Consumer Finance Monitor

Our special guest is Andrew Nigrinis of Legal Economics LLC and former CFPB enforcement economist. The CFPB’s final credit card late fee rule lowers the safe harbor late fee amount that card issuers other than “smaller card issuers” can charge to $8. We first discuss how the final rule differs from the proposed rule and the existing rule, who are “smaller issuers” not subject to the lower safe harbor amount, and the changes made by the final rule for larger issuers. We then look at issuers’ ability to determine late fees based on their costs, permissible fees other than late fees, the CFPB’s economic analysis underlying the final rule, and the final rule’s likely impact on issuers and cardholders. We conclude with a discussion of the Texas lawsuit challenging the final rule and the key arguments for invalidating the rule. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, leads the discussion, joined by John Culhane and Ronald Vaske, Partners in the Group, and Kristen Larson, Of Counsel in the Group.

Our special guest is Ian Moloney, Senior Vice President and Head of Policy and Regulatory Affairs with the American Fintech Council (AFC). After reviewing how EWA products are used by consumers and the differences between employer- and provider-based products, we discuss the regulatory challenges faced by the EWA industry, the regulatory approaches states have taken to EWA, actions taken by the Consumer Financial Protection Bureau related to EWA, and proposed federal legislation dealing with EWA. We conclude with a discussion of AFC’s letter to the Bureau urging the Bureau to develop a regulatory approach to EWA. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, leads the discussion, joined by Michael Guerrero, a Partner in the Group and Co-Leader of the firm’s Fintech and Payments Solutions Team.

Our special guest is David Pommerehn, SVP, General Counsel, Head of Regulatory Affairs at the Consumer Bankers Association. In January 2024, the CFPB proposed two new rules: one restricting overdraft fees and the other prohibiting NSF fees on certain declined transactions. The proposals are among the CFPB’s latest moves in furtherance of the Biden Administration’s “junk fees” agenda. In this episode, which repurposes a recent webinar, we discuss the key provisions of each proposal and entities covered, the CFPB’s justification for each proposal, the legal authority relied on by the CFPB for each proposal, business practices impacted by the proposals, and potential legal challenges. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, moderates the discussion, joined by John Culhane, a Partner in the Group, and Kristen Larson, Of Counsel in the Group.

Our special guest is Malini Mithal, Associate Director of the FTC’s Division of Financial Practices. In this episode, which repurposes a recent webinar, we review highlights of FTC regulatory and enforcement activity in 2023 directed at protecting consumers and small businesses and discuss what to expect from the FTC in 2024 and beyond. After reviewing the FTC’s authority, we discuss important consent orders and enforcement litigation involving: alternate financing mechanisms such as cash advance apps and income share agreements; discriminatory financing and other practices, including the FTC’s use of unfairness; small business financing such as merchant cash advances; telemarketing practices; crypocurrency; and use of dark patterns. Throughout this discussion, Ms. Mithal offers compliance tips and takeaways from the consent orders and enforcement litigation. We also look at the FTC’s final CARS rule, proposed junk fees rule, and artificial intelligence-related initiatives. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, leads the discussion, joined by John Culhane, a partner in the Group.

Our special guest is Jeff Sovern, Professor at the University of Maryland Francis King Carey School of Law. In March 2022, the CFPB announced that it had revised its exam manual to instruct its examiners to apply the “unfairness” standard under the Consumer Financial Protection Act to conduct considered to be discriminatory, whether or not it is covered by federal laws that expressly prohibit discrimination. The changes were subsequently vacated by a federal district court in a lawsuit brought by several trade groups challenging the changes and the Fifth Circuit has stayed the CFPB’s appeal from that decision pending the U.S. Supreme Court’s decision in CFSA v. CFPB. In this episode, we first review the background of the exam manual changes, the industry response, and the district court’s decision. We then take a close look at the key arguments both in support of and against upholding the decision. We conclude with a discussion of the use of disparate impact in applying the unfairness standard to discriminatory conduct and the appropriateness of the CFPB’s use of changes to its exam manual to announce its new interpretation of the standard. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, leads the discussion, joined by Richard Andreano, a Partner in the Group and Practice Leader of the firm’s Mortgage Banking Group.

New Federal Communications Commission TCPA rules will mean big changes for businesses, particularly comparison shopping websites, lead generators, and other companies that regularly contact consumers via phone or text message. This episode repurposes a recent webinar. After reviewing TCPA consent requirements for calls and texts and exceptions, we look at the impact of the U.S. Supreme Court’s 2021 Facebook decision on TCPA compliance. We then look at post-Facebook TCPA litigation, post-Facebook state law litigation involving unwanted calls and texts, and recent state legislative developments. We follow with a discussion of the FCC’s new TCPA rules addressing (1) how consumers may revoke consent to receive calls or texts and the obligations of callers and texters to honor revocation of consent requests, and (2) the application of TCPA consent requirements to lead generators. We conclude with a discussion of compliance and litigation considerations arising from the new TCPA rules. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, moderates the discussion, joined by Michael Guerrero, Daniel McKenna, Jenny Perkins, and Joel Tasca, Partners in the Group.

On January 17, 2024, the U.S. Supreme Court heard oral argument in two cases in which the question presented is whether the Court should overrule its 1984 decision in Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc. That decision produced what became known as the "Chevron judicial deference framework" - the two-step analysis that courts typically invoke when reviewing a federal agency’s interpretation of a statute. This two-part episode repurposes our webinar held in February 2024 and brings together as our guests three renowned administrative law professors, Kent Barnett, Jack Beermann, and Craig Green, and a leading Supreme Court practitioner, Carter Phillips, all of whom are experts on Chevron. In Part II, our guests share their reactions to the oral arguments, including their views on what the Justices’ questions and comments reveal about the Justices’ thinking, their predictions for how the Court will rule, and potential implications of the Court’s ruling on existing and future regulations. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, leads the discussion.

On January 17, 2024, the U.S. Supreme Court heard oral argument in two cases in which the question presented is whether the Court should overrule its 1984 decision in Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc. That decision produced what became known as the "Chevron judicial deference framework" - the two-step analysis that courts typically invoke when reviewing a federal agency’s interpretation of a statute. This two-part episode repurposes our webinar held in February 2024 and brings together as our guests three renowned administrative law professors, Kent Barnett, Jack Beermann, and Craig Green, and a leading Supreme Court practitioner, Carter Phillips, all of whom are experts on Chevron. In Part I, we first review the Chevron decision and judicial deference framework and the background of the two cases now before the Supreme Court. We then look at the history of judicial review of agency action culminating with the current challenge to Chevron deference, including the origins of judicial deference to agency action, the political shift away from judicial deference, and key post-Chevron decisions. We conclude with a discussion of the principal arguments made to the Supreme Court for upholding Chevron and for overruling Chevron. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, leads the discussion.

Our special guest is Brad Blower, Principal and Founder of Inclusive-Partners LLC, and author of a recent blog post titled “The CFPB Has An Opportunity to Greatly Advance the Ethical and Non-Discriminatory Use of AI in Financial Services and Should Take It.” We first discuss the lack of clear guidance from the CFPB on the non-discriminatory use of AI and the possible reasons for the CFPB’s apparent reticence to provide more specific guidance. We then identify the specific areas where additional guidance from the CFPB could be helpful and specific steps the CFPB could take to address the lack of clarity. We conclude with a discussion of where industry, in the absence of clear guidance from the CFPB, is heading in its efforts to achieve fairness when using AI without compromising the accuracy of underwriting models and what the CFPB will likely be doing over the next year to address fairness concerns. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, hosts the conversation.

Our special guest is Richard (“Rick”) Hackett, former Assistant CFPB Director responsible for auto finance regulation and presently a member of the Board of F&I Sentinel, which supports lender compliance in the auto finance and insurance industry. In December 2023, the FTC announced its final Combatting Auto Retail Scams Rule, otherwise known as the “CARS Rule,” which sets new requirements on the sale, financing, and leasing of new and used vehicles by motor vehicle dealers. This two-part podcast episode repurposes a recent webinar. In Part II, we begin with a discussion of how the Rule impacts the sale of add-on products. We then discuss the Rule’s impact beyond motor vehicle dealers covered by the Rule and the Rule’s intersection with other laws and regulations, including state law and the FTC’s Used Car Rule and Proposed Rule on Unfair or Deceptive Fees. We conclude with a discussion of best practices for auto sales finance companies to help navigate the Rule’s new requirements. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, moderates the discussion, joined by John Culhane and Michael Guerrero, Partners in the Group, and Brian Turetsky, Of Counsel in the Group.

Our special guest is Richard (“Rick”) Hackett, former Assistant CFPB Director responsible for auto finance regulation and presently a member of the Board of F&I Sentinel, which supports lender compliance in the auto finance and insurance industry. In December 2023, the FTC announced its Combatting Auto Retail Scams Rule, otherwise known as the “CARS Rule,” which sets new requirements on the sale, financing, and leasing of new and used vehicles by motor vehicle dealers. This two-part podcast episode repurposes a recent webinar. In Part I, we begin with a discussion of the legal challenge filed by the National Automobile Dealers Association seeking judicial review of the CARS Rule, the FTC’s postponement of the Rule’s effective date, and potential legislative challenges to the Rule. We then discuss the Rule’s scope and key definitions, the misrepresentations that are expressly prohibited under the Rule, and the Rule’s new disclosure requirements on dealer advertising and sales communications. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, moderates the discussion, joined by John Culhane and Michael Guerrero, Partners in the Group, and Brian Turetsky, Of Counsel in the Group.

In October 2023, the CFPB issued a groundbreaking proposal on personal financial data. This episode, which repurposes a webinar, begins with a review of the background of the rulemaking. We then discuss key provisions of the proposal, including the entities, data, and financial products and services that would be covered, the obligations that would be imposed on covered entities, and exceptions to the proposal’s requirements. We also look at the compliance timeline, practical takeaways, and the proposal’s operational impact on covered entities. We conclude with a discussion of the CFPB’s advisory opinion dealing with consumer requests for information. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, moderates the discussion joined by Ronald Vaske, a partner in the Group, Kristen Larson, Of Counsel in the Group, and Gregory Szewczyk, a Ballard Spahr partner and Practice Leader of the firm’s Privacy and Data Security Group.

Our special guest is Zarik Khan, Founder of Finsolute Advisors. In October 2023, the Federal Reserve Board issued a proposal to lower the maximum interchange fee that a large debit card issuer can receive for a debit card transaction. We first look at the roles of the various parties involved in a typical transaction in which a consumer uses a debit card to make a purchase from a merchant and the various fees imposed in connection with the transaction. We then discuss how the current debit interchange fee cap contained in the Fed’s final rule implementing the Durbin Amendment (Regulation II) that went into effect in October 2011 has impacted each of the parties involved in a typical debit card transaction, the Fed’s rationale for its new proposal and related study, and the proposal’s implications for each of the parties. We conclude with a discussion of the proposal’s prospects and the potential impact of a U.S. Supreme Court decision overruling Chevron on the proposal if implemented. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, hosts the conversation.

This special podcast episode, hosted by Senior Counsel and former Consumer Financial Services Practice Leader Alan Kaplinsky, sets the stage for the upcoming oral argument in the two U.S. Supreme Court cases where the fate of Chevron deference hangs in the balance. This episode provides an essential roadmap for anyone who will listen to the oral argument or is following this critical challenge to this important doctrine. Our special guest is Kent Barnett, Associate Dean of Academic Affairs and J. Alton Hosch Professor at the University of Georgia School of Law. On January 17th, the U.S. Supreme Court will hear oral argument in two cases, Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. U.S. Department of Commerce, presenting the question of whether the Court should overrule, or at least clarify, its 1984 decision in Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc. As discussed in our earlier blog, that decision established what became known as “Chevron deference”, which requires judges to accept an agency’s interpretation of federal law if indicated by the outcome of a two-step analysis defined in the Chevron decision. In this special podcast, we first discuss the importance of Chevron deference, specifically with respect to the consumer financial services industry. We follow with an explanation of the background of the two cases to be argued, and a detailed explanation of the question now before the Court. Professor Barnett provides fascinating historical insights about the Chevron doctrine, and the political influences that first elevated it and then, more recently, have called it into question. We then explore why the Court now has agreed to reconsider Chevron, and the impact of the Chevron doctrine on the courtroom success of federal agencies. Finally, we venture predictions as to the likely outcome of the Loper Bright and Raimondo cases, including possible clarifications that would give courts further guidance on how to apply the Chevron framework, and the potentially seismic effects that might ensue if the Court should decide to overrule Chevron completely.

We discuss various issues faced by lenders and servicers when attempting to foreclose on “zombie” mortgages, meaning second mortgages on which the borrower has not made a payment for a considerable length of time and the lender or servicer has not previously taken action to foreclose. First, we look at the CFPB’s May 2023 advisory guidance on the enforcement of time-barred mortgage loans. We then discuss defenses to foreclosure raised by borrowers, specifically that the loan was charged-off, discharged in a bankruptcy, or time-barred, and look at decisions in the states of Washington, Colorado, and Utah in which courts have addressed these defenses. We conclude with a discussion of steps that lenders and servicers should consider taking before attempting to foreclose on a “zombie” mortgage. Melanie Vartabedian and Matthew Morr, partners in Ballard Spahr’s Consumer Financial Services Group, discuss the issues.

Our special guest is Andrea Boyack, Professor, University of Missouri School of Law. We first discuss the principles that underlie our current system of consumer contracts and the system’s role in promoting transactional efficiency and other objectives. Prof. Boyack then provides her views on why the application of traditional contract law to the modern consumer contract context is not in the best interests of consumers and offers a different approach to consumer contracts in which a consumers can shape the terms of their contracts. In particular, she explains how this approach would treat a consumer’s choice to do business with a company as legally distinct from assent to particular terms in the company’s contracts. Prof. Boyack also shares her views on the recent Restatement of the Law of Consumer Contracts. We conclude with a discussion of the controversy that surrounds arbitration provisions, how Prof. Boyack’s new approach to consumer contracts would impact the use of such provisions, and what legal changes would be necessary to implement her approach. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, hosts the conversation.

On October 24, 2023, the OCC, FDIC and Board of Governors of the Federal Reserve System jointly adopted final amendments to their regulations implementing the Community Reinvestment Act of 1977 (CRA). In this episode, which repurposes a webinar, we are joined by guest speaker Kenneth H. Thomas, Ph.D., Founder/CEO of Community Development Fund Advisors. After reviewing the background of the adoption of the CRA and implementing rules by the banking agencies, we discuss the key elements of the final rule. We look at the requirement for banks to delineate assessment areas in which their CRA performance will be evaluated, the tests under which banks’ CRA performance will be evaluated, the strategic plan option, and data collection and reporting requirements. In discussing the final rule’s requirements, we also consider how they apply to banks of different sizes. Throughout our discussion, Dr. Thomas provides his commentary on the final rule’s impact on the goals of CRA and CRA evaluations. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, leads the discussion, joined by Scott Coleman, a partner in the Group, and Sarah Dannecker, an associate in the Group.

Providers of consumer financial services that rely on federal preemption to charge customers uniform interest rates and fees on a nationwide basis are currently facing a series of legislative and litigation challenges. In this episode, which repurposes a recent webinar, we first discuss the U.S. Supreme Court’s grant of certiorari in Cantero v. Bank of America on the question whether the National Bank Act preempts state laws requiring the payment of interest on mortgage escrow accounts and look at the competing arguments and preemption standards under consideration. We then look at the Dodd-Frank Act’s provisions on federal preemption for national banks and federal savings associations, OCC regulations addressing the scope of federal preemption, and federal statutes providing interest rate exportation authority for national and state-chartered banks and other institutions. We then turn to current legal challenges to rate exportation authority, focusing on state laws opting out of federal law allowing interest rate exportation by state banks, state laws defining “true lender” to target nonbank/bank partnerships seeking to take advantage of federal interest rate exportation authority, and the California trial court’s recent ruling in a very important “true lender” lawsuit. We conclude with a discussion of the potential implications of a U.S. Supreme Court override of the Chevron deference framework for OCC and FDIC regulations interpreting federal statutes on interest rate authority of national and state banks. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, leads the discussion, joined by John Culhane, Reid Herlihy, and Ronald Vaske, partners in the Group, and Mindy Harris, Of Counsel in the Group.

This two-part podcast repurposes our most recent webinar on the latest salvo of actions in the Biden Administration’s initiative directed at combatting so-called “junk fees.” Launched in January 2022, the initiative shows no signs of abating. In Part II, we first look at the Consumer Financial Protection Bureau’s advisory opinion on fees charged by large banks and credit unions to respond to information requests, including the Bureau’s discussion of non-fee obstacles such as chatbots that could unlawfully impede consumers’ ability to make an information request. We then discuss the CFPB’s second edition of Supervisory Highlights focused on “junk fees,” taking a close look at the CFPB’s findings regarding deposit account fees, auto servicing fees, and remittance transfer fees and its discussion of the CFPB’s circular on reopening closed deposit accounts, a remedial action against an auto servicer, and risks in connection with payment processing platforms for student meal accounts. We also discuss CFPB “junk fees” enforcement actions involving NSF fees, fees for add-on products charged by an installment loan lender, and refinancing costs imposed by a high-cost installment lender, as well as state law activity in California and elsewhere related to “junk fees.” We conclude with a discussion of potential future CFPB rulemaking and other actions involving “junk fees,” steps providers should consider to reduce “junk fees” compliance risk, and the preemptive effect on state law of an FTC “junk fees” rule. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, moderates the discussion, joined by John Culhane and Reid Herlihy, Partners in the Group, Michael Gordon and Kristen Larson, Of Counsel in the Group, and Roger Winston, a Partner in the firm and Leader of its Mixed-Use, Condominium, and Multifamily Development Team.