Consumer Finance Monitor

Our special guests are Professor Dru Stevenson, South Texas College of Law in Houston, and Brian Knight, Senior Research Fellow, Mercatus Center at George Mason University. In this episode, we first discuss the history of  “Operation Chokepoint,” the Obama-era initiative in which the FDIC and other federal banking agencies targeted banks serving payday lenders and companies engaged in other “disfavored” industries. We then devote the remainder of the episode to a discussion of what is the appropriate role of bank regulators with regard to banks’ customer relationships, with our guests presenting opposing views on how regulators should use their authority to address reputational and other risks to banks arising from customer relationships. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, leads the conversation.

Our special guest is Professor Richard Frankel of Drexel University Thomas R. Kline School of Law and the author of a recent article on mass arbitration. In this episode, we first discuss what mass arbitration is, how it relates to class action lawsuits, and the role of public enforcement. We then discuss the industry and consumer positions on the use of mass arbitration and the empirical study conducted by Prof. Frankel for his article. We conclude with a discussion of steps that companies using arbitration provisions in their consumer agreements can take to respond to the use of mass arbitration, the application of the Federal Arbitration Act to arbitration agreements containing provisions that address mass arbitration, and the role of state regulation. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, leads the conversation, joined by Mark Levin, Senior Counsel in the Group.

Our special guest is Brian Johnson, Managing Director of Patomak Global Partners and former CFPB Deputy Director. In Nov. 2023, the CFPB issued a proposed rule to supervise nonbank companies that qualify as larger participants in a market for “general-use digital consumer payment applications.” We first discuss the CFPB’s authority to supervise nonbank entities considered to be “a larger participant of a market for other consumer financial products or services” and  its previous use of that authority. We look next at how the CFPB has defined the relevant market in its current proposal and its rationale for the proposal. We then discuss the deficiencies in the CFPB’s cost benefit analysis of the proposal and how the proposal reflects changes to the CFPB’s approach to rulemaking under Director Chopra. We conclude with a discussion of possible litigation challenges to a final rule and issues companies likely to be covered by a final rule should be considering. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, leads the conversation.

On February 27, 2024, the U.S. Supreme Court heard oral argument in Cantero v. Bank of America, N.A., a case involving the effect of the Dodd-Frank Act on the scope of preemption under the National Bank Act (NBA). The specific question before the Court is whether, post-Dodd-Frank, the NBA preempts a New York statute requiring banks to pay interest on mortgage escrow accounts. The decision, however, could have ramifications well beyond the specific New York law at issue. This episode repurposes a recent webinar roundtable and brings together as our guests four attorneys who filed amicus briefs with the Supreme Court: Jonathan Y. Ellis, William M. Jay, and Matthew A. Schwartz, partners in private law firms, and Professor Arthur E. Wilmarth, Jr. After we review the procedural history of Cantero, our guests discuss the arguments made in favor of and against preemption in their amicus briefs and share their reactions to the oral argument and predictions for how the Court will rule. Alan Kaplinsky, Senior Counsel and former Practice Group Leader in the firm’s Consumer Financial Services Group, moderates the discussion.

Our special guest is Andrew Nigrinis of Legal Economics LLC and former CFPB enforcement economist. The CFPB’s final credit card late fee rule lowers the safe harbor late fee amount that card issuers other than “smaller card issuers” can charge to $8. We first discuss how the final rule differs from the proposed rule and the existing rule, who are “smaller issuers” not subject to the lower safe harbor amount, and the changes made by the final rule for larger issuers. We then look at issuers’ ability to determine late fees based on their costs, permissible fees other than late fees, the CFPB’s economic analysis underlying the final rule, and the final rule’s likely impact on issuers and cardholders. We conclude with a discussion of the Texas lawsuit challenging the final rule and the key arguments for invalidating the rule. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, leads the discussion, joined by John Culhane and Ronald Vaske, Partners in the Group, and Kristen Larson, Of Counsel in the Group.

Our special guest is Ian Moloney, Senior Vice President and Head of Policy and Regulatory Affairs with the American Fintech Council (AFC). After reviewing how EWA products are used by consumers and the differences between employer- and provider-based products, we discuss the regulatory challenges faced by the EWA industry, the regulatory approaches states have taken to EWA, actions taken by the Consumer Financial Protection Bureau related to EWA, and proposed federal legislation dealing with EWA. We conclude with a discussion of AFC’s letter to the Bureau urging the Bureau to develop a regulatory approach to EWA. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, leads the discussion, joined by Michael Guerrero, a Partner in the Group and Co-Leader of the firm’s Fintech and Payments Solutions Team.

Our special guest is David Pommerehn, SVP, General Counsel, Head of Regulatory Affairs at the Consumer Bankers Association. In January 2024, the CFPB proposed two new rules: one restricting overdraft fees and the other prohibiting NSF fees on certain declined transactions. The proposals are among the CFPB’s latest moves in furtherance of the Biden Administration’s “junk fees” agenda. In this episode, which repurposes a recent webinar, we discuss the key provisions of each proposal and entities covered, the CFPB’s justification for each proposal, the legal authority relied on by the CFPB for each proposal, business practices impacted by the proposals, and potential legal challenges. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, moderates the discussion, joined by John Culhane, a Partner in the Group, and Kristen Larson, Of Counsel in the Group.

Our special guest is Malini Mithal, Associate Director of the FTC’s Division of Financial Practices. In this episode, which repurposes a recent webinar, we review highlights of FTC regulatory and enforcement activity in 2023 directed at protecting consumers and small businesses and discuss what to expect from the FTC in 2024 and beyond. After reviewing the FTC’s authority, we discuss important consent orders and enforcement litigation involving: alternate financing mechanisms such as cash advance apps and income share agreements; discriminatory financing and other practices, including the FTC’s use of unfairness; small business financing such as merchant cash advances; telemarketing practices; crypocurrency; and use of dark patterns. Throughout this discussion, Ms. Mithal offers compliance tips and takeaways from the consent orders and enforcement litigation. We also look at the FTC’s final CARS rule, proposed junk fees rule, and artificial intelligence-related initiatives. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, leads the discussion, joined by John Culhane, a partner in the Group.

Our special guest is Jeff Sovern, Professor at the University of Maryland Francis King Carey School of Law. In March 2022, the CFPB announced that it had revised its exam manual to instruct its examiners to apply the “unfairness” standard under the Consumer Financial Protection Act to conduct considered to be discriminatory, whether or not it is covered by federal laws that expressly prohibit discrimination. The changes were subsequently vacated by a federal district court in a lawsuit brought by several trade groups challenging the changes and the Fifth Circuit has stayed the CFPB’s appeal from that decision pending the U.S. Supreme Court’s decision in CFSA v. CFPB. In this episode, we first review the background of the exam manual changes, the industry response, and the district court’s decision. We then take a close look at the key arguments both in support of and against upholding the decision. We conclude with a discussion of the use of disparate impact in applying the unfairness standard to discriminatory conduct and the appropriateness of the CFPB’s use of changes to its exam manual to announce its new interpretation of the standard. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, leads the discussion, joined by Richard Andreano, a Partner in the Group and Practice Leader of the firm’s Mortgage Banking Group.

New Federal Communications Commission TCPA rules will mean big changes for businesses, particularly comparison shopping websites, lead generators, and other companies that regularly contact consumers via phone or text message. This episode repurposes a recent webinar. After reviewing TCPA consent requirements for calls and texts and exceptions, we look at the impact of the U.S. Supreme Court’s 2021 Facebook decision on TCPA compliance. We then look at post-Facebook TCPA litigation, post-Facebook state law litigation involving unwanted calls and texts, and recent state legislative developments. We follow with a discussion of the FCC’s new TCPA rules addressing (1) how consumers may revoke consent to receive calls or texts and the obligations of callers and texters to honor revocation of consent requests, and (2) the application of TCPA consent requirements to lead generators. We conclude with a discussion of compliance and litigation considerations arising from the new TCPA rules. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, moderates the discussion, joined by Michael Guerrero, Daniel McKenna, Jenny Perkins, and Joel Tasca, Partners in the Group.