The result of the CFPB’s multi-year study of the BNPL industry is what the CFPB calls an interpretive rule in which it finds that: (1) “digital user accounts” (each a “DUA”) that may be used to access credit are “credit cards” under Regulation Z; (2) the lenders that issue such accounts are “card issuers;” and (3) that as it relates to traditional BNPL loans (loans that are payable in four or fewer installments with no finance charge) these card issuers are “creditors” subject to subpart B of Regulation Z—the provisions typically applicable to open-end credit.… Continue Reading

On May 16, the U.S. District Court for the District of Colorado held a hearing in NAIB, et al v. Weiser, et al. on a motion filed by three financial services industry trade groups to preliminarily enjoin Colorado from enforcing Colo. Rev. Stat. § 5-13-106 (the “Opt-Out Legislation”) to the extent it purports to apply Colorado’s interest rate and fee limitations to loans made by federally insured out-of-state state-chartered banks to Colorado borrowers.… Continue Reading

The industry group plaintiffs in NAIB et al. v. Weiser et al., the lawsuit challenging Colorado’s opt-out legislation, have filed their reply to the brief filed by the Colorado Attorney General and Colorado Uniform Consumer Credit Code Administrator in opposition to the plaintiffs’ motion for preliminary injunction.  In their reply, the plaintiffs also respond to the amicus brief filed by the FDIC supporting Colorado’s position.… Continue Reading

Last week, we blogged about arguments by Colorado and the FDIC in their briefs opposing a motion for preliminary injunction that would enjoin application of Colorado’s opt-out statute with respect to loans by FDIC-insured state banks located outside of Colorado. We promised to blog again this week with a more detailed discussion of why their arguments are off base.… Continue Reading

Colorado’s attempt to opt out of interest rate exportation by out-of-state, state-chartered banks ultimately will fail, and will cause irreparable harm in the interim: therefore, enforcement of the opt out should be preliminarily enjoined, according to the plaintiffs’ Motion for Preliminary Injunction (the “Motion”) filed April 2, 2024 in federal district court in Colorado in NAIB et al.Continue Reading

The D.C. federal district court has granted PayPal’s motion for summary judgment in its lawsuit challenging the CFPB’s prepaid card rule (Prepaid Rule) and vacated the Prepaid Rule’s short-form disclosure requirement as applied to digital wallets.

In 2016, the CFPB promulgated the Prepaid Rule, which requires a short- form and long- form account disclosure and requires an issuer to disclose its “most important fees” in the short-form disclosure.… Continue Reading

This will follow up on Barbara Mishkin’s January 14, 2016 blog “FTC warns use of big data may violate federal consumer protection laws.”  At the American Bar Association’s Consumer Financial Services Committee meeting last month in Park City, Utah, Bryce Stephens and Jeffrey Langer from the CFPB provided insight as to how the CFPB treats the use of big data by creditors. … Continue Reading

Yesterday, the House Armed Services Committee removed language from the draft Fiscal Year 2016 National Defense Authorization Act that would have delayed the finalization of rules proposed by the Department of Defense that would expand the types of credit subject to the Military Lending Act.  As we have previously discussed, the proposal faces strong criticism from the financial services industry.… Continue Reading

Last week, Director Cordray spoke at a National Credit Union Administration town hall webinar. While his prepared remarks were not particularly revealing, the American Banker reported that Director Cordray was unusually candid during the Q&A part of the program.

In discussing the CFPB’s work on a proposed rule for overdraft products, Director Cordray indicated that the CFPB is not planning on banning overdraft products, but is “reviewing the size of fees, frequency of fees, occasion for fees, [and] the ordering of transactions.”… Continue Reading

The CFPB’s Office for Older Americans released a report this month reviewing mortgage debt held by older consumers—individuals age 65 and older. The report found that older consumers are carrying more mortgage debt into retirement, and fewer older homeowners own their home outright than in the past two decades. In addition to mortgage debt, the report found that older Americans are also carrying more credit card and student loan debt into retirement than they were during the same period.… Continue Reading