A California federal district court recently denied the motion filed by the California Department of Financial Protection and Innovation (DFPI) seeking to dismiss a lawsuit filed by an advocacy organization seeking to enjoin DFPI from enforcing its final regulations (Regulations) implementing California’s commercial financing disclosure law. SB 1235, which was signed into law in 2018, requires consumer-like disclosures to be made for certain commercial financing products, including small business loans and merchant cash advances. … Continue Reading
CFPB determines Truth In Lending Act does not preempt New York, California, Utah, and Virginia commercial financing disclosure laws
The CFPB has issued a determination that the Truth in Lending Act (TILA) does not preempt the commercial financing laws of New York, California, Utah, and Virginia. The determination will be effective on the date it is published in the Federal Register.
TILA authorizes the CFPB to determine whether a state law disclosure requirement is preempted upon the CFPB’s own motion or upon the request of a creditor or other interested party. … Continue Reading
New York Department of Financial Services issues final regulations for consumer-like disclosures for commercial financing
The New York Department of Financial Services (DFS) has issued final regulations implementing the state’s Commercial Finance Disclosure Law (CFDL) which requires consumer-like disclosures for “commercial financing” transactions of $2.5 million or less. The regulations became effective on February 1, 2023, the date a Notice of Adoption was published in the New York State Register. … Continue Reading
New Jersey Attorney General settles lawsuit against merchant cash advance providers
The New Jersey Attorney General recently announced a settlement in its lawsuit against Yellowstone Capital LLC, its parent company, and various subsidiaries and affiliates alleging that the defendants violated the New Jersey Consumer Fraud Act (CFA) and the New Jersey Regulations Governing General Advertising (Advertising Regulations) in connection with marketing and providing merchant cash advances (MCAs). … Continue Reading
Advocacy group files lawsuit challenging California regulations requiring consumer-like disclosures for commercial transactions
On December 2, a non-profit advocacy organization filed a lawsuit in a California federal district court seeking to enjoin the California Department of Financial Protection and Innovation (DFPI) from enforcing the final regulations (Regulations) issued by the DFPI to implement California’s commercial financing disclosure law. SB 1235, which was signed into law in 2018, requires consumer-like disclosures to be made for certain commercial financing products, including small business loans and merchant cash advances. … Continue Reading
CFPB makes preliminary determinations that Truth in Lending Act does not preempt New York, California, Utah, and Virginia commercial financing disclosure laws
In a notice of “Intent to Make Preemption Determination under the Truth in Lending Act (Regulation Z),” the CFPB announced that it is seeking comments on its preliminary determinations that the Truth in Lending Act (TILA) does not preempt certain provisions of the New York Commercial Finance Disclosure Law (CFDL) or the commercial financing laws of California, Utah, and Virginia. … Continue Reading
Small Business Administration to expand 7(a) program to fintechs and alternative lenders
The Biden Administration recently announced a slate of new public and private sector initiatives aimed at advancing racial equity by delivering “capital and resources to underserved small businesses and the community lenders who serve them.” Among these initiatives was a proposed rule change for the Small Business Administration (SBA) that would increase the number of nonbanks, including Fintechs, eligible to offer SBA 7(a) loans. … Continue Reading
California DFPI issues final regulations implementing 2018 law requiring consumer-like disclosures for commercial financing
The California Department of Financial Protection and Innovation (DFPI) has issued final regulations to implement SB 1235, the bill signed into law on September 30, 2018 that requires consumer-like disclosures to be made for certain commercial financing products, including small business loans and merchant cash advances.
SB 1235, codified at CA Financial Code (Code) sections 22800-22805, requires a “provider,” meaning a person who extends a specific offer of “commercial financing” as defined in Code section 22800(d) to a recipient, to give the recipient certain disclosures at the time the provider extends the offer. … Continue Reading
Depository institutions beware: California appellate court holds bank liable for registered agent’s mistake in rejecting notice of levy
A California Court of Appeal recently found a bank liable to a judgment creditor under California’s Enforcement of Judgments Law for the bank’s registered agent’s mistake in misreading, and subsequently rejecting, a notice of levy. Although the bank itself did not have knowledge of the mistake, the Court held the bank responsible through principles of agency, rendering the bank liable for amounts that the account holder drained from the account when the levy should have been in effect.… Continue Reading
CFPB fines bank $10 million for conduct related to bank account garnishments and account agreements
The CFPB recently ordered a bank to cancel garnishment fees, review its system for processing garnishment orders, cease using contracts which limit consumer rights, and pay a $10 million penalty to the CFPB’s Civil Penalty Fund.
The garnishment process is a method for creditors to recover amounts that a judgment debtor owes from a third party that holds the judgment debtor’s assets, such as a deposit account held by a bank. … Continue Reading