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  • Washington State Attorney General wins two suits under medical billing practices

    State Issues

    On February 1, the Attorney General from Washington State successfully sued a large healthcare group to pay over $158 million for settlement of funds under the state’s Consumer Protection Act (CPA). The Washington AG stated that the healthcare group violated state law which requires hospital management to notify patients about financial assistance and to screen them for eligibility before trying to collect payment. The healthcare group has been ordered to pay $20.6 million in patient refunds and will forgive $137.2 million in medical debts; it will also pay $4.5 million to cover the attorney general’s costs. Among others, the consent decree includes several injunctions to be engaged in or refrained from for five years, including maintaining charity care policies, and not collecting payment for medical services unless presented with either of two stated stipulations. Lastly, the consent decree states that if the healthcare group violates a condition, it would have to pay up to $125,000 per violation. The defendants do not admit the allegations of the complaints filed in the first lawsuit from February 2022. 

    Similarly, on February 2 the Washington AG successfully entered into a motion for partial summary judgment against a medical debt collection agency working within the healthcare group for sending 82,729 debt collection notices under the Collection Agency Act (CAA). The court agreed with the AG’s finding that the agency’s debt collection notices failed to make the required disclosures under the CAA. Damages have not yet been awarded. 

    State Issues Medical Debt FDCPA Washington State Attorney General

  • Connecticut Attorney General reports on Connecticut Data Privacy Act

    State Issues

    On February 1, Connecticut’s Attorney General (AG) released a report on the Connecticut Data Privacy Act (CTDPA) including information on the law and how the state enforces it. Enacted in May 2022, the CTDPA is a comprehensive consumer data privacy law which took effect on July 1, 2023. The CTDPA gives consumers in Connecticut a set of rights regarding their personal information and privacy standards for businesses handling such data. Connecticut residents can: (i) see what data companies have on them; (ii) ask for corrections on inaccurate information; (iii) request the deletion of their data; and (iv) choose not to have their personal information used for selling products, targeted advertisements, or profiling. The report noted that within the first six months the CTDPA has been in effect, the AG issued dozens of violations towards a number of information requests. It added that companies generally responded positively to the notices and updated quickly their privacy policies and consumer rights mechanisms. According to the report, while some companies initially went below the CTDPA threshold, they made changes to meet it later while a few went beyond identified areas in the notices by strengthening their disclosures. 

    The report also mentioned that beginning on January 1, 2025, businesses are required to acknowledge universal opt-out signals, reflecting consumers’ choice to opt out of targeted advertising and the sale of personal data. This mandatory provision was emphasized during Connecticut's legislative process to alleviate the consumer burden, and it has been enacted into law. Finally, the report discusses possible expansions and clarifications to the CTDPA for the legislature to consider.  

    State Issues Connecticut State Attorney General Privacy, Cyber Risk & Data Security

  • Trade associations sue OCC, FDIC, and Federal Reserve on their Proposed Rules for the CRA

    Courts

    On February 5, a group of trade, banking, and business associations filed a class-action complaint for injunctive relief against the OCC, Federal Reserve, and FDIC (the Agencies) for their enforcement of the new rulemaking (the Rule) implementing the Community Reinvestment Act of 1977 (CRA). The plaintiffs argued that the Rule creates a “wholesale and unlawful change” to a successful fifty-year-old statute. After listing several problems, the plaintiffs requested the Court to “enjoin, hold unlawful, vacate, and set aside” the Rule; additionally, plaintiffs requested the Court declare that the Rule violates the CRA and the Administrative Procedures Act. 

    As previously covered by InfoBytes, the Rule was approved by the Agencies on October 24, 2023, published in the Federal Register on February 1, 2024, and would take effect on April 1, 2024. The plaintiffs state that the new regulatory rules are “extraordinarily and unnecessarily complex” since they require a “staggering” 649 pages. (An FDIC Vice Chairman was quoted as labeling the rules as “by far the longest rulemaking the FDIC has ever issued.”) In detail, the plaintiffs support their claims by pointing out the Rule creates different performance tests that differ “radically” from the previous regulatory framework, e.g., the Retail Lending Test is a two-part test, and that each of these tests includes “multiple sub-parts and sub-parts of sub-parts” that create complexity in the Rule. Banks will be given two years (until January 1, 2026) to comply with the Rule. Plaintiffs argue that banks must act immediately, citing the OCC’s own words that the estimated compliance costs are over $90 million during the first year. 

    The plaintiffs argue the Rule violates the APA by exceeding the Agencies’ statutory authority by “assessing banks on their responsiveness to credit needs outside of their geographic deposit-taking footprint” (Count I), and by issuing a rule that is arbitrary and capricious by failing to give reasonable notice of the areas and products that will be assessed and the market benchmarks against which performance will be evaluated; failing to conduct an adequate cost benefit analysis; and failing to consider the implications of the Rule (Count II). 

    Courts OCC FDIC Federal Reserve CRA Administrative Procedure Act

  • District Court grants defendant MSJ over cross-motions on a dispute on different debt owed amounts

    Courts

    On February 2, the U.S. District Court for the Western District of Pennsylvania held that a plaintiff had standing to bring two FDCPA claims, but remanded the plaintiff’s third claim for lack of standing. The Court also granted the defendant’s motion for summary judgement as part of a cross-motion. The plaintiff is an individual suing a debt collection company for allegedly attempting to collect a debt improperly and misrepresenting the amount the plaintiff owed under the FDCPA, 15 U.S.C. § 1692. The District Court was presented with cross-motions for summary judgment filed by both parties, and supplemental briefing on Article III standing. 

    The court first determined that the plaintiff, an individual, had Article III standing in two of three of her FDCPA claims, but that the defendant was entitled to summary judgment on those claims. The Court agreed the plaintiff had Article III standing for the 1692(e) claim that the defendant misrepresented the amount of debt owed when the defendant listed the debt of $22.95 but then attached account statements showing a balance of $271.34. However, the court found that the least sophisticated debtor would understand the collection letter to unambiguously represent that the total amount of debt owed is $22.95. The plaintiff also had standing for her informational injury claim that the defendant violated § 1692g by restarting its collection activity despite having failed to provide information that validated the debt owed of $22.95. However, the court found that the defendant sufficiently validated the debt despite attachments showing a larger balance because “it was not required to show detailed files of the debt, bills, or other evidence.”  Regarding the third claim, on that the defendant violated § 1692f when it sent the debt verification to an email the plaintiff owns (but claims is a secondary email), the Court found the plaintiff did not have standing since the plaintiff had not suffered concrete injury. 

    Courts Debt Collection FDCPA Standing

  • UK’s Prudential Regulation Authority imposes its second highest fine against a bank

    On January 30, UK’s Prudential Regulation Authority (PRA) fined a large bank £57,417,500, the second highest fine ever imposed by the PRA, for allegedly failing to properly implement Depositor Protection Rule requirements. The bank allegedly exhibited shortcomings in depositor protection like maintaining information integrity, which is relied upon by the Financial Services Compensation Scheme (FSCS) to make payments to depositors in the event of a firm failure. In addition, the PRA alleged that the bank did not identify eligible deposits for FSCS protection from 2015 to 2022. The bank also allegedly failed to notify the PRA of inaccuracies in its account of eligible FSCS-protected accounts in a timely manner or to appoint a senior manager responsible for ensuring compliance with Depositor Protection Rules. The bank agreed to settle this matter at an early stage of the PRA’s investigation.  

    Bank Regulatory Of Interest to Non-US Persons UK PRA Enforcement Deposits

  • OCC and FDIC announce their CRA evaluations

    On February 2, OCC and the FDIC released their Community Reinvestment Act (CRA) evaluations. The OCC disclosed a list of evaluations of national banks, federal savings associations, and insured federal branches of foreign banks that became public in January 2024. Out of the 18 evaluations, six were rated “outstanding,” nine were rated “satisfactory,” and three were rated as “needs to improve.” The evaluations can be accessed on the OCC’s website, including a searchable list of all public CRA evaluations. Simultaneously, the FDIC released its list of state nonmember banks that were evaluated for CRA compliance in November 2023. Out of 57 evaluations, 56 were rated as “satisfactory” and one bank was rated as “outstanding.”  

    Bank Regulatory CRA OCC FDIC Bank Supervision Federal Issues Compliance

  • Federal Reserve releases January SLOOS report on bank lending practices from Q4 2023

    On February 5, the Federal Reserve Board released the results from their January 2024 Senior Loan Officer Opinion Survey (SLOOS) on bank lending practices. The SLOOS addressed changes in standards, terms, and the demand over bank loans over the past three months (i.e., Q4 of 2023). The SLOOS’s topics included commercial and industrial lending, commercial and residential real estate lending, and consumer lending. The SLOOS included questions on banks’ expectations for changes in lending standards, borrower demand and asset quality over 2024. 

    The SLOOS provided specific findings for each of its topics. On loans to businesses, banks generally reported tighter standards and weaker demand for commercial and industrial loans, as well as all commercial real estate loan categories. Demand weakened for all residential real estate loans. On loans to households, banks generally reported tighter lending standards for residential real estate loans, but the standards were unchanged for government-sponsored enterprise-eligible residential mortgages. For home equity lines of credit, banks reported tighter standards and weaker demand; this falls in line with credit card, auto, and other consumer loans, generally. Last, on the banks’ 2024 expectations, they expect lending standards to remain unchanged for commercial and industrial loans, and residential real estate loans, but to tighten further for commercial real estate, credit card, and auto loans. Banks also reported that they expect demands for loans to strengthen, but loan quality to weaken, across all categories. The SLOOS includes 67 pages of data gleaned from its questions. 

    Bank Regulatory Federal Issues Loans Banking Agency Rule-Making & Guidance

  • Federal bank regulatory agencies seek comment on interagency effort to reduce regulatory burden

    Federal Issues

    On February 6, the FDIC, Fed, and OCC initiated a series of requests for public comment aimed at reducing regulatory burden on supervised institutions. This effort is mandated by the Economic Growth and Regulatory Paperwork Reduction Act of 1996, which required a review of regulations every 10 years. The agencies have divided regulations into 12 categories, with the first round focusing on three categories: Applications and Reporting, Powers and Activities, and International Operations. The public has 90 days to comment on the regulations in these categories. Over the next two years, the agencies will seek public feedback on more, remaining categories to identify regulations that are outdated, unnecessary, or unduly burdensome. Additionally, outreach meetings will be held to allow interested parties to provide direct input on regulatory requirements. Further details about these meetings will be shared as they are finalized. 

    Federal Issues FDIC OCC Federal Reserve

  • House Committee calls for new quantitative analysis from Basel III “Endgame” original proposal

    Federal Issues

    On January 31, the House Financial Services Committee issued a press release after holding its hearing on “Federal Banking Proposals Under the Biden Administration,” which invited two leaders from trade organizations, a lawyer, and a business school professor. The Committee’s main takeaway was that the Notice of Proposed Rulemaking from July 2023, as released by the OCC, Federal Reserve, and FDIC, provides “little quantitative analysis” of the potential economic impacts (covered by InfoBytes, here). This Notice initially opened the comment period for the Basel III “Endgame” meant to revise the capital requirements for large banking organizations.   

    The Committee took the position, through bipartisan agreement, that the Biden Administration “must withdraw” its Basel III “Endgame” implementing proposal and replace it with one that offers a sound and objective economic analysis that is not skewed by politics but supported by data. The Committee supports its position that the Notice provides a “paltry” economic and regulatory analysis by noting that it devotes only 17 out of 1087 pages to the analysis. The press release cited comments from various congressional members, some of whom raised concerns about the proposal’s potential impact on homebuyers and mortgage lending, and the proposal’s potential to disincentivize financing for renewable energy projects. Finally, the Committee linked several members’ comment letters over the past few months.  

    Federal Issues Basel FDIC OCC Federal Reserve Capital Requirements House Financial Services Committee

  • FTC bans student loan “scammers” from debt relief industry

    Federal Issues

    On February 6, the FTC announced two orders (here and here) that will ban a group of student loan debt relief “scammers” (defendants) from the debt relief industry. As previously covered by InfoBytes, defendants allegedly misled consumers by charging them for services that are free through the Department of Education, claiming consumers needed to pay fees or make payments to access federal student loan forgiveness. As a consequence, the FTC filed a temporary restraining order resulting in an asset freeze, among other things.  

    As a result of the FTC’s action, and subject to court approval, defendants are banned from operating in the debt relief industry, as well as prohibited from making false statements about financial products or services and from using deceptive tactics to gather consumers’ financial information. Moreover, the proposed orders include a monetary judgment of $7.4 million, with a significant portion suspended due to financial constraints. Defendants must surrender personal and business assets, and if any of them materially misrepresent their finances, the entire monetary judgment will become immediately payable.   

    Federal Issues FTC Enforcement Junk Fees Student Loans Consumer Protection FTC Act Department of Education

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