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CFPB issues advisory opinion on medical debt collection practices
On October 1, the CFPB issued an advisory opinion regarding medical debt collection practices and debt collectors’ obligations under the FDCPA and Regulation F. The advisory opinion identified practices for which debt collectors will be considered strictly liable for, such as (i) collecting amounts not owed because they were already paid, either fully or partially, including when paid by insurance or a government payor; (ii) collecting amounts not owed due to federal or state law, such as where employers or insurers are liable for the debt under state workers’ compensation programs; and (iii) collecting amounts above what can be charged under federal or state law, including limits set by the No Surprises Act or state common law remedies if there is not an express contract.
The CFPB also noted specifically that debt collectors will be liable for attempting to collect amounts for services not received, such as where a medical provider uses a code that entitles the provider to greater compensation than the level of care than what was provided, known as “upcoding.” The advisory opinion also stated that debt collectors must have a “reasonable basis” for asserting the validity and correctness of the debts they collect, which may require obtaining underlying patient agreements, billing history or other contracts.
The advisory opinion provided guidance on how the CFPB interprets “default” under the FDCPA for medical debt, stating that whether a debt will be considered “in default” will be determined by the terms of the agreement between the consumer and the medical provider under applicable law governing the agreement.
CFPB receives first application for open banking standard setter recognition
On September 24, the CFPB received its first application for open banking standard setter recognition under Section 1033 of the Dodd-Frank Act. As previously covered by InfoBytes, the CFPB initiated its public comment period in June for a final rule outlining the qualifications to become a recognized industry standard-setting body to comply with the CFPB’s upcoming Personal Financial Data Rights Rule. A data exchange group for financial data became the first company to submit an application, aiming to ensure fair, open and inclusive financial technical standards.
The company claimed its practices aligned with the CFPB’s requisite attributes. Its program interface specifications are freely available to any individual or organization that passes a know-your-client check, ensuring openness. The data exchange group stated its decision-making power was distributed across diverse groups, including data providers, third parties, and non-commercial entities. The data exchange group’s board had equal representation from data providers and third parties. The data exchange group maintained publicly available policies, provided adequate notice of meetings, and allowed sufficient time for review and comments to practice due process and appeals. The data exchange group followed a structured Request for Comment (RFC) process, where any member can submit an RFC, and all comments are addressed before final approval. The consensus attribute was upheld through a two-thirds majority vote requirement for all significant decisions, ensuring broad support while allowing for diverse opinions. Finally, the company’s transparency practices include publicly available policies and dedicated councils for smaller organizations, ensuring all members can participate actively and have visibility into decision-making processes.
Comments on the company’s application can be found here.
CFPB launches public comment process for open banking standard setter recognition
On September 24, the CFPB initiated a public comment process for recognizing organizations as open banking standard setters. The first application open for public comment was from a financial data exchange company. The CFPB outlined five qualifications for organizations seeking recognition as standard-setting bodies: (i) openness; (ii) transparency; (iii) balanced decision-making; (iv) consensus; and (v) due process and appeals. The CFPB invites public comments on the merits of applications under these criteria. To review the company's application and submit comments, the public can visit the CFPB’s Applications for Open Banking Standard Setter Recognition webpage.
Fed issues RFI to assess discount window operations and access to intraday credit
Recently, the Fed issued an RFI and comment period on the operational aspects of the discount window and the provision of intraday credit to banks and credit unions. The discount window allows depository institutions to borrow from Federal Reserve Banks by pledging collateral, helping institutions manage liquidity risks and maintain “the smooth flow of credit to households and businesses.” The Fed introduced tools like the Discount Window Direct online portal to streamline discount window processes and stated that this request for information is part of the Fed’s efforts to remain “effective and efficient as the banking system continues to evolve.”
The RFI seeks public input on specific operational processes related to the discount window and intraday credit, such as submitting legal documents, pledging or withdrawing securities and loans as collateral, and using the Discount Window Direct portal. The Fed also seeks feedback regarding operational frictions or inefficiencies that FHLBank members, smaller depository institutions, and correspondents may be experiencing when interacting with the Fed. Additionally, the Fed requests information regarding frictions involved in accessing intraday credit, such as the timing of credits and debits, processes for establishing credit limits, and reporting of intraday credit usage. Comments must be received within 90 days following its publication in the Federal Register.
CFPB amends Regulation E to update remittance transfer rule requirements
On September 20, the CFPB released its proposed rule to amend the remittance transfer disclosure requirements under the EFTA. The proposed amendments will adjust certain disclosures to clarify that consumers sending remittance transfers should contact the remittance provider regarding issues specific to their money transfer. The CFPB seeks public comments on this proposal and must be received by November 4.
The proposed amendments will include changes to certain model forms to update the disclosure language to direct consumers to contact the state licensing agency and the CFPB for unresolved problems or complaints only, rather than for general inquiries, and to make the remittance transfer provider’s contact information more prominent on the form. The proposal will include adding the provider’s phone number and website to the header and footer of the forms to prevent confusion between the provider’s contact information and that of the state agency or the CFPB. In its release, the CFPB stated the changes “can potentially save consumers time by resolving their inquiries more quickly.”
The proposal will include a solicitation for comments on whether additional time would be needed for remittance transfer providers to implement the required changes. If adopted, the rule would take effect 60 days after publication in the Federal Register. Finally, remittance transfer providers would not need to update disclosures made before the effective date.
Banking regulators extend comment period on bank-fintech relationships
On September 13, the Fed, OCC and the FDIC (the agencies) released a notice extending the comment period of their request for information regarding bank-fintech arrangements by one month. The notice extends the original deadline to October 30. As previously covered by InfoBytes, the agencies sought feedback on bank-fintech arrangements, effective risk management practices for these arrangements, and whether enhancements to existing supervision are needed.
OCC releases final rule on the Bank Merger Act
On September 17, the OCC approved a final rule amending its procedures for reviewing applications under the Bank Merger Act. The rule will aim to provide clearer guidelines for institutions regarding the OCC’s review process for bank mergers and ensure institutions remain relevant in the current financial landscape. Some commenters argued this change could increase the cost of applications — particularly for smaller banks. However, the OCC believes these changes will align the regulatory framework with current practices and promote transparency.
The final rule will also introduce a policy statement, included as Appendix A to 12 CFR Part 5, which will delineate the principles and statutory factors the OCC would consider when reviewing bank merger applications. The OCC will evaluate factors such as financial stability, financial and managerial resources, and the convenience and needs of a community. Applications with positive indicators, such as well-capitalized acquirers and no significant adverse effects on competition, will increase the likelihood of expeditious approval. Conversely, applications with indicators of supervisory or regulatory concerns, such as poor CRA ratings or ongoing enforcement actions, may be less likely to be approved unless these issues are adequately addressed.
In its consideration of financial stability, the OCC will assess factors such as the size of the combined institutions, the availability of substitute providers, and the complexity of the financial system. The OCC will apply a balancing test to weigh the financial stability risks posed by the pending transaction against the risk posed by denying it. The OCC may impose conditions on approval to address financial stability concerns, such as requiring asset divestitures or higher capital requirements. The policy statement will also outline the OCC’s approach to evaluating financial and managerial resources, such as considering the institutions’ capital levels, risk profiles, and managerial capabilities. The OCC plans to assess the needs of the community, considering factors such as branch closures, job losses and community investment initiatives. The final rule will go into effect on January 1, 2025.
CFPB publishes BNPL FAQs
On September 18, the CFPB issued Frequently Asked Questions (FAQ) guidance on Buy Now, Pay Later (BNPL) products. The FAQs are organized into three sections: (i) a general description of BNPL products and “Pay-in-Four” BNPL loans; (ii) scope and coverage of Pay-in-Four BNPL loans; and (iii) requirements for periodic statements for Pay-in-Four BNPL loans. In particular, the FAQs offer direction on how to apply Regulation Z to BNPL products, including the application of credit card periodic statement requirements to Pay-in-Four BNPL products accessed through digital user accounts. As previously covered by InfoBytes, the CFPB issued an interpretive rule in May, stating its position that certain consumer protection provisions of Regulation Z applied to BNPL accounts.
Veterans Affairs releases circular on new electronic system for lenders
On September 9, the U.S. Department of Veterans Affairs (VA) released Circular 26-24-18 announcing the launch of the new Program Participant Management (PPM) system for lenders beginning October 7. The PPM system will replace the current mail-based process and allow lenders to submit and track applications electronically. It will also manage payment accounts for lender maintenance fees and update employment information for underwriters and staff appraisal reviewers. The new system aims to centralize and simplify lender interactions with the VA and improve efficiency for lenders working with the loan guaranty program. Lenders must register for the new system and designate at least one VA relationship manager to manage their information within the system.
The VA plans to release training videos and user guides to help lenders transition to the new system. These materials will be available on the VA’s training website, and lenders are encouraged to enroll in the GovDelivery notifications for updates.
FHFA releases NPRM on housing goals for 2025-2027
On August 22, FHFA released a proposed rule on its housing goals for Fannie Mae and Freddie Mac (the GSEs) for 2025-2027 as required by the Federal Housing Enterprises Financial Safety and Soundness Act of 1992. FHFA is requesting comments on all aspects of the proposed rule. The rule included goals and subgoals for single-family and multifamily mortgages for low-income and very low-income families, set requirements for housing plans, and made technical changes to 12 C.F.R. § 1282. FHFA also proposed new criteria that would assess if a housing plan would be required for certain single-family housing goals during the 2025-2027 housing goals period. FHFA stated that it proposed these changes “to encourage the [GSEs] to focus on meeting the market levels rather than focusing exclusively on the housing goals benchmark levels in the event of unexpected disruptions to the market[.]”
The proposed rule would amend the housing goals to update the benchmark levels for the total number of purchase money mortgages for low-income families to 25 percent, down from 28 percent; and for very low-income families from 7 percent to 6 percent. Revised subgoals include low-income census tract housing remaining at 4 percent, but the minority census tracts housing subgoal increased from 10 percent to 12 percent. The refinancing housing goal remains at 26 percent. The previous goals were for 2022-2024.
The NPRM also included a new section (Section 1282.21) to codify rules on compliance with housing goals and notice of final determination. The new enforcement factors for 2025-2027 were listed under Section 1282.22. The NPRM included multiple tables outlining FHFA’s housing goals. FHFA will accept written comments on the proposed rule on or before 60 days after publication in the Federal Register.