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Welcome to Wiley’s update on recent developments and next steps in consumer protection in the Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC). In this newsletter, we analyze recent regulatory announcements, recap key enforcement actions, and preview upcoming deadlines and events. We also include links to our articles, blogs and webinars with more analysis in these areas. We understand that staying on top of the rapidly changing regulatory landscape is more important than ever for companies looking to deliver new and breakthrough technologies. Please contact us if there are other topics you would like us to cover or for any additional information.
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The FTC will vote on government fraud and ANPRM identity theft. At December 9, FTC President Lina Khan announced that the FTC will vote on an advance notice of regulatory proposal (ANPRM) at the agency’s public meeting on December 16. According to the FTC press release, the ANPRM is intended to combat “rampant government and corporate identity theft fraud.” The FTC says these scams “are a primary source of consumer complaints and the single largest source of total consumer financial losses reported – and have worsened during the pandemic.”
CFPB publishes 2021 violation surveillance highlights report. At December 8, the CFPB released a Surveillance Highlights report summarizing legal violations identified by the agency in the first half of 2021, including previous surveillance findings that led to enforcement action during the first half of 2021. semester 2021. Among other violations, the report focused on (1) findings that mortgage services allegedly charged borrowers late fees and default-related fees, despite the aid, relief and economic security against the coronavirus; (2) alleged violations of the Equal Credit Opportunity Act by mortgage lenders against African Americans and female borrowers; and (3) payday lenders allegedly charging consumers’ bank accounts without authorization.
FTC data shows a recent increase in gift card scams. At December 8, the FTC released data showing consumers reported losing $ 148 million in the first nine months of 2021 to scams in which gift cards were used as a form of payment. Specifically, 40,000 consumers reported falling victim to gift card scams during this period. Consumers said they lost $ 116 million over the whole of 2020, according to FTC data. The FTC notes that fraud most often occurs when scammers trick consumers into giving them the number on the back of the gift card.
CFPB publishes final rule to ease transition from LIBOR. At December 7, the CFPB has published a final rule to facilitate the transition from the London Interbank Offered Rate (LIBOR) index. The LIBOR index, which will expire in June 2023, is a standard financial index used by the US capital markets, and many financial instruments, including adjustable rate mortgages, credit cards, student loans, loans reverse mortgages and home equity lines of credit are linked. to that. The final rule, which takes effect April 1, 2022, requires creditors to choose an index comparable to LIBOR when changing the index of a floating rate loan.
CFPB Director Chopra delivers remarks at the December NAAG meeting. At December 7, CFPB Director Rohit Chopra spoke at the December meeting of the National Association of Attorneys General (NAAG). Director Chopra focused on developing regulations to avoid the pre-emption of âstronger state laws that protect the publicâ in the area of ââconsumer protection. He also noted that he had asked the CFPB to explore ways the agency could expand the remedies available to state attorneys general under the Consumer Financial Protection Act. Finally, Director Chopra stressed the desire to coordinate with state attorneys general to prevent repeat offenders from violating agency or court orders made at the federal and state levels.
CFPB publishes a study on bank overdraft fees. At 1st December, the CFPB published research (available here and here) concluding that bank income from overdraft and insufficient funds (NSF) fees reached $ 15.47 billion in 2019. CFPB research concludes that the fees from Overdraft and NSF account for two-thirds of banking income, which varied between institutions according to bank call reports. However, the research also found that overdraft and NSF fee income fell 26.2% in 2020. The CFPB said that as a result of the research it will “strengthen its oversight and oversight control. application of banks which depend heavily on overdraft fees. . “
CFPB and Federal Reserve announce thresholds for exempting consumer credit and leasing transactions from M and Z regulations. At 1st December, the CFPB and the Federal Reserve Board have announced that Regulations Z and M will apply to consumer credit and leasing transactions of $ 61,000 or less in 2022. Private education loans and loans secured by real estate (such as mortgages) remain subject to Regulation Z regardless of the amount of the loan. Regulation Z is the Enforcement Regulation of the Loan Truth Act, which requires lenders to provide certain information to consumers regarding the costs of borrowing. Regulation M implements the Consumer Leasing Act, which requires landlords to make certain disclosures to tenants before entering into rental contracts.
Recent Congressional Hearings
Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States. At December 8, the United States House of Representatives Committee on Financial Services held a hearing titled “Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States.” A list of witnesses, opening statements and a recording of the hearing are available here.
Deadlines and upcoming events for comments
The CFPB is seeking comments on proposed changes to the ECOA rules under the Dodd-Frank Act. Comments are due January 6, 2022 on a proposed rule to amend rule B of the Equal Credit Opportunity Act (ECOA) made pursuant to section 1071 of the Dodd-Frank law on Wall Street reform and protection of consumers (Dodd-Frank law). Concretely, the agency proposes to oblige the financial institutions covered by article 1071 to collect and declare to the CFPB certain data on the credit applications of small businesses. The rule proposed by the CFPB also deals with the interests of privacy; protect the demographics of underwriters and other individuals; record keeping requirements; and implementing provisions. The agency is also seeking comments on effective and compliance dates.
The FTC is seeking comments on a proposal to further amend the safeguard rule to strengthen information security protection for financial institutions. Comments are due February 7, 2022 on a proposal in a proposed supplemental regulatory notice to add reporting of certain security incidents to the FTC by covered companies within 30 days of their discovery. Specifically, the proposal would require financial institutions to report security-related events to the FTC when it has been determined that consumer information has been misused, or is reasonably likely to be misused. usefully, in an event affecting at least 1,000 consumers.
The FTC’s revisions to the safeguard rule are effective January 10, 2022. The FTC’s revisions to the safeguard rule were published in the Federal Register on December 9. The safeguard rule requires financial institutions subject to the Gramm-Leach-Bliley Act (GLBA) to implement information security programs to protect consumers’ financial information. Covered companies include many online financial technology (fintech) companies, mortgage lenders, and companies otherwise involved in credit transactions, among others. Accordingly, by January 10, 2022 and as we have discussed in more detail here, the revised rule will require financial institutions to, among other things, implement periodic risk assessments and modify their information security programs based in part on those assessments of risks. More detailed requirements will come into effect on December 9, 2022.
More Wiley Analyzes
Confidentiality in the spotlight: White House seeks AI bill of rights, calls for comment on use of biometric data
Confidentiality in the spotlight: CISA Publishes Cyber ââSecurity Incident Response and Vulnerability Response Manuals with Intent to Raise Private Sector Expectations
California to begin potentially sweeping privacy regulations
American Bar Association Webinar: Crypto at a Crossroads: Crypto and Privacy
FTC publishes detailed information security requirements and offers breach notification for financial institutions
Duane Pozza discusses updated FTC save rule
Confidentiality in the spotlight: Data transfers from the EU – Publication of further guidance
FTC Widely Publishes Approvals and Testimonials Notices to National Advertisers, Signaling New Approach to Enforcement
Duane Pozza discusses the emerging regulatory approach to crypto and DeFi
Privacy at a glance: Latest FTC Changes Will Lead To Federal Action On Privacy, Data Security And AI
Privacy at a glance: FTC policy statement signals heightened oversight of protection of sensitive personal health information
Privacy at a glance: AI Risk Management Framework Part of Emerging Federal AI Initiatives
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Disclaimer: The information is current as of December 13, 2021. This document is for informational purposes only and does not purport to be a comprehensive review of all procedures and deadlines. Deadlines and dates are subject to change. Please contact us with any questions