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MoFo Reenforcement

The Enforcement Blog

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.

#ThrowbackThursday: Summary of Final CARD Act Clarifications

Posted in Credit Cards, Regulatory Developments

In April 2011, Morrison & Foerster published the client alert “Summary of Final CARD Act Clarifications.”

Summary:

On March 18, 2011, the Federal Reserve Board (“FRB”) issued a final rule to clarify certain recent amendments to Regulation Z, particularly those implementing the Credit Card Accountability Responsibility and Disclosure Act of 2009 (“CARD Act”). While the FRB indicated that the rule was intended to enhance consumer protection and to facilitate compliance by resolving areas of uncertainty, the final rule will significantly impact current industry practices and, in some instances, will require issuers to again revise compliance policies and procedures, application and account-opening disclosures, and change in terms notices and other consumer communications.

The effective date, as well as the mandatory compliance date, of the final rule is October 1, 2011. Issuers may, however, comply with the rule prior to the mandatory compliance date.

Click here to read the full alert.

EVENT: Shining a Light on the SFT Regulation and an Update on Shadow Banking Reform

Posted in Events

Tuesday, May 24, 2016
12:00 p.m. – 1:00 p.m. EDT

The Financial Stability Board has been spearheading a review of “shadow banking” entities and activities since the onset of the financial crisis. A key element of its work has been assessing the financial stability risks and strengthening regulation of securities lending and repo transactions. In the EU this work has resulted in the Regulation on Transparency of Securities Financing Transactions (the “SFT Regulation”) which came into force in January 2016.

This presentation will give an overview of the provisions of the SFT Regulation and the effect it is having on financial markets. An overview on the current status of other aspects of global shadow banking reform will also be provided.

Speakers:

Continuing Education Credits: CLE credit is pending.

Click here to register.

The Supreme Court’s Spokeo Decision: Concrete Shoes For Consumer Class Actions?

Posted in Credit Reports

Today the Supreme Court issued its highly anticipated decision in Spokeo, Inc. v. Robins. The decision takes on a hot topic in consumer class action law today—what must a plaintiff plead and prove to have standing to sue for a violation of a federal statute? The Court held that an allegation of a statutory violation, without some showing of concrete harm, is not enough. Instead, in this Fair Credit Reporting Act case, the issue is “[w]hether the particular procedural violations alleged . . . entail a degree of risk [of harm] sufficient to meet the concreteness requirement.” In its focused 11-page opinion, the Court declined to decide to evaluate that risk on the record before it and, instead, remanded the case to the Ninth Circuit for further proceedings. However, the Court did provide several guideposts for how the Ninth Circuit, and courts around the country evaluating standing questions, may consider plaintiffs’ claimed injuries.

Read our client alert.

FinCEN Finalizes Customer Due Diligence Rule for Legal Entity Customers

Posted in Regulatory Developments

On May 11th, 2016, the Financial Crimes Enforcement Network (“FinCEN”), a bureau of the Department of the Treasury, published a Final Rule (the “Rule”) on customer due diligence after a four-year rulemaking process. The Rule requires covered financial institutions, including banks, money services businesses, broker-dealers, mutual funds, and commodities brokers, to enhance their customer due diligence procedures by collecting and verifying information about the individuals who own or control the legal entity customers of the financial institution.

Read our client alert.

EVENT: Financial Regulatory Briefing

Posted in Events

Thursday, June 2, 2016
Registration/Breakfast: 8:00 a.m. EDT

Morrison & Foerster LLP
250 West 55th Street
New York, NY 10019

Please join Morrison & Foerster attorneys at our Financial Regulatory Briefing in New York City.

Agenda:

  • The SEC’s Focus on the Use of Derivatives by Funds
    8:30 a.m. to 9:30 a.m.
  • Asset Management and Financial Stability
    9:30 a.m. to 10:00 a.m.
  • Fed’s Long Term Debt, TLAC and Clean Holding Company Requirement and its Effects on Financial Institutions Issuers and the Debt Capital Markets
    10:00 a.m. to 11:00 a.m.
  • The Single Counterparty Exposure Reproposal, the Net Stable Funding Rule Proposal, and Incentive Compensation at Covered Financial Institutions
    11:00 a.m. to 12:00 p.m.
  • Lunch
    12:00 p.m. to 12:15 p.m.
  • A FinTech Discussion:  An Overview of Legal and Regulatory Issues That Arise when Banks Work with FinTech Companies
    12:15 p.m. to 1:15 p.m.

We encourage you to share this invitation with friends and colleagues who may have an interest in attending.

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

Click here to register.

Treasury Issues White Paper on Online Marketplace Lending

Posted in CFPB, Fair Lending

On May 10, 2016, the U.S. Department of the Treasury (“Treasury”) issued a white paper, entitled “Opportunities and Challenges in Online Marketplace Lending” (“White Paper”). The White Paper describes Treasury’s review of online marketplace lending and provides Treasury’s recommendations to the private sector and the federal government on how to encourage “safe growth” in the industry. The White Paper also summarizes the approximately 100 responses to Treasury’s July 20, 2015 request for information on the marketplace lending industry.

Read our client alert.