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MoFo Reenforcement

The Enforcement Blog

ACH Debit Transactions – Whose Agent Are You?

Posted in CFPB, Enforcement Actions, UDAAP

Tucked away in a seeming innocuous paragraph in a complaint, the CFPB has asserted an extraordinary and potentially far-reaching expansion of its authority.

On June 6, 2016, the CFPB filed an action in a U.S. district court asserting that Intercept Corporation (Intercept) (and each of its owners) engaged in unfair acts and practices in violation of the CFPA. Intercept initiates ACH transactions to consumer accounts on behalf of its merchant-customers. In doing so, Intercept acts as an agent of the merchant-customer, but not as an agent to the consumer whose account is being debited. Nevertheless, the CFPB complaint states that Intercept is a “covered person” under the CFPA because it provides “payments or other financial data processing products or services to consumers[.]” The complaint also states that Intercept processes transactions resulting in the transfer of funds, via the ACH system, from the deposit accounts of consumers to pay for loans and other transactions.

This is not the first complaint/enforcement order in which the CFPB has asserted that a payment processor has engaged in an unfair or deceptive practice, but this is the first action in which the CFPB has asserted that a payment processor is subject to the CFPB’s authority under this novel reading of the definition of a “covered person” under the CFPA.

Read our client alert.

CFPB Publishes Spring 2016 Regulatory Agenda

Posted in CFPB, Regulatory Developments

On June 9, 2016, the CFPB released its semi-annual regulatory agenda for Spring 2016. The agenda identifies the CFPB’s priorities through April 2017. While it does not include any major surprises, the agenda does revise the projected timeline for several highly anticipated rulemaking activities.

Read our client alert.

EVENT: Setting the New Benchmark: EU Regulation on Financial Benchmarks

Posted in Events

Wednesday, June 15, 2016
12:00 p.m. – 1:00 p.m. EDT

The new EU Regulation on indices used as benchmarks in financial instruments and contracts is expected to enter into force very shortly and to apply from early 2018. It will introduce a new regulatory regime for firms that administer, contribute to or use financial benchmarks in the EU. It will also impact non-EU benchmarks which are used in the EU. The definition of “financial benchmark” is very wide and will include some customized proprietary indices.

This teleconference will look at the relevant provisions of the regulation and consider its practical implications for benchmark administrators, users and contributors.


Continuing Education Credits:
Credit is pending for New York and California.

For more information:
Trevor Starer
(212) 336-4310

The CFPB’s Payday Lending Rulemaking is Here With Sweeping Implications for the Short-Term Credit Industry

Posted in CFPB, Payday Lending, Regulatory Developments, UDAAP

On June 2, 2016, the CFPB released its long-anticipated Notice of Proposed Rulemaking (“Proposed Rule”) on short-term lending. Although the rulemaking has been characterized as the “payday loan rule,” it is sweeping in terms of the products covered and the limitations it would impose on the short-term consumer lending industry generally. The Proposed Rule is the first federal rulemaking focusing specifically on the short-term lending industry — an industry that traditionally has been governed by state law. Announcing the Proposed Rule primarily pursuant to Title X, Section 1031, of the Consumer Protection Act of 2010 (“Act”), the CFPB cited its authority to “identify and prevent unfair, deceptive, or abusive acts or practices in the consumer financial markets” (“UDAAP”). This is significant, as it marks the first time the CFPB has used its UDAAP authority for rulemaking purposes.

Read our client alert.

#ThrowbackThursday: FTC Rescinds FCRA Commentary in Handoff to CFPB

Posted in CFPB

In July, 2011, Morrison & Foerster published the client alert “FTC Rescinds FCRA Commentary in Handoff to CFPB.”


Earlier this week, the FTC withdrew its Statements of General Policy or Interpretations under the FCRA, which includes the FTC’s Commentary on the Fair Credit Reporting Act (“Commentary”). See 16 C.F.R. pt. 600. In addition, the FTC released a staff report—“Forty Years of Experience with the Fair Credit Reporting Act”—providing background on the FTC’s role in connection with the FCRA, as well as compiling and updating the FTC’s interpretations from the Commentary. The FTC withdrew its Commentary and issued its staff report one day before the “Designated Transfer Date,” the appointed day on which the CFPA became effective, and authority to enforce and administer the various consumer credit protection laws, including the FCRA, transferred to the new CFPB.

Click here to read the full alert.

FTC Releases New Guidance on FCRA Compliance for Employment Background Screening Companies

Posted in Regulatory Developments

The FTC has released new guidance aimed at helping companies that conduct background screenings for employment purposes to determine whether they are “consumer reporting agencies” within the meaning of the federal FCRA. Pointing to the broad statutory definition of “consumer reports,” the guidance helpfully notes that many companies that provide information about people to employers for use in hiring and other employment decisions are, in fact, consumer reporting agencies covered by FCRA.

The guidance provides a concise summary of FCRA’s key requirements for consumer reporting agencies, including:

  • Establishing and following reasonable procedures to assure the accuracy of the information provided in the consumer report;
  • Obtaining certifications from clients establishing that (1) they will only use consumer reports for employment purposes, (2) they have complied with FCRA’s requirements, including by giving notice to and obtaining authorizations from the applicants and employees who are subjects of the consumer reports, and (3) they will use the information in consumer reports in accordance with equal opportunity laws;
  • Providing clients with information about FCRA’s requirements, including two standard form notices prepared by the Consumer Financial Protection Bureau addressed to users of consumer reports and consumers who are the subjects of consumer reports; and
  • Upholding the rights of individual consumers under FCRA, such as the rights to access their files and dispute the accuracy of information held about them.

A copy of the guidance may be found here.

CFPB Poised to Expand Regulation to Small Business Lending: Expect the Unexpected

Posted in CFPB, Fair Lending, Regulatory Developments

Recent initiatives by the CFPB to dramatically expand its regulation of small business lending present a confluence of concerns to industry participants. These initiatives include the CFPB’s extension of fair lending rules to types of credit not ordinarily considered to be subject to the agency’s jurisdiction. The CFPB’s focus on business lending likely will have a particular impact on non-bank lenders making loans to small businesses, a product line that today is increasingly being served by FinTech and other online marketplace lenders. For example, recent articles in the trade press have covered issues arising out of the intersection of FinTech and fair lending.

Read our client alert.

Comment Clock on Proposed Arbitration Rule Is Ticking

Posted in Arbitration, CFPB

The CFPB’s proposed rule on arbitration agreements in consumer financial product and services contracts was published in the Federal Register today.  That means the 90-day comment period has started to run. Interested entities will have until August 22, 2016 to submit comments to the CFPB. For more information about the proposed rule, see our client alert.