Consumer Finance Litigation Bulletin

Latest from Consumer Finance Litigation Bulletin

New York Executive Order and Regulation Requires Banks To Honor Forbearance Requests And Other Regulated Entities To Potentially Restrict Late And Overdraft Fees On March 7, 2020, Governor Cuomo issued Executive Order No. 202.9 (the “Order”) which sought to modify New York Banking Law to deem “an unsafe and unsound business practice” if any bank, subject to the Department of Financial Services (the “Department”), fails to “grant a forbearance to any person or business who has a financial hardship as a result of the COVID-19 pandemic for a period of ninety days.” See here. The Order also directed the Superintendent…
If your company’s marketing strategy involves communicating with prospective or existing clients via phone calls and text messages, you are probably familiar with the Telephone Consumer Protection Act (“TCPA”).   In part, the TCPA makes it unlawful to make a “call” to a cell phone using an automatic telephone dialing system (“ATDS”) unless you have the prior written consent of the called party. And this includes sending text messages to cell phones. While the TCPA, enacted in 1991, makes no mention of text messages, a majority of federal courts that have considered the issue have ignored the plain language of the…
A New York Class Action Relying on the Second Circuit’s Madden Decision Is In Jeopardy After Magistrate Judge’s Recommendation In 2019, two putative class actions were filed in New York by plaintiffs seeking to build off the Second Circuit’s decision in Madden v. Midland Funding, LLC, 786 F. 246 (2d Cir. 2015). The plaintiffs alleged that the defendants, who acquired securitized credit card receivables from national banks, violated New York law by charging interest amounts that were in excess of New York’s usury cap of 16%. One of these cases, Petersen v. Chase Chard Funding LLC, 19-cv-0741 (W.D.N.Y.) is now…
Key Takeaways for Furnishers from the CFPB’s Recent Supervisory Highlights on Credit Reporting In December 2019, the Consumer Financial Protection Bureau (CFPB) issued its Supervisory Highlights covering its findings from examinations in the areas of credit reporting and the furnishing of credit information to consumer reporting agencies (CRAs). The following are a few of the key takeaways from the CFPB’s findings and comments. 1.  The Lack of Procedures Necessary to Fit a Furnisher’s “Nature, Size, Complexity and Scope of Activities” The CFPB highlighted that a furnisher’s policies and procedures must be appropriate to fit the nature, size, complexity, and scope…
New Jersey Appellate Division Rejects Consumer’s Attempt to Declare Arbitration Provision Invalid Under New Jersey Plain Language Act In a recent unpublished opinion, Maisano v. LVNV Funding, LLC, No. A-1775-18T2, 2019 WL 6341035 (App. Div. Nov. 27, 2019), the New Jersey Appellate Division upheld the trial court’s order compelling Maisano (the “consumer”) to arbitrate his claims against LVNV Funding, LLC (“defendant”), an entity that acquires outstanding credit card accounts and collects the balances. In this case, the consumer entered into a credit card agreement with Credit One (“Agreement”) and as a result of the consumer’s failure to make payments…
IF THE SHIELD AGAINST AT-WILL TERMINATION OF THE CFPB’S DIRECTOR IS UNCONSTITUTIONAL, WHAT NEXT? The U.S. Supreme Court has already agreed to consider in the matter of Seila Law v. CFPB whether the for-cause requirement for the President’s dismissal of the Consumer Financial Protection Bureau’s (“CFPB”) director is unconstitutional as a violation of the separation of powers. Now the Court is being asked by All American Check Cashing to review the same issue but with a twist: if that for-cause termination requirement is unconstitutional, must all of the CFPB’s enforcement actions therefore be dismissed? For the CFPB, the Department of…
The United States Supreme Court has granted certiorari in the matter of Seila Law LLC v. Consumer Financial Protection Bureau to address the question of whether the Consumer Financial Protection Bureau’s (CFPB) single-director structure and the President’s authority to remove the director only “for cause,” as prescribed by 12 U.S.C. § 5491(c)(3), violate the separation of powers. The Supreme Court also directed the parties to brief the question of whether, if the CFPB is found to be unconstitutional because of 12 U.S.C § 5491(c)(3), that section can be severed from Dodd-Frank Act, which established the CFPB. Interestingly, the Court did…
Trump Administration Seeking Presidential Authority to Remove CFPB Director, asking Supreme Court to Decide As the CFPB is currently structured, the head of the CFPB may only be ousted by the President for good cause. However, the Trump Administration is asking the Supreme Court to take up a case[1] on certiorari to decide the issue of the CFPB’s constitutionality, ultimately seeking to allow the President the power to fire the head of the CFPB at will. The CFPB has been under attack throughout the Trump Administration regarding its leadership structure, some arguing that it is unconstitutional to have a…
11th Circuit Finds Receipt Of A Single Unsolicited Text Message Fails To Confer Article III Standing Under The TCPA In Salcedo v. Hanna, No. 17-14077 (11th Cir. Aug. 28, 2019), the 11th Circuit considered whether receipt of a single unsolicited text message was sufficient to confer Article III standing to sue for a violation of the Telephone Consumer Protection Act (“TCPA”). The court found it was not and in doing so, it rejected decisions from other U.S. circuit courts on this issue. This putative class action arose from the plaintiff’s receipt of a single unsolicited text message on his…
CFPB Continues Its Enforcement In Less Than Traditional Areas of Consumer Protection; This Time it is Remittances The Consumer Financial Protection Bureau (CFPB) announced on Tuesday, August 27, 2019 a consent order entered into with Maxitransfers Corp., a Texas-based money transmitter, following its investigation of Maxitransfers’ compliance with the Remittance Rule’s regulations concerning transmission error-resolution policies and consumer disclosures. The Remittance Rule was promulgated pursuant to The Dodd Frank Act and implements requirements of the Electronic Funds Transfer Act (EFTA). The CFPB found that Maxitransfers, which assists consumers in the US to remit money to Central and South America…
New Jersey Appellate Division Curtails Prior Holdings Exempting “Semi-Professionals” from the Consumer Fraud Act In a recent published decision, Shaw v. Shand,1 the New Jersey Appellate Division held that licensed semi-professionals are not “learned professionals” exempt from liability under the Consumer Fraud Act (“CFA”)2 simply because they are subject to an independent statutory or regulatory scheme.  Shaw was an appeal from a trial court decision entering summary judgment on the plaintiffs’ CFA claims in favor of a home inspector, holding that home inspectors are “semi-professionals” exempt from the CFA. The “semi-professional” exemption was articulated by the Appellate Division in a…
Third Circuit Holds that Inclusion of “Quick Response” Codes on Envelope Violates the Fair Debt Collection Practices Act In a precedential opinion, DiNaples v. MRS BPO, LLC, the Third Circuit held that adding an unencrypted “quick response” or “QR” code to an envelope containing a debt collection letter violates 15 U.S.C. § 1692f(8) of the Fair Debt Collection Practices Act (“FDCPA”).i That section limits what collection agencies can include on envelopes, prohibiting “language or symbols” other than the debt collector’s address.   The DiNaples panel extended the Third Circuit’s 2014 decision in Douglass v. Convergent Outsourcing, which held that a…
New York Department of Financial Services’ Title Insurance Regulation Vacated, Again? On to the Court of Appeals On August 5, 2019 a New York state court, on remand from the Appellate Division, again determined that Section 228.2(c) of the New York Department of Financial Services’ (DFS) Title Insurance Regulation was unconstitutionally vague and thus could possibility be applied arbitrarily and capriciously. Section 228.2(c) requires that title insurance underwriters and agencies making political or charitable donations and spending on advertising do so in a manner that is “reasonable and customary,” and not do so in a manner that is “lavish or…
New York Bill Targeting Robocalls Could Significantly Increase Exposure for Financial Services Companies A New York law aimed at curbing robocalls could significantly increase risk for companies relying on auto-dialers or prerecorded calls to contact customers. The “Robocall Prevention Act” would ban calls and text messages using equipment from numbers stored on a list, or equipment that uses random or sequential number generators, unless the caller shows that “substantial additional human intervention” to dial the call is required after a person initiates the call.[1] The bill outright bans calls using an artificial or prerecorded voice. These prohibitions…
In Consumer Financial Protection Bureau v. Seila Law LLC, 2019 WL 1985350 (9th Cir. May 6, 2019), the Ninth Circuit followed the earlier decision of the D.C. Circuit in PHH Corp. v. Consumer Financial Protection Bureau, 881 F.3d 75 (D.C. Cir. 2018) (en banc), in holding that the single-director structure of the Consumer Financial Protection Bureau (CFPB) is constitutional. The constitutional challenge was raised by a law firm, Seila Law LLC, that provided debt relief services to consumers. Seila Law received a civil investigative demand (CID) from the CFPB and it refused to comply with it. The CFPB then…
Second Circuit Decision has Implications for Native American Sovereign Immunity and Predatory Lending Practices On April 24, 2019, the U.S. Court of Appeals for the Second Circuit issued its decision in the case of Gingras v. Think Finance, Inc., 2019 WL 1780951 (2d Cir. April 24, 2019), a decision with far-reaching implications on Native American sovereign immunity and predatory lending practices.  From July 2011 through July 2013, plaintiff-appellees Jessica Gingras and Angela Given borrowed various amounts, ranging from $1,000 to $3,000, from Plain Green, LLC. Plain Green operates as a “tribal lending entity wholly owned by the Chippewa Cree Tribe…