cover a range of topics including pre-acquisition disclo- sures, access to account information, error-resolu- tion procedures, overdraft protections, and circula- tion of prepaid account agreements. Mortgage Servicing. In August 2016, the CFPB amended its mortgage servicing rules (effective October 19, 2017) to provide borrowers with great- er loss mitigation protection, including requiring lenders to work with borrowers to find alternatives to foreclosure more than once during the life of the loan, requiring the provision of additional informa- tion to borrowers who are “successors-in-interest” to a mortgage, and providing consumers in bank- ruptcy proceedings with periodic updates on their loss mitigation evaluation. Arbitration. In May 2016 the CFPB issued a pro- posed rule that would prohibit certain financial services providers from using an agreement with an arbitration clause to bar a consumer from partic- ipating in or filing a class action against the provid- er. The rule would also require providers involved in arbitration pursuant to an arbitration agreement to submit certain arbitral records to the CFPB. A Number of Significant OCC, DOJ, and CFPB Enforcement Actions, Including: Wells Fargo Entered into Consent Order Agree- ing to Pay $185 million for Alleged Unauthorized Cross-Selling Tactics. In September 2016, the CFPB and Wells Fargo agreed to resolve allega- tions brought by it, the OCC, and the City of Los Angeles that the bank’s employees had been responding to pressure to cross-sell credit products by opening credit accounts without customers’ knowledge or authorization. Quarter of Press Release 0 10 20 30 40 2016 Q4 2016 Q3 2016 Q2 2016 Q1 Mortgages $3,642.4M 49 Debt Settlement $241.3M 20 Debt Collection $166.6M 31 Auto Lending $43.5M 16 Student Lending $42.0M 10 7 - Mortgage Actions Payday/Small Dollar Lending $1,476.4M 31 Credit Reporting $7.4M 7 Banking $197.7M 6 Credit Card $70.3M 5 Federal State & Federa 15 14 12 13 37 29 19 32 3 4 1 Consent Orders Against Credit Card Providers for Alleged Unfair Billing Practices and Decep- tive Marketing of Add-On Products. The OCC entered into a $35 million settlement with HSBC in April 2016 over allegations that HSBC charged customers for credit monitoring services before the customers had enrolled in the program. And in Au- gust 2016, the OCC and CFPB jointly entered into a consent order with First National Bank of Omaha under which the bank agreed to pay $35 million for its alleged failure to adequately disclose fees and for charging customers for add-on services they did not receive. A $1.2 Billion Settlement Between Wells Fargo and the DOJ. The case involved allegations that Wells Fargo had underwritten and endorsed loans for Federal Housing Association (FHA) insurance even though it knew the loans were not eligible under government guidelines. Consent Orders Against Mortgage Lenders and Auto Lenders for Alleged Discriminatory Pricing. In February 2016, the CFPB and DOJ reached a $21.9 million settlement with Toyota Motor Credit Corp. after they alleged that the auto lender had charged borrowers who were members of racial minority groups higher interest rates than they had white borrowers. Similarly, Bancorpsouth Bank was ordered to pay more than $10 million in a consent order with the DOJ and CFPB involving allegations that it had engaged in redlining and that it had charged minority borrowers higher interest rates and offered them less credit assistance than it did to white borrowers. The most significant targets for enforcement actions in 2016 were mortgage lending, debt collection and set- tlement, payday/small dollar lending, and auto lending. Unsurprisingly, these industries were also among the CFPB’s primary regulatory priorities in 2016. 2016 total Actions by product/service