July 01, 2019

MONTH-IN-BRIEF: Business Regulation & Regulated Industries

Lynette Hotchkiss

Consumer Finance

CFPB June 25 Symposium on Abusive Acts or Practices

By Barbara S. Mishkin, Ballard Spahr LLP

On June 25, 2019, the CFPB held its first symposium, which focused on the Dodd-Frank Act’s prohibition of abusive acts or practices, specifically the meaning of abusiveness.  The panelists’ written statements are available here.

The Dodd-Frank Act does not authorize state attorneys general to bring claims against national banks or federal savings associations to directly enforce Dodd-Frank’s UDAAP provisions.  However, under Section 1042(a)(2) of Dodd-Frank, a state attorney general can bring claims against national banks or federal savings associations “to enforce a regulation prescribed by the Bureau under a provision of [Title 10].”  Thus, this enforcement authority would presumably be triggered if the Bureau were to adopt a rule regarding what is an “abusive act or practice” under Section 1031 of Dodd-Frank.

Payday Rule Delay Published in Federal Register

By Eric Mogilnicki and Sam Adriance, Covington & Burling LLP

On June 17, the CFPB officially published in the Federal Register a final rule delaying, until November 19, 2020, the compliance date for the underwriting provisions of its rule regarding Payday, Vehicle Title, and Certain High-Cost Installment Loans (the “Payday Rule”).  This delay will give the Bureau the opportunity to consider comments and issue a final rule regarding its proposal to rescind the underwriting provisions before they would take effect. 

This delay affects only the Payday Rule’s underwriting provisions, which would require lenders to assess borrowers’ ability to repay, verify borrowers’ incomes, and furnish certain information regarding payday loans to registered information systems, among other things.  The delay does not apply the Payday Rule’s payment provisions, which would prohibit lenders from engaging in certain practices to obtain loan payments. 

Under the previous rule, companies were required to comply with the Payday Rule by August 19, 2019. 

FTC Delivers 2018 Annual Financial Acts Enforcement Report to the CFPB

By Eric Mogilnicki and Sam Adriance, Covington & Burling LLP

On June 6, 2019, the FTC announced that it had provided to the CFPB its 2018 Annual Financial Acts Enforcement Report regarding its enforcement and related activities under Regulation Z (Truth in Lending Act (“TILA”)), Regulation M (Consumer Leasing Act (“CLA”)), and Regulation E (Electronic Fund Transfer Act (“EFTA”)). 

Following the Dodd-Frank Act, the FTC retained its authority to enforce TILA, the CLA, and the EFTA, and also to enforce CFPB rules against financial services companies within the FTC’s jurisdiction.  The report provides a helpful summary of the FTC’s actions in the financial services space in 2018, and highlights the following activities:

  • Enforcement “related to automobile purchases and financing, payday lending, and consumer electronics financing; leasing; and negative options and other practices involving electronic fund transfers.”
  • “[R]esearch and policy efforts related to truth in lending, leasing, and electronic fund transfer issues, including a qualitative study of consumers’ experiences in buying and financing automobiles at dealerships.”
  • The FTC’s “Military Task Force, which comprises a cross-section of FTC representatives and focuses on various initiatives to assist military consumers.”
  • The “FTC’s consumer and business education efforts on truth in lending, leasing, and electronic fund transfer issues.”

Lynette Hotchkiss

EVP/General Counsel & Corporate Secretary; Rabobank, N.A

Lynette Hotchkiss is EVP/General Counsel & Corporate Secretary for Rabobank, N.A., where she also previously served as Associate General Counsel. Prior to joining Rabobank, Lynette was with OneWest Bank, N.A, where her responsibilities included monitoring and reporting on regulatory developments impacting the bank’s operations and providing legal support for regulatory compliance matters. Before that, Lynette was an attorney in the Financial Practices Division of the Federal Trade Commission, where she focused on mortgage servicing issues. For much of her career, Lynette used her knowledge and experience in consumer finance laws and regulations to build compliance tools to help financial institutions comply with the complex array of federal and state requirements, first acting as the lead compliance attorney at CFI ProServices Inc. (now Finastra) to develop the Laser Pro® loan documentation system and later leading the legal team at Mavent Inc. (now part of Ellie Mae) to develop the Mavent Expert System, an automated compliance system for mortgage origination.