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
FinCEN Publishes New Advisory on Cyber-Events and Cyber-Enabled Crimes
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.
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Spokeo’s Impact (So Far) on FDCPA Claims
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.”
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Spokeo v. Robins: Supreme Court Requires Concrete and Particularized Injury Before Consumers Can Sue Under Federal Statutes, Giving Financial Services Providers an Additional Defense
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
United States Supreme Court to Resolve Circuit Split Involving the Constitutionality of “No Surcharge” Laws
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.
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Seventh Circuit Holds That Filings in Court Can Fall Within the FDCPA
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.”
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Lenders Beware: Settlement Suggests Illinois Attorney General Is Cracking Down on Interest Fees
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
Supreme Court to Hear Case Involving Interplay Between Fair Debt Collection Practices Act and Bankruptcy Code
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.
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In Brief: CFPB Issues Long-Awaited Final Prepaid Rule
After more than four years of anticipation and speculation from the financial services community, the Consumer Financial Protection Bureau (CFPB) unveiled its final prepaid rule on October 5 (accompanied by an animated video explaining highlights of the rule).
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Don’t Ask, Don’t Discriminate: CFPB States That ECOA Prohibits Creditor Discrimination Based on Gender Identity and Sexual Orientation
The Consumer Finance Protection Bureau has stated that discrimination by creditors based on gender identity or sexual orientation violates the Equal Credit Opportunity Act. As Slate online magazine put it, when providing the first widespread coverage of this issue in an article published last week,“[t]he federal government just accomplished a decades long goal of LGBTQ advocates with a single letter.” The letter referred to was actually sent on August 30, 2016, from the CFPB to Services and Advocacy for GLBT Elders (“SAGE”), a national social service and advocacy organization for gay, lesbian, bisexual, and transgender elders.
Continue Reading Don’t Ask, Don’t Discriminate: CFPB States That ECOA Prohibits Creditor Discrimination Based on Gender Identity and Sexual Orientation