On February 7, 2022, Acting Chairman Martin J. Gruenberg released a statement outlining the FDIC’s 2022 priorities. He also recognized the contributions of former Chairman Jelena McWilliams, who resigned on February 4, 2022.

The FDIC has been the recent subject of uncommon public infighting, as the FDIC board faces internal and external turmoil related to political and intra-agency pressures brought into focus due to the change in presidential administrations. Many on the board support a more pro-active and progressive approach, while Ms. McWilliams favored a more conservative style of oversight. With her resignation, as well as the recent FDIC, Department of Justice (DOJ), and Financial Crimes Enforcement Network actions related to bank oversight, it appears the activist wing has succeeded for now.

Entities operating in the financial services industry should pay close attention to the agenda, and specifically to two of these priorities in particular:

Continue Reading FDIC Announces 2022 Priorities in the Wake of Chairman Jelena McWilliams Resignation; Financial Services Entities Should Take Note of FDIC Focus on Bank Mergers and Crypto

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

Respondents to Dykema’s 17th annual M&A Outlook Survey expected the financial services industry to be among the busiest sectors for M&A activity in the coming 12 months. While automotive topped the list, financial services was ranked third, up from fifth place last year.

Continue Reading Survey Results: Significant M&A Activity Expected for the Financial Services Sector in the Next 12 Months

Debt Buyers Get Some FDCPA Relief from Supreme Court: Case Offers Insights But Leaves Some Questions Unanswered

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

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On August 11, 2021, the Federal Financial Institutions Examination Council (the “FFIEC”) issued new guidance on risk management principles for access to and authentication of electronic funds transfers for the first time in over a decade, titled Authentication and Access to Financial Institution Services and Systems (the “New Guidance”).[1] The New Guidance effectively replaces the FFIEC’s prior guidance on this topic, including its original guidance issued in 2005, Authentication in an Internet Banking Environment (the “Original Guidance”), and the supplement issued in 2011 in response to increased fraud in Internet-based financial transactions (the “Supplement,”[2] and together with the Original Guidance, the “Guidance”). The Guidance was intended to set regulatory expectations for financial institutions offering Internet-based financial services to both commercial and consumer customers. Continue Reading An Enhanced Standard of Commercial Reasonableness for Security Procedures? The FFIEC Updates Its Authentication Guidance for Internet-Based Financial Services

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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

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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

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Enforcement and litigation directed at the consumer financial services industry is expected to increase under the Biden administration. While increased enforcement is likely to occur with respect to all federal agencies, the most significant increases are being forecast in the areas of fair lending enforcement, which was relatively subdued under the Trump administration.

On Jan. 20, 2021, his first day in office, President Biden announced CFPB veteran David Uejio as the Acting Director of the Bureau, who made it clear that he intended to immediately ramp up enforcement activity. Shortly after being appointed, Acting Director Uejio spoke in a blog post of intensifying the efforts to protect the “economically vulnerable”, promised more aggressive supervision, and indicated he intends to focus on fair lending and COVID-19 relief. Continue Reading CFPB Enforcement Expected to Increase Under the Biden Administration

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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.

  1. 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

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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