The five-year anniversary of some of the major financial regulations passed by the Consumer Financial Protection Bureau (CFPB) is coming up in January 2018, meaning that such regulations will soon undergo a review to check on their effectiveness. The Dodd-Frank Act requires the CFPB to review its rules five years after their effective date to make sure that the rules operate as the CFPB intended and that they are not having an undue burden on the entities they seek to regulate. Some major rules related to mortgages, including the Ability-to-Repay Rule and other rules regulating the servicing industry, were implemented in January 2013 and will be included in the review. Chris D’Angelo, the CFPB’s Associate Director for Supervision, Enforcement and Fair Lending, recently spoke at the American Bankers Association’s Government Relations Summit and indicated that, although the actual five-year anniversary of these rules is still several months away, the CFPB plans to get started on its review soon. View the LenderLaw Watch blog post.
On March 28, the CFPB released Volume 21 of its Monthly Complaint Report (the Report). The purpose of the Report is, in part, to educate consumers and financial institutions on major consumer issues—which it does by providing a high-level analysis of trends in consumer complaints, focusing on one or two product areas each month. The analysis is based on complaints received by the CFPB in its Consumer Complaint Database, which tracks complaints filed by consumers through the CFPB and also has a search functionality allowing users to quantify complaint trends. It behooves financial companies to keep apprised of these trends, as they signal areas that may undergo increased scrutiny by the CFPB. The Report details its findings primarily by establishing a three-month rolling average—in this case, December 2016 through February 2017—and comparing it with the same period in the prior year. View the LenderLaw Watch blog post.
The SEC approved: (1) the adoption of new FINRA Rule 2165 (Financial Exploitation of Specified Adults) to permit members to place temporary holds on disbursements of funds or securities from the accounts of specified customers where there is a reasonable belief of financial exploitation of these customers; and (2) amendments to FINRA Rule 4512 (Customer Account Information) to require members to make reasonable efforts to obtain the name of, and contact information for, a trusted contact person for a customer’s account. New Rule 2165 and the amendments to Rule 4512 become effective February 5, 2018.
Enforcement & Litigation
On March 29, in Expressions Hair Design v. Schneiderman, the Supreme Court remanded a case to the Second Circuit Court of Appeals (Second Circuit) to determine whether a New York law that restricts the disclosures retailers can make to customers about credit card surcharges violated the retailers’ First Amendment rights. Petitioners, five New York businesses and their owners who wish to impose surcharges for credit card use, filed suit against state officials, arguing that §518 of the New York General Business Law violates their First Amendment rights by regulating how they communicate their prices. The District Court had ruled in favor of the merchants, but the Second Circuit vacated the judgment with instructions to dismiss on the grounds that §518 regulated conduct and not speech. On appeal, the Supreme Court ruled that, in regulating the communication of prices rather than prices themselves, §518 regulates speech and ordered the Second Circuit, on remand, to determine whether §518 survives First Amendment scrutiny as a speech regulation.
On March 27, the North Carolina Attorney General announced that it had settled a lawsuit filed in the Wake County, North Carolina Superior Court against a student loan company. As a result of the settlement, the parties filed a consent judgment requiring that the company pay $377,048 in restitution to 377 North Carolina student borrowers. View the Enforcement Watch blog post.
On March 24, the Federal Trade Commission (FTC) announced that it entered into a consent order with a debt collection company, resolving allegations that the company engaged in unfair and abusive debt collection practices in violation of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692-1692p, and section 5 of the Federal Trade Commission Act (FTC Act), 15 U.S.C. § 45. View the Enforcement Watch blog post.
The 2017 Blockchain Technology and Digital Currency National Institute will take place on April 10, 2017, in New York City. This special program is dedicated to in-depth analysis of the emerging legal issues and the latest legal events concerning digital currencies, like Bitcoin, and blockchain technology. It will be an informative and exciting opportunity for anyone interested in better understanding the interplay of the law, digital currencies and blockchain technology. The speakers and panels will explore topics including blockchain innovations and opportunities; emerging intellectual property issues; global regulatory efforts; and recent law enforcement actions. Grant Fondo, a chair of Goodwin’s Digital Currency and Blockchain Technology Practice and partner in Goodwin’s Securities Litigation and White Collar Defense Group, will be a featured speaker. For more information, please visit the event website.
Goodwin is pleased to present this event created specifically to address issues faced by trustees, officers and in-house counsel at colleges, universities and research institutions. We are delighted to present David Greene, President of Colby College, as our keynote speaker. David is a highly respected leader in education and business and will provide an inspiring perspective on his experience with public/private partnerships focused on revitalizing cities and neighborhoods where schools are located. The symposium will also feature a panel discussion with in-house counsel at higher education institutions concerning the relationships between schools and their students, as well as interactive sessions led by industry experts and thought leaders on privacy and cybersecurity and recent developments in 403(b) plan excessive fee litigation. For more information, please visit the event website.This week’s Roundup contributors: Catalina Azuero and Justin Pierce.