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On September 15, 2020, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) released an Outline of Proposals under Consideration and Alternatives Considered for the small business data collection rulemaking mandated by Section 1071 of the Dodd-Frank Act and a High-Level Summary of the outline of proposals.  The release signals that a Small Business Advisory Panel will convene in October 2020 as required by the Small Business Regulatory Enforcement Fairness Act of 1996 (“SBREFA”) to assess the impact of the Bureau’s outline of proposals under consideration.  Participants in the SBREFA panel are invited to submit written comments by November 9, 2020; other interested stakeholders are invited to submit written comments by December 14, 2020.

Section 1071 amends the Equal Credit Opportunity Act to require financial institutions to collect certain data regarding applications for credit for women-owned, minority-owned, and small businesses, maintain records of responses, and report the data to the CFPB on an annual basis, in accordance with rules and guidance issued by the CFPB.  The purpose of Section 1071 is “to facilitate enforcement of fair lending laws and enable communities, governmental entities, and creditors to identify business and community development needs and opportunities of women-owned, minority-owned, and small businesses.”  15 U.S.C. § 1691o-2(a).

The Bureau’s proposals under Section 1071 have been long-awaited by industry associations, consumer groups, state regulators, Congress, and many other stakeholders, and the convening of the SBREFA panel represents the start of a rigorous and potentially lengthy rulemaking process.

A short list of highlights of the proposals follows after the jump, and we plan to publish a more detailed client alert on the CFPB’s outline of proposals in the near future.…

Continue Reading CFPB Outlines Small Business Data Collection Proposals

Today, July 7, 2020, the Consumer Financial Protection Bureau (“CFPB”) released final amendments to its small-dollar lending rule published in November 2017 (the “2017 Rule”), specifically repealing the mandatory underwriting provisions of the rule.  The CFPB did not rescind or alter the payments provisions of the 2017 Rule, and instead ratified those provisions and will move forward to implement those provisions.  We address each aspect of the final amendments below.
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Continue Reading CFPB Finalizes Amendments to Payday Lending Rule

On April 1, 2020, the Consumer Financial Protection Bureau (“CFPB”) released a statement on “Supervisory and Enforcement Practices Regarding the Fair Credit Reporting Act and Regulation V in Light of the CARES Act.” This statement provides guidance outlining the CFPB’s expectations of furnishers and consumer reporting agencies (“CRAs”) during the COVID-19 pandemic, and signals that the CFPB will take a flexible supervisory and enforcement approach to compliance with the Fair Credit Reporting Act (“FCRA”) and its implementing regulation, Regulation V.

The key points of the CFPB’s guidance are discussed below.
Continue Reading CFPB Releases Guidance on FCRA and Regulation V Compliance During COVID-19

On March 3, 2020, the U.S. Supreme Court heard oral arguments in Seila Law LLC v. Consumer Financial Protection Bureau, a case centered on the constitutionality of the Bureau’s leadership structure.  A transcript of the argument is available here, and an audio recording is available here.
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Continue Reading U.S. Supreme Court Hears Arguments on Constitutionality of CFPB

On February 26, 2020, the Consumer Financial Protection Bureau hosted a symposium titled “Consumer Access to Financial Records.”  Video of the Symposium is available here.  The agenda included discussion among panelists from large financial institutions, fintechs, consumer groups, policy centers, and the CFPB.  Director Kathleen L. Kraninger also delivered brief opening remarks describing the history of regulation of financial data access.

Much of the symposium’s discussion focused on Section 1033 of the Dodd-Frank Act, which governs consumers’ rights to access their financial data.  While the CFPB has the authority to issue rules interpreting Section 1033, it has not done so (although it has issued non-binding “Consumer Protection Principles” on financial data sharing and aggregation).…

Continue Reading CFPB Hosts Symposium on Consumer Access to Financial Records

The House Financial Services Committee (“HFSC”) announced that it will convene hearings this month to consider both the trend of financial technology firms partnering with chartered banks to provide financial services and the rise of mobile payments. More information about the hearing schedule is available on the HFSC’s website.
Continue Reading House Financial Services Committee to Consider Two Fintech Issues In January

On December 19, 2019, the Office of the Comptroller of the Currency (OCC) appealed a decision from the U.S. District Court for the Southern District of New York holding that the OCC cannot offer special purpose national bank charters to fintech companies. Lacewell v. Office of the Comptroller of the Currency, Case 1:18-cv-08377 (S.D.N.Y. Sept. 14, 2018).
Continue Reading OCC Appeals Fintech Charter Ruling to Second Circuit

On January 7, 2020, the presidential campaign of Senator Elizabeth Warren released a plan to overhaul the consumer bankruptcy system in the United States. The plan would repeal means testing and other provisions of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act. It would also implement enhanced protections for consumer debtors who file for bankruptcy.

Perhaps most significantly, the plan would abolish the “undue hardship” standard for the discharge of student loans. Under current law, borrowers seeking to discharge student loans must file a separate adversary proceeding alongside their non-adversary bankruptcy case and make a significant showing of hardship. The plan would treat student loans identically to other types of consumer debt, allowing for their discharge without any special showing.
Continue Reading Warren Proposes Far-Reaching Consumer Bankruptcy Reforms

On December 10, the Federal Trade Commission (“FTC”) and Consumer Financial Protection Bureau (“CFPB”) held a joint workshop on accuracy in consumer reporting. The workshop included remarks from FTC Commissioner Noah Joshua Phillips, CFPB Assistant Director for Supervision Policy Peggy Twohig, CFPB Deputy Director Brian Johnson, and FTC Deputy Director for the Bureau of Economics Andrew Stivers. The workshop included four panels:

  • Panel 1: Furnisher Practices and Compliance with Accuracy Requirements
  • Panel 2: Current Accuracy Topics for Traditional Credit Reporting
  • Panel 3: Accuracy Considerations for Background Screening
  • Panel 4: Navigating the Dispute Process

Panelists included a range of stakeholders in the consumer reporting ecosystem, including representatives from consumer reporting agencies (“CRAs”), trade associations, furnishers, and consumer advocacy organizations.

In her closing remarks, Maneesha Mithal, Associate Director in the FTC’s Division of Privacy & Identity Protection, discussed three key takeaways and themes from the workshop:

  • (1) Alternative Data: Mithal noted that the issue of alternative data came up on almost every panel, and that there appeared to be a consensus that using some types of alternative data may benefit consumers and the industry. Mithal noted that a number of panelists expressed caution about using “fringe data,” including social media data.In a panel discussion, Michael Turner, founder and President of the Policy and Economic Research Council (“PERC”), drew a distinction between “proven payment data,” including payments for utilities, media, and rent, and unproven “fringe data” or “unstructured data,” including information from social media. Turner, along with a number of other panelists, believed that reporting proven payment data would be beneficial for consumers. Francis Creighton, President and CEO of the Consumer Data Industry Association (“CDIA”), noted that consumers are currently experiencing the “downside” impacts of the reporting of negative information about the non-payment or late payment of obligations for utilities, media, and rental housing, but are not receiving the “upside” benefits of reporting on the positive payment histories on those recurring obligations. Consumer advocates, such as Ed Mierzwinski of U.S. Public Interest Research Group (“PIRG”), expressed skepticism regarding the use of certain alternative data, such as utility payment data, and the ability of the industry to ensure the accuracy of such data.
  • (2) Role of Technology: Mithal also noted that there was some consensus that technology, including Artificial Intelligence (“AI”) and pattern recognition, may improve the quality and accuracy of consumer report information. Mithal stated that there appeared to be less consensus regarding the use of technology in data matching, with some panelists expressing the view that manual review is still necessary to ensure maximum possible accuracy. Mithal also noted that some panelists expressed the view that the CFPB should exercise its supervisory authority to examine CRAs and furnishers’ use of technology in consumer reporting.
    • In general, industry panelists spoke favorably about the prospects for AI and other technologies. For example, Eric Ellman, Senior Vice President, Public Policy and Legal Affairs at CDIA, discussed the use of technology in dispute intake, including filtering credit repair disputes from legitimate consumer disputes. Chi Chi Wu of the National Consumer Law Center expressed skepticism about relying on AI and other technologies for data matching and dispute investigations.
  • (3) Accuracy: Mithal concluded by discussing the accuracy of consumer reporting more generally, and stated that some panelists believe that the regulators should issue specific guidance in this area. Mithal also noted that panelists discussed both the importance of data accuracy with respect to consumer reports and furnished data, including ways in which CRAs may oversee furnishers.
    • In general, industry panelists pointed to substantial improvements made in recent years with regard to the accuracy of consumer reports, with repeated emphasis on improvements brought about by the National Consumer Assistance Plan (“NCAP”), an outgrowth of a multi-state attorney general settlement with the three nationwide CRAs in May 2015. Turner discussed improvements between the early and more recent studies of data accuracy. Consumer advocates stressed continuing problems with data accuracy, including the reappearance of derogatory information on consumer reports.

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Continue Reading FTC and CFPB Host Workshop on Accuracy in Consumer Reporting

On October 29, 2019, the House Committee on Financial Services held a hearing entitled “Financial Services and the LGBTQ+ Community: A Review of Discrimination in Lending and Housing.”  Witnesses at the hearing included Harper Jean Tobin, the Director of Policy at the National Center for Transgender Equality, Michael Adams, CEO of SAGE (Services and Advocacy for GLBT Elders), and Alphonso David, President of the Human Rights Campaign.
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Continue Reading House Committee Holds Hearing on Financial Services and the LGBTQ+ Community