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Yesterday, the CFPB filed its tenth status report with the California federal district court hearing the lawsuit brought to force the CFPB to move forward with rulemaking to implement the small business data requirements of Section 1071 of the Dodd-Frank Act.  The Bureau states in the status report that it is on track to issue the Section 1071 final rule by March 31, 2023.… Continue Reading

On July 29, the Federal Trade Commission (“FTC”) announced a settlement with First American Payment Systems LP, a Texas-based nationwide payment processor, and two of its sales agent affiliates, Think Point Financial LLC and Eliot Management Group LLC (collectively, “First American”), in an action alleging hidden terms, “surprise” exit fees, and charges made to merchants without their consent. … Continue Reading

The CFPB has agreed to a March 31, 2023 deadline for issuing a final rule implementing the small business data requirements of Section 1071 of the Dodd-Frank Act. 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 small businesses, including women- or minority-owned small businesses. … Continue Reading

The California Department of Financial Protection and Innovation (DFPI) has issued proposed regulations implementing certain provisions of the state’s Consumer Financial Protection Law (CFPL).  Comments must be submitted by August 8, 2022.

The proposal includes provisions implementing the DFPI’s authority under the CFPL to issue and enforce rules defining unfair, deceptive, or abusive acts or practices as they relate to “commercial financing,” as that term is defined in Cal.… Continue Reading

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

Utah and Virginia recently became the first two states to require the registration of providers of merchant cash advances.  The new laws also include disclosure requirements.  (Although laws requiring disclosures for merchant cash advances already exist in California and New York, those laws have not yet become effective.)

Utah. … Continue Reading

On February 22, 2022, the CFPB filed its eighth status report with the California federal district court hearing the lawsuit brought by the California Reinvestment Coalition, National Association for Latino Community Asset Builders, and two individual plaintiffs in 2019.  The purpose of the suit was to force the Bureau to issue a proposal implementing the small business data requirements of Section 1071 of the Dodd-Frank Act of 2010 after years of delay.… Continue Reading

Around the nation, regulators are preparing to implement and enforce new consumer-like disclosure laws for small business commercial finance providers.

New York regulators have yet to issue final regulations implementing the state’s Commercial Finance Disclosure Law (CFDL), which went into effect on January 1, 2022.  As we previously reported, the New York State Department of Financial Services (NYDFS) advised that commercial finance providers’ obligations under the CFDL do not ripen until the NYDFS “issues final implementing regulations and those regulations take effect.” … Continue Reading

The New York Department of Financial Services has issued a letter announcing that it has concluded that the obligation of providers of commercial financing under the Commercial Finance Disclosure Law (CFDL) to provide consumer-like disclosures does not arise “until the Department issues final implementing regulations and those regulations take effect.”

The CFDL was enacted by S 5740-B and requires consumer-like disclosures for “commercial financing” transactions of $2.5 million or less. … Continue Reading

The FTC’s recent announcement that it has entered into a settlement with two of the defendants (RAM Capital Funding LLC and Tzvi Reich) in a lawsuit filed by the FTC against two merchant cash advance providers and three of their officers for alleged violations of the FTC Act serves as a reminder of the FTC’s continuing focus on small business financing as well as the FTC Act’s application to business-to-business activity.… Continue Reading