This month marks the one-year anniversary of the Financial Crimes Enforcement Network (FinCEN)’s long-awaited beneficial ownership rule, which imposes certain Customer Identification Program (CIP) requirements under the Bank Secrecy Act (BSA). FinCEN proposed the rule in 2014 and finalized it in May 2016. FinCEN has also issued Frequently Asked Questions Regarding Customer Due Diligence Requirements for Financial Institutions, which provides guidance in understanding and implementing the new rule. All financial institutions subject to the rule must begin complying with it no later than May 11, 2018.

The rule will impose new compliance obligations on federally regulated banks, federally insured credit unions, mutual funds, brokers or dealers in securities, futures commission merchants, and introducing brokers in commodities. Continue Reading Key Steps in One-Year Countdown to Compliance with FinCEN’s Beneficial Ownership Rule

The future of the CFPB is one of the hottest hot topics in the post-election environment. Created by Title X of the Dodd-Frank Act (DFA), the CFPB has been the centerpiece of consumer-related financial reform — and the focus of controversy from industry stakeholders.

Fate of CFPB and Its Leadership

  • Will the CFPB be immediately disbanded by the new Congress and President?

Continue Reading The Fate of CFPB and Its Leadership

The CFPB is warning financial services companies to carefully evaluate their employee incentive programs. Specifically, companies should scrutinize bonus structures that tether compensation and employment status to unrealistic sales goals. Such bonus structures, the CFPB cautions, “may intentionally or unintentionally encourage illegal practices such as unauthorized account openings, unauthorized opt-ins to overdraft services, deceptive sales tactics, and steering consumers into less favorable products.”

Continue Reading Take a Second Look at Incentive Programs, the CFPB Warns

The Financial Crimes Enforcement Network (“FinCEN”) recently published an Advisory to Financial Institutions on Cyber-Events and Cyber-Enabled Crime. The Advisory does not change or create any new regulatory obligations, but it does clarify how existing Bank Secrecy Act (“BSA”) regulations for reporting cyber-events and cyber-enabled crimes apply to financial institutions. Specifically, the Advisory provides additional guidance for reporting cyber-enabled crime and cyber-enabled events through Suspicious Activity Reports (“SARs”), including cyber-related information in SARs; collaborating between BSA units and in-house cybersecurity units to identify suspicious activity; and sharing cyber-related information among financial institutions to prevent and report money laundering, terrorism financing, and cyber-enabled crimes. Continue Reading FinCEN Publishes New Advisory on Cyber-Events and Cyber-Enabled Crimes

Last week, Dykema’s Consumer Financial Services Law Blog discussed in detail the Supreme Court’s decision in Spokeo v. Robins, 136 S. Ct. 1540 (2016). In anticipation of that decision, district courts across the country issued stays pending guidance from the Supreme Court on one key issue: “Whether Congress may confer Article III standing upon a plaintiff who suffers no concrete harm, and who therefore could not otherwise invoke the jurisdiction of a federal court, by authorizing a private right of action based on a bare violation of a federal statute.”

Continue Reading Spokeo’s Impact (So Far) on FDCPA Claims

The United States Supreme Court held earlier this year in Spokeo v. Robins that to maintain Article III standing, a plaintiff must allege an injury-in-fact that was both concrete and particularized. Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1542 (2016). This requirement of requiring an injury to actually exist has the potential to eliminate spurious suits from plaintiffs based on alleged federal statutory violations, including particularly alleged violations of federal statutes related to consumer financial services.

Continue Reading Spokeo v. Robins: Supreme Court Requires Concrete and Particularized Injury Before Consumers Can Sue Under Federal Statutes, Giving Financial Services Providers an Additional Defense

On September 29, 2016, the United States Supreme Court granted certiorari in the matter of Expressions Hair Design et al. v. Schneiderman, on appeal from the Second Circuit Court of Appeals, in order to resolve a circuit split involving whether state “no-surcharge” laws violate the First Amendment.

Continue Reading United States Supreme Court to Resolve Circuit Split Involving the Constitutionality of “No Surcharge” Laws

Last month, the Seventh Circuit reversed the dismissal of a putative class action alleging that debt collector defendants used misleading language in their state court collection complaints in violation of the federal Fair Debt Collection Practices Act (FDCPA). In so ruling, the Seventh Circuit joined the numerous other circuits that have already addressed the issue in concluding that “pleadings or filings in court can fall within the FDCPA.”

Continue Reading Seventh Circuit Holds That Filings in Court Can Fall Within the FDCPA

A court settlement involving Illinois lenders suggests that Illinois Attorney General Lisa Madigan is making good on her promise to crack down on lenders’ attempts to charge excessive fees to debtors. The settlement in Illinois v. CMK Investors, Inc., which the Attorney General’s office announced this week, requires CMK Investors, Inc. to both cease efforts to collect on accounts with excessive fees and reimburse customers who overpaid. The settlement also permanently and immediately prohibits CMK from making loans with an interest rate above the state’s 36 percent limit.

A court settlement involving Illinois lenders suggests that Illinois Attorney General Lisa Madigan is making good on her promise to crack down on lenders’ attempts to charge excessive fees to debtors. The settlement in Illinois v. CMK Investors, Inc., which the Attorney General’s office announced this week, requires CMK Investors, Inc. to both cease efforts to collect on accounts with excessive fees and reimburse customers who overpaid. The settlement also permanently and immediately prohibits CMK from making loans with an interest rate above the state’s 36 percent limit.

Continue Reading Lenders Beware: Settlement Suggests Illinois Attorney General Is Cracking Down on Interest Fees

On October 11, 2016, the United States Supreme Court granted certiorari in the matter of Johnson v. Midland Funding LLC, on appeal from the Eleventh Circuit Court of Appeals, in order to resolve whether a conflict exists between the Fair Debt Collection Practices Act (“FDCPA”) and the Bankruptcy Code. In Midland Funding, the appellate court found a debt collector to have violated the FDCPA by filing a proof of claim on time-barred debt in a Chapter 13 bankruptcy.

Continue Reading Supreme Court to Hear Case Involving Interplay Between Fair Debt Collection Practices Act and Bankruptcy Code