New report analyzes continued decline in federal and state enforcement of consumer financial services law
Global law firm Goodwin published today its fifth annual Consumer Finance 2019 Year in Review. Produced by the firm’s Consumer Financial Services practice, the in-depth report analyzes the regulatory, litigation and enforcement actions faced by the US consumer finance industry over the last year and provides outlooks on what the industry can expect for the remainder of 2020 and beyond.
The report highlights industry developments pertaining to ongoing Fintech industry regulation; mortgage origination and servicing; credit, debit and prepaid cards; student and auto lending; credit reporting practices; payday/small dollar lending; debt collection and settlement; the Telephone Consumer Protection Act (TCPA) and more.
“As the financial needs of institutions and consumers become more complex, there is a pronounced shift in the direction of enforcement priorities,” said Anthony Alexis, head of Goodwin’s Consumer Financial Services Enforcement practice who co-authored the report alongside partners Sabrina Rose-Smith and Kyle Tayman. “Over the next year, we anticipate that federal and state agencies will continue to focus on politically viable enforcement targets while continuing to progress on yet-to-be-announced investigations or actions that were initiated early this year.”
Some of the report’s findings from the last year and predictions for 2020 include:
- Fintech companies have produced innovative products to directly assist consumers; however, regulators have struggled to identify how to regulate these new products. In 2020, there will be an increasing focus on the regulation and enforcement of the Fintech industry.
- Goodwin tracked 18 federal and state enforcement actions related to student lending in 2019. These actions included litigation and settlements against student-loan debt relief providers and servicers, as well as several high-profile settlements against for-profit educational institutions and their lenders. For the foreseeable future, there will likely be a continued state and federal focus on student lending and for-profit universities, particularly in an election year as this is a politically popular subject.
- In 2019, Goodwin tracked 3 enforcement actions related to credit and debit cards, a significant decrease from the 8 such actions Goodwin tracked in 2018. In 2020, the firm anticipates a potential increase in credit card-related litigation as balances climb and credit tightens, in addition to continued reluctance by the CFPB to bring forth enforcement actions.
Goodwin’s Consumer Financial Services Litigation and Enforcement + Government Investigations practices help clients manage the risks associated with government investigations, enforcement actions and high-stakes litigation. Goodwin has substantial experience representing banks, non-bank lenders and servicers, student loan companies, credit card issuers, auto finance companies, debt collectors, non-traditional finance companies, and other market participants in responding to government investigations, defending enforcement actions, and managing administrative, criminal, and private proceedings. The firm offers clients advice related to claims under federal and state consumer credit law, fair lending claims and investigations, financial institution fraud, money laundering and Bank Secrecy Act claims, challenges to loan servicing and loan origination processes and charges, and claims concerning consumer bankruptcy.
To view the full report, please download here.