Dykema Gossett PLLC
Dykema Gossett PLLC

Consumer Financial Services Law Blog

Consumer Financial Services Law Blog

News and analysis regarding Consumer Financial Services litigation and regulation, and activities of the Consumer Financial Protection Bureau

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CFPB Issues Latest TRID Proposal for Comment

On Friday, July 29, the Consumer Financial Protection Bureau (CFPB) issued a much-anticipated proposal to amend its TILA-RESPA Integrated Disclosure Rule (TRID), with public comments due October 18, 2016. Read More ›

CFPB Releases Outline of Proposals for Debt Collection Rules

The Consumer Financial Protection Bureau (“CFPB”) announced yesterday at a field hearing in Sacramento, California, that it is considering several potential approaches to issuing rules on debt collection. The CFPB would take this action pursuant to its authority under the Dodd-Frank Act to issue regulations implementing the Fair Debt Collection Practices Act (“FDCPA”) as well as to issue regulations prohibiting unfair, deceptive, and abusive acts and practices. This rulemaking would mark the first time regulations would be issued to implement the FDCPA, and it is likely to have significant effects on the debt collection industry. Read More ›

Ninth Circuit Holds That Each Debt Collector Must Send to the Consumer Disclosures After Its Own Initial Communication Under the Fair Debt Collection Practices Act (FDCPA)

In an important ruling for debt collectors, the Ninth Circuit Court of Appeals held in Hernandez v. Williams, Docket No. 14-15672 (2016), that the failure of a debt collector (successor or otherwise) to send its own “validation notice” under 15 U.S.C. §  1692g(a) to a consumer violates the Fair Debt Collection Practices Act (“FDCPA”), specifically 15 U.S.C. § 1692g, even when a prior debt collector sent its own validation notice to the same person. In doing so, the Court reasoned that placing the requirement on any and all debt collectors involved was in line with the consumer-protection purpose of the FDCPA. Read More ›

SEC’s Focus on Enforcing Data Security Safeguards Continues: Lessons Learned from Its $1M Fine of Morgan Stanley

The SEC’s recent settlement with Morgan Stanley highlights the agency’s continued focus on enforcing cybersecurity measures. On June 8, 2016, Morgan Stanley agreed to pay a $1 million penalty to settle charges relating to its alleged failure to adopt written policies and procedures reasonably designed to protect customer records and information, a violation of the “Safeguards Rule.”  Read More ›

The CFPB’s Small-Dollar Lending Proposal: First UDAAP Rulemaking Proposal Hits the Streets

After much anticipation, the Consumer Financial Protection Bureau (“CFPB”) has released its proposed small-dollar lending rule. Spanning 1,334 pages in length, the proposal marks the first time the CFPB has exercised its authority to issue regulations prohibiting unfair, deceptive, or abusive acts or practices (“UDAAP”). Until now, the CFPB has elected to define UDAAP through its enforcement actions. And despite the proposal’s length, it does not appear that it fully covers the waters of consumer credit in the CFPB’s sights. Accompanying the proposed rule is a Request for Information (“RFI”) asking additional questions about certain other high-cost, longer-term installment loans and open-end lines of credit, raising the possibility of additional rulemakings in the future.   Read More ›

Illinois Strengthens Data Breach Notification Statute

Illinois recently amended its data breach notification law, joining a number of states that have also amended their own breach notification statutes this year. States appear to be looking to strengthen their breach notification laws by expanding the definition of "personal information" covered by the laws, clarifying the role of encryption in providing a safe harbor, and redefining content and timing requirements for notifications provided to affected persons. Read More ›

Texas Supreme Court Opens Door to Home-Equity Lien Challenges

On May 20, 2016, the Supreme Court of Texas decided two cases that arise from the requirements of Article XVI, Section 50 of the Texas Constitution regarding provisions related to home-equity loans. The opinions have great significance for mortgage servicers, originators, and title insurers that deal with Texas home-equity loans. Claims related to origination defects, once believed barred on limitations grounds, are now fair game for the life of the loan and will undoubtedly create a new incentive for borrowers to challenge the validity of lien securing their home-equity loan.  Read More ›

Supreme Court Holds That Debt-Collecting Law Firms Delegated as Special Counsel Do Not Violate FDCPA by Using Attorney General’s Letterhead

In an important ruling for debt-collection law firms, the United States Supreme Court held in Sheriff et. al v. Fillie et. al, Docket No. 15-338 (2016), that when a debt-collection firm is hired by the Attorney General to collect debts on behalf of the State, use of the Attorney General’s letter head does not violate the Fair Debt Collection Practices Act (“FDCPA”). In doing so, the Court reasoned that the letters did not contain false information or misleading representations. Read More ›

Fraudulent Transfer Judgments May Survive a Debtor’s Bankruptcy Filing: Supreme Court Clarifies Meaning of “Actual Fraud”

A Supreme Court ruling this week should give creditors a powerful tool to collect their debts from debtors who try to transfer assets before seeking bankruptcy protection. The primary reason an individual may turn to personal bankruptcy is to protect assets from creditor collection while obtaining a “discharge” from debts. Such protection is increasingly necessary where an individual is being pursued by one or more creditors, particularly where those creditors may have obtained (or are about to obtain) judgments against the individual. Once a debtor obtains a discharge in bankruptcy, creditors are prohibited from continuing to pursue collection efforts against the debtor. The Bankruptcy Code generally favors “fresh starts” for honest debtors, but there are several important exceptions to this general rule. Section 523(a) of the Bankruptcy Code contains at least 19 such exceptions, ranging from exceptions for unpaid taxes to exceptions for judgments arising from securities law violations. One of the more frequently litigated discharge exceptions is the “actual fraud” exception under section 523(a)(2)(A) of the Bankruptcy Code. That issue was front and center in Husky International, Inc. v. Ritz, 15-145 (May 16, 2016) (slip op.) Read More ›

FinCEN Releases Long-Awaited Beneficial Ownership Final Rule

The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has finalized its long-awaited beneficial ownership rule, which it proposed in 2014. The regulation does two things.  First, it extends Customer Due Diligence (CDD) requirements under Bank Secrecy Act (BSA) rules to the natural persons behind a legal entity. Second, the regulation adds a fifth pillar to the traditional “four pillars” of an effective anti-money laundering (AML) program by requiring covered financial institutions to establish risk-based procedures for conducting ongoing customer due diligence. As of May 11, 2018, entities subject to BSA will be required to identify and verify the identity of beneficial owners of legal entity customers at the time the customer opens a new account, subject to certain exclusions and exemptions, as well as develop risk profiles and conduct ongoing monitoring of customers. Read More ›