Consumer Finance Monitor

Our special guest is Andrea Boyack, Professor, University of Missouri School of Law. We first discuss the principles that underlie our current system of consumer contracts and the system’s role in promoting transactional efficiency and other objectives. Prof. Boyack then provides her views on why the application of traditional contract law to the modern consumer contract context is not in the best interests of consumers and offers a different approach to consumer contracts in which a consumers can shape the terms of their contracts. In particular, she explains how this approach would treat a consumer’s choice to do business with a company as legally distinct from assent to particular terms in the company’s contracts.  Prof. Boyack also shares her views on the recent Restatement of the Law of Consumer Contracts. We conclude with a discussion of the controversy that surrounds arbitration provisions, how Prof. Boyack’s new approach to consumer contracts would impact the use of such provisions, and what legal changes would be necessary to implement her approach. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, hosts the conversation.

On October 24, 2023, the OCC, FDIC and Board of Governors of the Federal Reserve System jointly adopted final amendments to their regulations implementing the Community Reinvestment Act of 1977 (CRA). In this episode, which repurposes a webinar, we are joined by guest speaker Kenneth H. Thomas, Ph.D., Founder/CEO of Community Development Fund Advisors. After reviewing the background of the adoption of the CRA and implementing rules by the banking agencies, we discuss the key elements of the final rule. We look at the requirement for banks to delineate assessment areas in which their CRA performance will be evaluated, the tests under which banks’ CRA performance will be evaluated, the strategic plan option, and data collection and reporting requirements. In discussing the final rule’s requirements, we also consider how they apply to banks of different sizes. Throughout our discussion, Dr. Thomas provides his commentary on the final rule’s impact on the goals of CRA and CRA evaluations. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, leads the discussion, joined by Scott Coleman, a partner in the Group, and Sarah Dannecker, an associate in the Group.

Providers of consumer financial services that rely on federal preemption to charge customers uniform interest rates and fees on a nationwide basis are currently facing a series of legislative and litigation challenges. In this episode, which repurposes a recent webinar, we first discuss the U.S. Supreme Court’s grant of certiorari in Cantero v. Bank of America on the question whether the National Bank Act preempts state laws requiring the payment of interest on mortgage escrow accounts and look at the competing arguments and preemption standards under consideration. We then look at the Dodd-Frank Act’s provisions on federal preemption for national banks and federal savings associations, OCC regulations addressing the scope of federal preemption, and federal statutes providing interest rate exportation authority for national and state-chartered banks and other institutions. We then turn to current legal challenges to rate exportation authority, focusing on state laws opting out of federal law allowing interest rate exportation by state banks, state laws defining “true lender” to target nonbank/bank partnerships seeking to take advantage of federal interest rate exportation authority, and the California trial court’s recent ruling in a very important “true lender” lawsuit. We conclude with a discussion of the potential implications of a U.S. Supreme Court override of the Chevron deference framework for OCC and FDIC regulations interpreting federal statutes on interest rate authority of national and state banks. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, leads the discussion, joined by John Culhane, Reid Herlihy, and Ronald Vaske, partners in the Group, and Mindy Harris, Of Counsel in the Group.

This two-part podcast repurposes our most recent webinar on the latest salvo of actions in the Biden Administration’s initiative directed at combatting so-called “junk fees.” Launched in January 2022, the initiative shows no signs of abating. In Part II, we first look at the Consumer Financial Protection Bureau’s advisory opinion on fees charged by large banks and credit unions to respond to information requests, including the Bureau’s discussion of non-fee obstacles such as chatbots that could unlawfully impede consumers’ ability to make an information request. We then discuss the CFPB’s second edition of Supervisory Highlights focused on “junk fees,” taking a close look at the CFPB’s findings regarding deposit account fees, auto servicing fees, and remittance transfer fees and its discussion of the CFPB’s circular on reopening closed deposit accounts, a remedial action against an auto servicer, and risks in connection with payment processing platforms for student meal accounts. We also discuss CFPB “junk fees” enforcement actions involving NSF fees, fees for add-on products charged by an installment loan lender, and refinancing costs imposed by a high-cost installment lender, as well as state law activity in California and elsewhere related to “junk fees.” We conclude with a discussion of potential future CFPB rulemaking and other actions involving “junk fees,” steps providers should consider to reduce “junk fees” compliance risk, and the preemptive effect on state law of an FTC “junk fees” rule. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, moderates the discussion, joined by John Culhane and Reid Herlihy, Partners in the Group, Michael Gordon and Kristen Larson, Of Counsel in the Group, and Roger Winston, a Partner in the firm and Leader of its Mixed-Use, Condominium, and Multifamily Development Team.

This two-part podcast repurposes our most recent webinar on the latest salvo of actions in the Biden Administration’s initiative directed at combatting so-called “junk fees.” Launched in January 2022, the initiative shows no signs of abating. In Part I, we first review the background of the initiative, the range of fees the Administration has labeled “junk fees,” and discuss the Administration’s focus on competition and its related guidance and directives to federal agencies. We then take a close look at the Federal Trade Commission’s proposed rule to regulate “junk fees,” including the rationale for the FTC’s decision to engage in rulemaking, the price and fee disclosures that would be required by the proposal, and how an FTC “junk fees” rule could be used in support of Consumer Financial Protection Bureau actions targeting “junk fees.” We conclude with a discussion of the impact of the Administration’s initiative and FTC proposal on “junk fees” related to rental housing. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, moderates the discussion, joined by John Culhane and Reid Herlihy, Partners in the Group, Michael Gordon and Kristen Larson, Of Counsel in the Group, and Roger Winston, a Partner in the firm and Leader of its Mixed-Use, Condominium, and Multifamily Development Team.

In October 2023, the FTC issued a proposed “Rule on Unfair or Deceptive Fees” targeting so-called “junk fees.” Our special guest is Stacy Cammarano, Staff Attorney in the FTC’s Bureau of Consumer Protection, Division of Advertising Practices, and a lead attorney on the proposal. After reviewing how the FTC has previously used its enforcement authority to address “junk fees,” we discuss some of the key issues identified in comments received by the FTC on its October 2022 Advance Notice of Proposed Rulemaking on “junk fees.” We then look at the price and fee disclosures that would be required by the proposal, the businesses that would be covered, and examples of charges for mandatory ancillary goods or services by various industries that would have to be included in disclosed pricing. We also look at the relationship of the FTC’s proposal to “junk fees” initiatives of other federal agencies, such as the CFPB, and to state initiatives, and consider the impact of the U.S. Supreme Court’s AMG decision on the FTC’s use of rulemaking. We conclude with a discussion of likely next steps in the rulemaking process and what businesses can be doing now to reduce compliance risk. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, leads the discussion.

Switching from his usual role as frequent host of the Consumer Finance Monitor Podcast, Alan Kaplinsky, Senior Counsel in and former Practice Group Leader of Ballard Spahr’s Consumer Financial Services Group, was recently the special guest of Bloomberg Intelligence analysts Elliott Stein and Nathan Dean on their podcast, Votes and Verdicts. The episode begins with a discussion of (1) the CFPB’s impact on consumer financial services providers, (2) how, since the CFPB’s creation in 2010, its three Directors have used the CFPB’s supervisory, enforcement, and regulatory authorities, and (3) the differences in the three Directors’ approaches. This is followed by a discussion of the case pending before the U.S. Supreme Court involving a challenge to the constitutionality of the CFPB’s funding mechanism in which Alan shares his reactions to the oral argument in the Supreme Court and discusses potential remedies if the Court rules that the CFPB’s funding is unconstitutional. The episode concludes with a discussion of how the case has impacted ongoing CFPB activity, the potential impact of a Supreme Court ruling in favor of the CFPB on future CFPB activity, and potential future challenges the CFPB may face from industry.

Our special guest is David Sherwyn, Professor of Law at Cornell University's School of Hotel Administration. In Sept. 2023, a group of consumer advocate organizations filed a Petition for Rulemaking with the CFPB that would prohibit the use of pre-dispute arbitration clauses in consumer contracts in favor of arbitration clauses that would permit consumers to choose between arbitration and litigation only after a dispute has arisen. In response, the CFPB indicated it is carefully considering the petition, and will be opening a public docket and taking comment from the public on the petition. We first discuss the results of Prof. Sherwyn’s study which concluded, in the context of employment disputes, that while superficially appealing, post-dispute arbitration fails in reality and hurts both businesses and individuals, and explain why these study results are applicable in the context of consumer finance. We then offer compelling reasons why the CFPB should not engage in such a rulemaking, including why the petition is a clear attempt to make an end-run around the CFPB’s prior arbitration rulemaking that would have prohibited class action waivers in consumer arbitration agreements and was overridden by Congress and why the petition is premature. We conclude by responding to arguments made by opponents of pre-dispute arbitration agreements that consumers are uninformed about arbitration and are “forced” to enter into such agreements. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, leads the discussion, joined by Mark Levin, Senior Counsel in the Group.

The CFPB recently issued a policy statement in which it provided a framework for determining what constitutes abusive conduct under the CFPA. After reviewing the definition of abusive in the CFPA and the historical background of the adoption of an abusive standard in the CFPA, we examine how the policy statement addresses each element of the abusive standard and share our observations as to the policy statement’s implications. We then look at past CFPB enforcement actions and supervisory findings in which conduct was alleged to be abusive. We also look at the overlap between abusive conduct and unfair or deceptive conduct and the relationship between “dark patterns” and abusive conduct and identify conduct that the CFPB might consider to be abusive. We conclude with a discussion of best practices for companies to consider to avoid engaging in conduct that the CFPB might find to be abusive. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, hosts the discussion joined by Michael Guerrero, a partner in the Group, Michael Gordon, Of Counsel in the Group, and Brian Turetsky, Of Counsel in the Group.

On October 3, 2023, the U.S. Supreme Court held oral argument in CFSA v. CFPB, a case with profound potential implications for the future of the CFPB. The Court will rule on whether the CFPB’s funding mechanism violates the U.S. Constitution’s Appropriations Clause and, if so, what the appropriate remedy should be.  Our special guests are six renowned attorneys who filed amicus briefs in the case: Michael Williams, Principal Deputy Solicitor General, Office of the West Virginia Attorney General; Adam Levitin, Professor, Georgetown University of Law Center; Scott Nelson, Public Citizen Litigation Group; Jeffrey Naimon, Orrick, Herrington & Sutcliffe LLP; Joshua Katz, Research Fellow, Cato Institute; and John Masslon, Counsel, Washington Legal Foundation. This two-part episode repurposes our widely-attended and highly interactive webinar held on October 17. In Part II, each of our guests offers his predictions for how the Court is likely to rule in CFSA v. CFPB. We then discuss each party’s position regarding what remedy the Court should impose if it rules that that the CFPB’s funding mechanism  is unconstitutional, including whether the relevant provisions of the Dodd-Frank Act are severable and how a ruling against the CFPB should impact existing CFPB regulations. We conclude with a discussion of the kinds of non-constitutional legal challenges the CFPB is currently facing or is likely to face in the future, including the potential impact of a Supreme Court decision overruling its 1984 Chevron decision dealing with judicial deference to federal agency rules. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, moderates the discussion.