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Troutman Pepper Weekly Consumer Financial Services Newsletter


To help you keep abreast of relevant activities, below find a breakdown of some of the biggest events at the federal and state levels to impact the Consumer Finance Services industry this past week:

Federal Activities

State Activities

Federal Activities:

  • On September 22, the Consumer Financial Protection Bureau (CFPB) announced its request for public input on ways to spur new mortgage products that help households. The CFPB invites insights on ways to improve mortgage refinances for homeowners who would benefit from refinancing, especially for borrowers with smaller loan balances. The CFPB also seeks public input on ways to support automatic short- and long-term loss mitigation assistance for homeowners experiencing financial disruptions. The CFPB plans to use this information as it considers steps to support household financial stability and address refinance market gaps. For more information, click here.
  • September 22, the Commodity Futures Trading Commission (CFTC) entered an order, simultaneously filing and settling charges against Ooki DAO and its co-founders Tom Bean and Kyle Kistner. The order states that the bZx protocol, the predecessor of Ooki DAO, violated the Commodity Exchange Act (CEA) by failing to register as a futures commission merchant prior to enabling users of the bZx protocol to engage in margin and leverage trading. Notably, the order specifically stated that “[v]irtual currencies such as ETH, DAI, and others” traded on the bZx protocol constitute “commodities” under the CEA. Additionally, the order held that Ooki DAO is an unincorporated association, and as a result, the co-founders are personally liable for CEA violations committed by Ooki DAO. In July 2020, alleged members of Ooki DAO brought a class-action lawsuit against the DAO in a California federal court, which we discussed in depth here. For more information about the CFTC’s recent settlement with Ooki DAO, click here.
  • On September 22, the Department of Justice and the Internal Revenue Service announced that a federal judge granted their request for an order, authorizing the IRS to issue a John Doe summons requiring M.Y. Safra Bank to produce information about U.S. taxpayers who may have failed to report to the IRS, and pay taxes on, cryptocurrency transactions. For more information, click here.
  • On September 20, an identified party hacked DeFi liquidity provider Wintermute and absconded with $160 million worth of cryptocurrency. For more information, click here.
  • On September 19, the CFPB released its annual report on residential mortgage lending activity and trends for 2021, based on data from thousands of the nation’s lending institutions per the Home Mortgage Disclosure Act. The report shows a shift from refinance loans in 2020 to home purchase loans in 2021, with a greater share of home purchase loans going to Asian, Black, and Hispanic white borrowers relative to the share of home purchase loans for non-Hispanic white borrowers. The top 25 closed-end lenders by loan volume held nearly half of the market share of residential mortgage lending — a trend that has risen each year since 2018. For more information, click here.
  • On September 19, the Securities and Exchange (SEC) issued a cease-and-desist order against Sparkster Ltd. and Sparkster CEO Sajjad Daya for the unregistered offer and sale of crypto-asset securities from April 2018 through July 2018 and charged crypto influencer Ian Balina for failing to disclose compensation he received after reselling Sparkster tokens. For more information, click here.
  • On September 19, Representatives Peter Welch (D-VT) and Lance Gooden (R-TX) introduced the House companion of the Credit Card Competition Act of 2022 (CCCA), which Senators Dick Durbin (D-IL) and Roger Marshall (R-KS) introduced in late July 2022. The bill intends to expand interchange price controls by creating a new credit card routing mandate. For more information, click here.
  • On September 14, while addressing testimony presented by SEC Commissioner Gary Gensler, U.S. Senate Banking Committee Ranking Member Pat Toomey (R-PA) clearly expressed his frustration toward the SEC’s lack of helpful public guidance concerning the distinction between cryptocurrencies that constitute securities and cryptocurrencies that do not. For more information, click here.

State Activities:

  • On September 15, California Governor Gavin Newsom signed into law Assembly Bill 1904, which amends the California Consumer Legal Remedies Act to make it unlawful for “covered persons” to fail to include certain information in a solicitation to a consumer for a financial product or service. The amendment supplements already-existing consumer protection laws, targeting the unlawful, unfair, deceptive, or abusive acts or practices related to consumer financial products or services, as well as unfair competition and deceptive acts pertaining to the sale or lease of goods or services to a consumer. As an example, the amendment would require a “covered person” to disclose that a solicitation is an “advertisement” and does not require payment or other action by the consumer. For more information, click here.
  • On September 15, New York Governor Kathy Hochul signed legislation to expand the reach of the federal Public Service Loan Forgiveness (PSLF) program statewide. PSLF incentivizes public service work by forgiving a portion of borrowers’ federal student loan debt. Hochul noted that “this legislation acknowledges the significant contributions of our public servants, first responders, educators, and more, by helping unlock federal loan forgiveness for countless members of New York’s workforce.” An estimated 2.7 million people currently serve New York’s public or nonprofit sectors. For more information, click here.
  • On September 14, the New York Department of Financial Services issued notice of proposed rules, pertaining to the state’s Commercial Finance Disclosure Law (CFDL). The CFDL requires certain providers of commercial financing to provide prescribed disclosures when extending a financing offer to a potential recipient. Among some of the issues addressed by the proposed regulations are the disclosure of annual percentage rate, a formula for determining when an annual percentage rate disclosure is accurate, and formatting and content requirements for various disclosures. Though the rules’ reception varied, many commenters acknowledged the rules as necessary to implement the CFDL. The public have until October 31 to provide further feedback on the proposed rule. For more information, click here.
  • On September 13, California Governor Gavin Newsom signed Assembly Bill 2311, which, among other things, would prevent a seller from conditioning the extension of credit, term of credit, or terms of a conditional sale contract for purchase of an automobile on the consumer’s purchase of a guaranteed asset protection (GAP) waiver. Additionally, the bill would prevent a GAP waiver sale where the loan-to-value ratio of the vehicle purchase exceeds the maximum loan-to-value ratio of the waiver, unless the GAP waiver discloses and the consumer is informed of the limitation. Furthermore, the bill would require that the GAP waiver include a statement, advising the consumer of the right to a refund of any unearned portion of the waiver on a pro-rata basis. For more information, click here.


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