In January 2020 the Federal Housing Finance Agency (FHFA) published a request for input on Property Assessed Clean Energy (PACE) transactions involving residential property. FHFA describes PACE transactions as being part of residential energy retrofitting programs that are created through special state legislation and result in the financed part of the transaction resulting in a tax assessment on the home, which is a ‘‘super-priority lien’’ over existing and subsequent first mortgages. (As previously reported, pursuant to the Economic Growth, Regulatory Relief and Consumer Protection Act (Act) the CFPB is conducting rulemaking to extend Truth in Lending Act ability-to-repay requirements to PACE transactions.)

The FHFA notes in the request for input that previously it directed Fannie Mae and Freddie Mac not to purchase mortgage loans on homes that are subject to a lien in connection with a PACE transaction. FHFA also notes that the Federal Housing Administration (FHA) will not insure loans on homes that are subject to a lien in connection with a PACE transaction. In the Request for Input, the FHFA seeks comment on enhancing the actions taken regarding PACE transactions.

In particular, the FHFA seeks comments on whether it should direct Fannie Mae and Freddie Mac to (1) decrease loan-to-value (LTV) ratios for all new loan purchases in states or in communities where PACE loans are available, or (2) increase their Loan Level Price Adjustments (LLPAs) or require other credit enhancements for mortgage loans or re-financings in communities with available PACE financing.

The deadline to respond to the request was March 16, 2020. Among the various comments, a number of industry trade organizations joined in a comment letter. In the letter, the organizations state “[w]e jointly write . . . to express our significant concern with FHFA’s consideration of options to limit access to conventional financing for borrowers with less than a 20% down payment simply because they live in jurisdictions where PACE financing may be available. A decrease in allowable [LTV] ratios for new home purchases in jurisdictions that permit PACE financing would be unnecessarily punitive to the millions of consumers who live in those jurisdictions and who would be affected negatively due to the presence of PACE financing in that area.”

With regard to the request for input on the increase of LLPAs, the organizations oppose such a policy and state that “increased LLPAs would be an unnecessary and burdensome fee for homebuyers that is unrelated to their personal credit profiles. This policy would amount to an arbitrary and speculative tax on homebuyers in select jurisdictions and is not grounded in the reality of the risk posed by any one borrower’s loan.” The organizations note that had such a policy been in effect in 2019, the “arbitrary fees” could have applied to nearly one million home purchase transactions in the three states (California, Florida and Missouri) that permit residential PACE financing.

The organizations joining in the joint comment letter are the California Mortgage Bankers Association, Credit Union National Association, Housing Policy Council, Leading Builders of America, Mortgage Bankers Association, Mortgage Bankers Association of Florida, Mortgage Bankers Association of Missouri, National Association of Federally-Insured Credit Unions, National Association of REALTORS®, Real Estate Services Providers Council, Inc. (RESPRO), and U.S. Mortgage Insurers.

As we reported previously, the Economic Growth, Regulatory Relief and Consumer Protection Act (Act) subjects Property Assessed Clean Energy (PACE) financing to Truth in Lending Act (TILA) ability-to-repay (ATR) requirements under rules to be adopted by the CFPB. The CFPB recently issued an advance notice of proposed rulemaking to solicit information regarding PACE financing. Comments will be due 60 days from publication of the notice in the Federal Register.

For purposes of the Act, a PACE financing is defined as financing to cover the costs of home improvements that result in a tax assessment on the real property of the consumer. The Act provides that the CFPB regulations must carry out the purposes of the TILA ATR requirements and apply the TILA civil liability provisions to violations of those requirements, accounting “for the unique nature of” PACE financing. The Act also provides that in connection with adopting regulations, the CFPB may collect such information and data that it determines is necessary, and must consult with state and local governments and bond-issuing authorities.

The CFPB seeks information dealing with five main categories and numerous sub-categories of information:

  1. Written materials associated with PACE financing transactions.

In particular, the CFPB requests (a) materials provided to consumers before they sign a PACE financing agreement, (b) PACE financing agreements, and (c) bills or statements that provide payment information to consumers.

  1. Descriptions of current standards and practices in the PACE financing origination process.

Among other items of information, the CFPB requests information regarding (a) the collection and verification of information from consumers and third parties, (b) current underwriting standards, and whether those standards include a determination of a consumer’s ability to repay, (c) the process of approving or denying financing applications, (d) the parties to whom PACE financing obligations are “initially payable on the face” of the financing agreements, (e) the role of state or local governments in the origination and underwriting of PACE financing, and (f) the relationship between the PACE financing agreement and the home improvement agreement.

  1. Information relating to civil liability under TILA for violations of the ATR requirements in connection with PACE financing, as well as rescission and borrower delinquency and default.

The CFPB notes that this information request is intended to help the CFPB identify to whom TILA civil liability might apply and which parties would in fact bear the risk of any such liability. The CFPB requests information regarding (a) the assignment, sale or securitization of PACE financing agreements, (b) any indemnification agreements that are commonly part of PACE financing transactions, (c) the rescission rights available to consumers with respect to PACE financing agreements or home improvement contracts, and (d) what happens to PACE financing obligations when a consumer becomes delinquent or defaults, including information regarding any loss mitigation programs.

  1. Information about what features of PACE financing make it unique and how the Bureau should address those unique features.

The CFPB seeks information on a number of topics, including information regarding (a) any public or private financing options that satisfy the Act’s definition of a PACE financing, whether or not the options are commonly understood to be PACE financing, (b) the source of funding for PACE financing, (c) the role of public bonds in PACE financing, (d) consumer repayment, (e) how PACE financing is integrated with local property tax systems and how specific information about the PACE financing is distinguished from other real property tax obligations in the tax system, (f) the financial costs to consumers that may be associated with PACE financing, (g) any costs savings associated with home improvement projects funded with PACE financing, (h) whether the addition of PACE financing affects consumers’ ability to meet their financial obligations, (i) the liens associated with PACE financing, and (j) the treatment of PACE financing obligations by servicers of mortgage loans that were placed on the property before the PACE financing encumbrance,

  1. Views concerning the potential implications of regulating PACE financing under TILA.

The CFPB requests information regarding (a) any likely effects on state and local governments or bond-issuing authorities if existing TILA ATR requirements were to apply to PACE financing, (b) the likely effects on consumers and PACE financing industry participants resulting from the application of such requirements to PACE financing, (c) which specific TILA ATR requirements, if applied to PACE financing, would conflict with existing state or local legal requirements, (d) which specific TILA ATR provisions would be difficult for market participants to apply to current PACE financing origination practices, bond processes, or laws and practices implicating real property tax systems, (e) which specific TILA ATR provisions would be beneficial for consumers, (f) how the existing TILA ATR requirements could be tailored to account for the unique nature of PACE financing, (g) any likely impacts on consumers or PACE financing market participants resulting from the application of TILA civil liability provisions to PACE financing, and (h) whether the CFPB should address the application of other TILA provisions to PACE financing.

On February 2, 2021, the Federal Reserve (“Fed”) announced that the launch date for its instant payments platform—FedNow—would be sooner than originally expected.  The announcement narrows the delivery timeframe by a full year.

FedNow provides interbank clearing and settlement, which enables funds to be transferred between banks and credited to accounts in near real-time.  The Fed’s move-up of the anticipated launch date appears to be prompted by criticism that the U.S. is lagging behind other countries with respect to instant payments platforms.  It is expected that FedNow will be particularly appealing to smaller and mid-sized financial institutions that need an entre-point to instant payments platforms.

FedNow’s initial launch will include core clearing and settlement functionality and key value-added features, such as a request-for-payment capability and tools to support participants in their handling of payment inquiries, reconcilements and certain exceptions.  The Fed plans to supplement FedNow’s core functionality in subsequent releases.

Before FedNow is released, it will be extensively tested to ensure that it is market-ready.  In the first quarter of this year, the Fed plans to finalize FedNow’s ISO specifications, an international standard for payments messaging.  The Fed is also considering adding cross-border payment capabilities after the initial launch.

The latest announcement is significant because of its focus on interoperability.  The ISO specifications are an important tool for financial institutions, processors, and others to understand how to interface and send messages on the system.  The Fed is also working to integrate FedNow with the RTP Network offered by The Clearinghouse so that the two systems can effectively operate alongside one another.

According to Kenneth Montgomery, first vice president and chief operating officer at the Federal Reserve Bank of Boston, the Fed does not yet have an estimate for the ultimate cost of the system.  Before its launch, FedNow will also need to devise a pricing structure, which will need to ensure that the service can recover the network’s development costs.

What is our 101 take on FedNow and RTP Network? The United States is a relatively new player in the real-time payments space.  The Clearing House launched the RTP Network back in November 2017 and is currently the only RTP rail servicing the United States.  The Fed’s entry into the real-time payments space could mean more opportunities for participants in the U.S. payments ecosystem to allow them access to real-time payments for a variety of use cases, from real-time access to wages for gig workers to a transformation of treasury and payroll services for corporations (no more costly checks!) and increase overall certainty in payments.

For more information, see our article “Will COVID-19 Fraud Issues Impact the Use of Real-Time Payments” and podcast “An Introduction to Real-Time Payments” on the topic of real-time payments and related issues.

 

On January 4, 2021, the Office of the Comptroller of the Currency (“OCC”) published an Interpretive Letter clarifying the authority of national banks and federal savings associations to participate in independent node verification networks (“INVN”) and use stablecoins to conduct payment activities and other bank-permissible functions.

A stablecoin is a type of cryptocurrency that is backed by an asset, such as a fiat currency or a commodity, which is designed to have a stable value as compared with other types of cryptocurrency.  In contrast, an INVN is a shared electronic database where copies of the same information are stored on multiple computers, and has participants, known as nodes, which typically validate transactions, store transaction history, and broadcast data to other nodes.  The OCC clarified that, as long as banks comply with applicable law and sound banking practices, “a national bank or federal savings association may validate, store, and record payments transactions by serving as a node on an INVN.”  Similarly, “a bank may use INVNs and related stablecoins to carry out other permissible payment activities.”

This is the third installation of guidance issued by the OCC authorizing banks to offer cryptocurrency-related services.  On July 22, 2020, the OCC published an Interpretive Letter clarifying the authority of banks to provide cryptocurrency custody services for customers.  In the July 2020 letter, the OCC “found that the authority to provide safekeeping services extends to digital activities and, specifically, that national banks may escrow encryption keys used in connection with digital certificates because a key escrow service is a functional equivalent to physical safekeeping.”  On September 21, 2020, the OCC published an Interpretive Letter confirming the authority of banks to hold deposit “reserves” on behalf of customers that issue certain types of stablecoins.  The September 2020 letter specified that banks can only hold reserve deposits where there is a direct one-to-one relationship with the single fiat currency for which the stablecoin provides a digital representation.

The OCC’s latest cryptocurrency guidance now allows banks to serve as a node on an INVN and use INVNs and related stablecoins to conduct permissible banking activities, including authorized payment activities.  The OCC noted that it “has repeatedly recognized that banks may conduct permissible payment activities using new and evolving technologies.”  In the OCC’s view, the use of INVNs and stablecoins to facilitate payments transactions simply represents a new means of performing a bank’s permissible functions.

The OCC also explained that allowing banks to engage in INVNs may enhance the efficiency, effectiveness, and stability of payments activities, and also limit tampering because information is only added to the network after consensus is reached among the nodes validating the information.  The OCC further noted that the use of stablecoins to facilitate payments allows banks to capture the advantages that INVN may present in a manner that retains the stability of fiat currency.

The OCC cautioned banks to be “aware of potential risks when conducting INVN-related activities, including operational risks, compliance risk, and fraud[,]” stating that these “[n]ew technologies require enough technological expertise to ensure banks can manage these risks in a safe and sound manner.”

Acting Comptroller of the Currency, Brian Brooks, inferred in the related press release that the latest guidance is geared toward leveraging the cryptocurrency industry to keep pace, stating that “[w]hile governments in other countries have built real-time payments systems, the United States has relied on our innovation sector to deliver real-time payments technologies.”

 

The CFPB and the South Carolina Department of Consumer Affairs (SCDCA) recently settled a lawsuit they filed jointly in a South Carolina federal district court in October 2019 against Performance Arbitrage Company, Inc. and Life Funding Options, Inc., and their individual owner that alleged the defendants violated the Consumer Financial Protection Act and the South Carolina Consumer Protection Code by brokering high-interest loans to consumers that were marketed as purchases of the consumers’ future pension or disability payments.  The CFPB and SCDCA alleged that the majority of the transactions involved veterans with federal disability pensions or other pensions issued to veterans.  They also alleged that the defendants assessed the creditworthiness of consumers before entering into the transactions and allowed consumers to repay the contracts from sources other than the contracted-for income streams.

The stipulated final judgment approved by the court permanently bans the defendants from collecting money on any transaction, using any consumer information, and providing consumer financial products or services.  The individual defendant was discharged from bankruptcy in May 2020.  The settlement requires her to pay civil money penalties of $500 each to the Bureau and to South Carolina.

In addition to targeting companies that broker pension advance products structured as purchases, the Bureau has targeted service providers to such companies.  In February 2020, the CFPB, joined by the SCDCA and the Arkansas Attorney General, filed a complaint in a South Carolina federal district court against Upstate Law Group LLC. and two of its individual owners and managers that alleged the defendants violated the Consumer Financial Protection Act in connection with the brokering of pension advance products structured as purchases by engaging in unfair and deceptive acts or practices and by providing substantial assistance to others who had engaged in deceptive and unfair acts or practices. The complaint also included a count brought only by the SCDCA alleging the defendants violated the South Carolina Consumer Protection Code by engaging in unconscionable debt collection.

According to the complaint, the defendants worked with other companies (Broker Companies) that brokered high-interest loans to consumers that were marketed as purchases of the consumers’ future pension or disability payments, where the majority of such consumers were veterans with federal disability pensions or other pensions issued to veterans.  Such Broker Companies included Performance Arbitrage and Life Funding Options.  The Bureau entered into settlements with the other Broker Companies in January 2019 and August 2019.

These lawsuits indicate that not only companies offering financial products structured as purchases should expect continued CFPB scrutiny, particularly under a new CFPB Director appointed by President-elect Biden, but also indicate that service providers to such companies should expect such scrutiny.  An even heightened risk of scrutiny should be expected where the products are marketed to veterans.

The lawsuits also underscore the need for all players in this space, including litigation funding companies and merchant cash advance providers, to revisit true sale compliance, both in the language of their agreements and in the company’s actual practices.  Providers of business financing can face lawsuits from federal regulators as well as state AGs and regulators.  Providers of merchant cash advances are the targets of recent lawsuits filed by the FTC and the New Jersey Attorney General.

 

The Supreme Court has granted certiorari to review a $40 million class action trial judgment for statutory and punitive damages under the Fair Credit Reporting Act, and its forthcoming decision later this Term will likely be the Supreme Court’s most important ruling in the consumer financial services space since its 2016 ruling in Spokeo, Inc. v. Robins.

In TransUnion, LLC. v. Ramirez, the Supreme Court agreed to decide the following question posed by TransUnion: “Whether either Article III or Rule 23 permits a damages class action where the vast majority of the class suffered no actual injury, let alone an injury anything like what the class representative suffered.”  In this case, plaintiff Sergio Ramirez alleged that he suffered difficulty in obtaining credit, embarrassment in front of family members, and had to cancel a vacation after an automobile dealer received a credit report incorrectly indicating that his name matched a name found on a list of terrorists and narcotics traffickers with whom U.S. companies may not transact business that is prepared by the Office of Foreign Assets Control.  He filed a class action against TransUnion alleging violations of the FCRA.  Significantly, it was stipulated by the parties that, unlike Ramirez, approximately 79% of the 8,185 class members did not have a credit report disseminated to a third party during the class period.  The court certified the class despite TransUnion’s objections that most of the class members lacked standing and that Ramirez was not typical of the class he represented.  Unlike the vast majority of class actions, the case proceeded to trial and the jury awarded each class member $984.22 in statutory damages and an additional $6,353.08 in punitive damages.  On appeal, the Ninth Circuit, ruling 2-1, upheld class certification, the jury verdict in favor of the class, and the statutory damages amount, but reduced the punitive damages to $3,936.88 per class member.

TransUnion’s cert petition forcefully argued that “the Ninth Circuit eviscerated critical Article III, Rule 23, and due process constraints, thereby paving the way for one highly atypical plaintiff to recover massive damages on behalf of thousands of uninjured class members.”  Given the grant of certiorari in this case and the current composition of the Supreme Court, it can reasonably be anticipated that the Court’s decision later this Term will be favorable to TransUnion and to class action defendants generally, and will likely enunciate more rigorous requirements for standing under Rule 23 and Spokeo and for typicality under Rule 23(a)(3).

The CFPB has published its Fall 2020 rulemaking agenda as part of the Fall 2020 Unified Agenda of Federal Regulatory and Deregulatory Actions.  It represents the CFPB’s fourth rulemaking agenda under Director Kraninger’s leadership.  The agenda’s preamble indicates that the information in the agenda is current as of September 11, 2020 and identifies the regulatory matters that the Bureau “reasonably anticipates having under consideration during the period from November 2020 to November 2021.”

The Bureau issued its final debt collection rule in October 2020.  In February 2020, the Bureau issued a supplemental proposal that would require debt collectors to make specified disclosures when collecting time-barred debts.  The Bureau indicates in the preamble that it plans to finalize its supplemental proposal regarding disclosures for time-barred date this month.

Other items listed in the agenda on which the CFPB expects to take action before the end of this year and next year include:

  • Business Lending Data (Regulation B).  Section 1071 amended the ECOA, subject to rules adopted by the Bureau, to require financial institutions to collect and report certain data in connection with credit applications made by women- or minority-owned businesses and small businesses.  The Bureau issued a SBREFA outline in September 2020 and convened a SBREFA panel in October 2020.  The Bureau released the panel report today.
  • Property Assessed Clean Energy Financing.  In March 2019, the CFPB issued an Advance Notice of Proposed Rulemaking to extend Truth in Lending Act ability-to-repay requirements to PACE transactions.  The agenda estimates pre-rule activity in March 2021.
  • Home Mortgage Disclosure Act (Regulation C).  The HMDA amendments adopted by the CFPB in October 2015 revised certain pre-existing data points, added data points set forth in Dodd-Frank, and included additional data points based on discretionary authority in Dodd-Frank permitting the CFPB to mandate reporting of other information.  The October 2015 amendments also expanded the scope of reportable loans by requiring the reporting of dwelling-secured business or commercial purpose loans that meet the definition of a home purchase, refinancing, or home improvement transaction.  In May 2019, the Bureau issued an Advance Notice of Proposed Rulemaking seeking comment on whether to make changes to the revised or new data points, and the coverage of business or commercial-purpose loans that are made to a non-natural person and secured by a multi-family dwelling.  The agenda estimates issuance of a Notice of Proposed Rulemaking in February 2021.
  • Public Release of Home Mortgage Disclosure Act Data.  In December 2018, the CFPB announced final policy guidance regarding the application-level HMDA data that will be made available to the public.  The agenda estimates issuance of a Notice of Proposed Rulemaking on the public disclosure of HMDA data in February 2021.
  • Amendments to FIRREA Concerning Appraisals (Automated Valuation Models).  The Bureau is participating in interagency rulemaking with the Federal Reserve, OCC, FDIC, NCUA and FHFA to develop regulations to implement the amendments made by the Dodd-Frank Act to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) concerning appraisals.  The FIRREA amendments require implementing regulations for quality control standards for automated valuation models.  The agenda estimates that the agencies will issue a Notice of Proposed Rulemaking in June 2021.
  • Mortgage Servicing Rules.  The Bureau expects to propose additional amendments to the servicing rules, including, for example, loss mitigation provisions and estimates its proposal will be issued in March 2021.
  • Higher-Priced Mortgage Loan Escrow Exemption.  The Economic Growth, Regulatory Relief, and Consumer Protection Act directs the CFPB to implement an exemption from the mandatory escrow account requirement for higher-priced mortgage loans under the Truth in Lending Act and Regulation Z for certain insured credit unions and insured depository institutions.  The CFPB has proposed amendments to Regulation Z pursuant to this directive.  The Bureau estimates that it will issue a final rule in January 2021.

The Bureau’s long-term regulatory agenda items, which have no estimated dates for further action, include the following:

  • Abusive Acts and Practices.  In January 2020, the CFPB issued a policy statement to clarify the Dodd-Frank Act’s abusiveness standard.   The Bureau states that it recognizes the importance of continuing to monitor the use of AI and machine learning and is evaluating “whether rulemaking, a policy statement, or other Bureau action.   The agenda indicates that in issuing the policy statement, “the Bureau did not foreclose the possibility of engaging in a future rulemaking to further define the abusiveness standard.”
  • Artificial Intelligence.  In February 2017, the CFPB issued a request for information concerning the use of alternative data and modeling techniques in the credit process.  The Bureau states that it recognizes the importance of continuing to monitor the use of AI and machine learning and is evaluating “whether rulemaking, a policy statement, or other Bureau action may become appropriate.”
  • Payday Disclosure Rule.  The Bureau states that it has begun research focused on providing information to consumers about the costs associated with payday loans.  The Bureau anticipates completing the first phase of this research, which involves qualitative testing, by the end of September 2021.  The results of the testing will inform the Bureau in deciding whether to move forward with quantitative testing that might support a future rulemaking or other actions related to payday loan disclosures.
  • Loan Originator Compensation.  The Bureau states that it has received feedback that aspects of its current rule “may be unnecessarily restrictive” and is considering a rulemaking to address these concerns.  Possible topics for consideration might include whether creditors can lower compensation for originating state housing finance authority loans and whether creditors can reduce compensation due to an originator’s error.

Other long-term items include the application of E-Sign Act requirements in the context of certain Bureau regulations and possible changes to the Bureau’s TILA/RESPA Integrated Disclosure Rule.

The U.S. Supreme Court ruling in Seila Law that the Dodd-Frank Act provision allowing the President to remove the Bureau’s Director only “for cause” is unconstitutional and the appropriate remedy is to sever that provision means that President-elect Biden will be able to remove Director Kraninger without cause.  As a result, the Bureau’s Spring 2021 rulemaking agenda could reflect a significant change in priorities.

On December 9-10, 2020, the Conference on Consumer Finance Law and the Program on Financial Regulation & Technology at George Mason University’s Scalia Law School is sponsoring a webinar that will examine emerging issues in the areas of fintech and consumer finance.

Chris Willis, Deputy Practice Leader of Ballard Spahr’s Consumer Financial Services Group, will participate as a panel member on the afternoon of the first day.  Titled “Consumer Finance and Big Data, AI, Social Media, and Alternative Credit Scoring: Opportunity or Infringement,” the panel will discuss the implications of the integration of AI, Big Data, and consumer finance for banks, fintech firms, and consumers.  The full webinar agenda is available here.

There is no charge to register but virtual space is limited.  If you would like to attend, please register by December 4, 2020.  Click here to register.

 

PLI’s 25th Annual Consumer Financial Services Institute will take place on December 7-8, 2020 by live webcast.

The Institute is considered the country’s premier consumer financial services CLE program and this year’s Institute will once again explore in detail important developments in consumer financial services regulation and litigation.  I am again co-chairing the event, as I have for the past 24 years.

While the leadership and priorities of the Consumer Financial Protection Bureau, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, and Federal Trade Commission have changed under the Trump Administration, these agencies have remained active in enforcing consumer financial services laws.  In addition, state regulators and attorneys general have increased their enforcement activity to fill any void created by a decline in activity at the federal level.  The volume of private litigation, particularly under the Telephone Consumer Protection Act, the Fair Debt Collection Practices Act, and the Fair Credit Reporting Act, also remains high.  At the same time, the improved economy prior to COVID-19, the deregulatory environment at the federal level, and the increase in technological innovation has resulted in new entrants into the consumer financial services industry and the offering of new products by existing industry players.

Former CFPB Director Richard Cordray will deliver a keynote address.  The morning session on the first day will feature two consecutive panel discussions titled “Federal Regulators Speak,” that will be divided into two segments and focus on federal regulatory, enforcement, and supervisory developments.  I will co-moderate both.  The first panel will feature a discussion among CFPB and FTC representatives.  The second panel will feature OCC and FDIC representatives.

My partner Chris Willis, Practice Leader of our firm’s Consumer Financial Services Litigation Group, will participate as a panel member on an afternoon panel each day.  The first, titled “The Rapidly Evolving Landscape for FinTech,” will examine the legal issues facing users of aggregated data and data providers, the use of artificial intelligence (AI), alternative data, and Blockchain, and the legal challenges facing marketplace lenders (including Madden and “true lender”).  The other panel is titled “Fair Credit Reporting Act/Debt Collection Issues,” and will include a discussion of the CFPB’s final debt collection rule, FCRA litigation trends, and FCRA legislative activity.

The Institute will also focus on a variety of other cutting-edge issues and developments, including:

  • State regulatory and enforcement developments
  • Data security and privacy issues
  • TCPA developments
  • Class actions and UDAP litigation developments
  • Consumer advocates’ perspectives on current regulatory and litigation issues

In addition, attendees can receive up to one full hour of Ethics credit exploring ethical issues unique to the consumer space and satisfy their Diversity & Inclusion/Elimination of Bias credit requirements.

We hope you can join us for this informative and valuable program.  PLI has made a special 25 percent discounted registration fee available to those who register using the link that follows.  To register and view a complete description of PLI’s 25th Annual Consumer Financial Services Institute, click here.

For more information and/or assistance with registration, contact PLI Customer Service at 800.260.4PLI.

 

 

Come January 1, 2021, senior citizens in California will be afforded additional cancellation rights when entering into contracts negotiated or executed away from typical business establishments. AB-2471, which Governor Newsom signed into law at the end of September 2020, provides greater protections to senior citizens by extending from three to five business days the right of persons 65 years of age and older to cancel certain consumer contracts. In doing so, California joins other states who have expanded protections beyond those offered under the FTC’s Cooling Off Rule to those aged 65 or older.

The bill applies to home solicitation contracts, home improvement contracts, PACE assessment contracts, service or repair contracts, and seminar sales contracts and amends existing California law that requires cancellation notices for these transactions. Sponsors of the bill reported that some senior citizens may have difficulty understanding complex financial transactions or may be vulnerable to high-pressure sales tactics, particularly if they occur in the senior’s home, and may need more time to consult with family members or others about the implications of their financial decisions. Sponsors further noted that these transactions often occur in non-traditional business environments, such as at the consumer’s home or during a seminar, where there is an increased risk of unfair or predatory business practices such as high-pressure or intimidating sales tactics or intentional miscommunications regarding the terms of the written contract. The bill seeks to protect senior citizens from entering into a contract they misinterpret, do not fully understand, or would simply not choose to enter into in a traditional setting by providing an additional two days for seniors to review a contract before the right to cancel terminates.

Companies doing business in California and engaging in transactions for which they must currently provide consumers with a right to cancel under California law should carefully review their cancellation notices and related practices to confirm they comply with the new law. Likewise, we note that the Department of Financial Protection and Innovation may give priority to protection of senior citizens when exercising its expanded UDAAP authority under newly-enacted AB-1864.