On October 3, the second morning of its new term, the Supreme Court of the United States (SCOTUS) heard oral arguments in the case of Consumer Financial Protection Bureau v. Community Financial Services Association of America, Limited. This case is the latest iteration in the broadside attacks on the Bureau by an industry hoping to neuter its impact, at least during periods of Republican control of Congress.Continue Reading A Lively Supreme Court Argument on the Constitutionality of CFPB Funding: Ruling Not Expected for Several Months
Supreme Court Ruling on Bankruptcy Code May Have Far-Reaching Implications for Tribal Business Arrangements
On June 15, 2023, the Supreme Court held that the Bankruptcy Code unambiguously abrogates the sovereign immunity of federally recognized Indian tribes. Therefore, tribes may not raise sovereign immunity as a defense to multiple portions of the Bankruptcy Code. Many tribal enterprises and their business partners, for the first time, will need to consider the legal implications of bankruptcy on their business arrangements. The immediate significance of this case is that tribes may be subject to damage claims for violating the automatic stay. However, there may be broader implications for tribal business dealings from this case.Continue Reading Supreme Court Ruling on Bankruptcy Code May Have Far-Reaching Implications for Tribal Business Arrangements
Fifth Circuit Holds CFPB Funding Structure is Unconstitutional, Invalidates Payday Lending Rule
A three-judge panel of the United States Fifth Circuit Court of Appeals held that the CFPB’s funding structure is unconstitutional. The CFPB must now consider whether to appeal to the Supreme Court, seek en banc review (by all of the Fifth Circuit judges), or let the ruling stand (which does not dissolve the CFPB). If the CFPB chooses to let the ruling stand, then the CFPB’s Payday Lending Rule is invalidated.
Continue Reading Fifth Circuit Holds CFPB Funding Structure is Unconstitutional, Invalidates Payday Lending Rule
Mining the Metaverse: Prospecting the Virtual Real Estate Boom and Implications For Lenders
If Mark Zuckerberg is to be believed, the Metaverse is the next step in our digital evolution, a virtual reality space where users can interact with a computer-generated environment and socialize among user-created avatars.
And it’s already here.
The Metaverse is a new virtual frontier that combines many aspects of the virtual world we already know: social media, Zoom, online gaming, augmented reality, virtual reality, blockchain, and cryptocurrencies. The Metaverse allows its users to interact with each other in ways that mimics real-world interaction. Users can virtually surf, race, go to a bar, or engage in combat – the possibilities are endless.
Now, you can even buy land in this virtual frontier.
Just as in the real world, you can finance your virtual property with a virtual mortgage. In this virtual world, can virtual mortgages be foreclosed and how can loans be enforced? This new paradigm implicates both loan enforcement and bankruptcy.
Let us break down a few of the basics.Continue Reading Mining the Metaverse: Prospecting the Virtual Real Estate Boom and Implications For Lenders
Convenience Fees Face Increased Scrutiny After Fourth Circuit Holds That Online Payments May Violate Consumer Protection Statutes
The Fourth Circuit recently found that the imposition of convenience fees can run afoul of consumer protection statutes—including the Fair Debt Collection Practices Act.
Convenience fees are commonly charged by financial institutions in exchange for allowing a consumer to easily make payments online or via telephone as opposed to making payments by mail.
The case is Alexander v. Carrington Mortgage Services, LLC, and the three-judge panel for the Fourth Circuit unanimously held that a mortgage servicer violated Maryland’s consumer protection statute when it charged consumers a $5 fee to make mortgage payments online or by phone.Continue Reading Convenience Fees Face Increased Scrutiny After Fourth Circuit Holds That Online Payments May Violate Consumer Protection Statutes
No Time to Waste: New Federal Rules Regulating Debt Collection Practices (Regulation F) Take Effect November 30, 2021
In May 2019, the Consumer Financial Protection Bureau (CFPB) proposed new rules to amend and expand Regulation F, to further regulate the debt collection industry and those connected to it. It was meant to supplement the federal Fair Debt Collection Practices Act (FDCPA).
These rules are now final and scheduled to go into effect on November 30, 2021.Continue Reading No Time to Waste: New Federal Rules Regulating Debt Collection Practices (Regulation F) Take Effect November 30, 2021
Workouts Never Go Out of Style: What To Expect in the CMBS Market During the Second Half of 2021, and Beyond
2020 was a bad year… okay, it was a really, really bad year. CMBS borrowers, in particular, found themselves in default and often-times upside down on their CMBS loans. While 2021 has started to show signs of life, even showing a gentle decline in special servicing and delinquency rates, a closer look reveals that certain sectors remain in distress.
As forbearance periods expire, state moratoriums on commercial evictions and foreclosures end, and businesses exhaust federal PPP and other stimulus aid, more foreclosures and other loan enforcement solutions are inevitable. (The status of moratoriums on commercial foreclosures/eviction are as follows: Illinois—expired; Michigan—expired; Texas—expired; New York—expired May 1, 2021; California—county-specific; Ohio—expired; and Indiana—expired.) While the world remains hopeful for a more “normal” 2021, the impacts on CMBS borrowers will likely continue in a state of flux for some time.Continue Reading Workouts Never Go Out of Style: What To Expect in the CMBS Market During the Second Half of 2021, and Beyond
Phonelines Are Buzzing: The Supreme Court Has Finally Provided Clarity Regarding the TCPA’s Definition of Automatic Telephone Dialing Systems
In a much anticipated decision, the U.S. Supreme Court yesterday provided clarity on the definition of an automatic telephone dialing system (“ATDS”) under the Telephone Consumer Protection Act (“TCPA”) of 1991, 47 U.S.C. § 227. Those in the Financial Services industry have been eagerly awaiting the guidance that the Court’s ruling would provide. And provide guidance it did.
In a rare unanimous opinion, the Court rejected a broad definition of an ATDS previously applied by the Second, Sixth and Ninth Circuits in favor of a much more narrow one. Indeed, the Court found that, in order to qualify as an ATDS under the TCPA, a device must “have the capacity either to store a telephone number using a random or sequential generator or to produce a telephone number using a random or sequential number generator.” Facebook, Inc. v. Duguid, No. 19-511, April 1, 2021, slip op. at 1.
Continue Reading Phonelines Are Buzzing: The Supreme Court Has Finally Provided Clarity Regarding the TCPA’s Definition of Automatic Telephone Dialing Systems
Bankruptcy’s New Normal – The Consolidated Appropriations Act Distances from the Bankruptcy Code to Provide Further Covid Relief
On December 27, 2020, the Consolidated Appropriation Act of 2021 (the “CAA“) was enacted to provide additional coronavirus stimulus relief for businesses challenged by the ongoing Covid-19 Pandemic. In doing so, the CAA includes several targeted, but temporary, changes to the Bankruptcy Code (the “Code”) which will have implications for lenders, landlords, vendors and other creditors. Absent further legislation, these changes will sunset on December 27, 2022, but will continue thereafter to affect cases filed prior to that date.
- PPP Loans Still Aren’t For Everyone: CAA Attempts to Clarify Debtors’ Eligibility
The CARES Act, passed at the outset of the Covid-19 pandemic, did not make clear whether bankrupt debtors were eligible for the Paycheck Protection Program (“PPP“) loans it provided. The Small Business Administration (“SBA”), the agency charged with implementing the PPP loan program, previously promulgated regulations disqualifying all bankrupt debtors from the program, and it sought to enforce that regulation in the Bankruptcy Courts. Litigation ensued over debtor eligibility for PPP loans, but no clear consensus emerged.
Continue Reading Bankruptcy’s New Normal – The Consolidated Appropriations Act Distances from the Bankruptcy Code to Provide Further Covid Relief
Why Cannabis Companies Need to Care About the TCPA
Cannabis companies nationwide are facing yet another statutory obstacle that can have serious (and potential ruinous) consequences for the emerging industry if not appropriately addressed—the Telephone Consumer Protection Act (“TCPA”). There is a recent uptick in class-action lawsuits filed against cannabis companies across the country premised on alleged violations of the TCPA including lawsuits in Michigan and California. These complaints allege cannabis companies sent unsolicited marketing text messages or placed automated phone calls to individuals without their consent. Cannabis dispensaries and other cannabis-related businesses should add TCPA compliance protocols to their checklist of regulatory requirements to be satisfied in this quickly emerging industry.
The TCPA
Enacted in 1991, the TCPA heavily regulates the ability to send phone, text, or facsimile messages through automatic telephone dialing systems. Non-compliance with the statute can be costly, as companies found to have violated the TCPA can be liable for $500 per call or text sent in violation of the Act, and up to $1,500 for willful or knowing violations. Damages are also not capped under the TCPA, so even a small number of texts or calls sent to a large number of recipients can lead to hefty damage awards. The ability to recover significant damages results in most TCPA claims being brought as class-actions. As a result, it is imperative that cannabis businesses that communicate with customers via text or by phone understand the rules governing the TCPA to avoid or at least minimize their liability exposure.
Continue Reading Why Cannabis Companies Need to Care About the TCPA