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NYDFS commits to mitigating virtual currency risks
On May 20, NYDFS Superintendent Adrienne A. Harris emphasized the role regulation plays in protecting consumers from cybercriminals in the virtual currency marketplace. According to Harris, NYDFS is committed to mitigating risks in this space by guarding against sanctions evasion and illicit activity and making sure corporate infrastructure and consumer data are well protected from bad actors. Harris stressed that NYDFS “will continue to improve upon [its] regulation and supervision; engage with key stakeholders on important trends and issues; collaborate with state, federal and international regulators; and strive to be a forward-looking, innovative regulator, including through [its] VOLT initiative,” which supports the department’s efforts to increase transparency and enhance supervision related to virtual currency.
NYDFS issues industry letter on reverse mortgage lending
On May 17, NYDFS announced an industry letter to establish its expectations for all institutions engaged in reverse mortgage lending in the State on cooperative apartment units (coop-reverse mortgages) once newly enacted Section 6-O*2 of the New York Banking Law takes effect May 30. The letter noted there is a comprehensive regulatory framework that addresses the marketing, origination, and servicing of reverse mortgages in New York and stated that most of the existing requirements apply equally to coop-reverse mortgages. This includes Title 3 of the New York Code of Rules and Regulations Part 79 (3 NYCRR 79), which establishes various requirements relating to the marketing, origination, servicing, and termination of reverse mortgage loans in New York, and Title 3 of the New York Code of Rules and Regulations Part 38 (3 NYCRR 38), which addresses issues involving, among other things, commitments and advertising for mortgage loans generally. Even so, the letter noted that NYDFS is considering amending its existing regulations to specifically address coop-reverse mortgages, or issuing a separate regulation governing this as a new product. Finally, the letter explained that “institutions that seek to originate, or service coop-reverse mortgages are directed to comply with the provisions of 3 NYCRR 79, and 3 NYCRR 38 in originating or servicing such mortgages” (subject to described clarifications, modifications, and exclusions). However, NYDFS stated that “in the event of any inconsistency between the provisions of Section 6-O*2 and provisions of either 3 NYCRR 79 or 3 NYCRR 38, the provisions of Section 6-O*2 will govern; and in the event of any inconsistency between the provisions of 3 NYCRR 79 and 3 NYCRR 38, provisions of 3 NYCRR 79 will govern.”
Oklahoma establishes telephone solicitation restrictions
On May 20, the Oklahoma governor signed HB 3168, which establishes the Telephone Solicitation Act of 2022. The bill, among other things, prohibits (i) certain sales calls without the prior express written consent of the called party; (ii) commercial telephone sellers or salespersons from using certain technology to conceal their true identity; and (iii) commercial telephone sellers or salespersons from using automated dialing or recorded messages to make certain commercial telephone solicitation phone calls. The bill also establishes a time frame during which a commercial telephone seller or salesperson may make commercial solicitation phone calls. The bill is effective November 1.
Connecticut amends banking statutes
On May 17, the Connecticut governor signed S.B. 268, which makes various revisions to state banking statutes. Among other things, the bill establishes that a money transmission license is not transferable or assignable, but a licensee may be acquired under certain circumstances. The bill also establishes that the commissioner cannot approve a state-bank’s loan production office to be established unless the commissioner has considered the out-of-state bank's record of compliance. Additionally, the bill establishes certain definitions, including the meaning of “control”, “control person,” “key individual,” and “passive investor.” The bill is effective October 1.
Florida amends MSB provisions to define “control persons”
On May 12, the Florida governor signed HB 273, which amends provisions related to money services business activities. The bill, among other things, revises provisions related to prohibited activities without a license and other requirements for written contracts between a money transmitter or payment instrument seller and an authorized vendor, and provides requirements for a money transmitter that receives virtual currency, among other things. The bill also establishes that “each money transmitter that receives virtual currency, either directly or through an authorized vendor, for the purpose of transmitting such virtual currency from one person to another location or person must at all times, until the transmission obligation is completed, hold virtual currency of the same type and amount owed or obligated to the other location or person.” The bill is effective January 1, 2023.
Illinois amendments address confidentiality of customer financial records
On May 13, the Illinois governor signed SB 3971, which makes various amendments to Illinois Banking Act and Savings Bank Act provisions concerning the confidentiality of customer financial records. Among other things, the Act provides that a bank must disclose financial records “only after the bank sends a copy of the subpoena, summons, warrant, citation to discover assets, or court order,” to the person establishing the relationship with the bank if living (or the person’s representative otherwise), at the person’s last known address. Further, such requests must be sent through a third-party commercial carrier or courier, with delivery charge fully prepaid, by hand or by electronic delivery at an email address on file with the bank (provided the person has consented to electronic delivery).
The Act also stipulates that a bank retain customer financial records “in a manner consistent with prudent business practices and in accordance with this Act and applicable State or Federal laws, rules, and regulations.” A bank may also destroy records (with reasonable precautions taken to ensure the confidentiality of the information contained in the records) except where a retention period is required by law. The Act is effective immediately.
Arizona obtains $1.6 million in restitution from debt collection operation
On May 10, the Arizona attorney general announced it filed a stipulated consent judgment in the Superior Court of Arizona against a defendant, the owner and manager of a debt collection operation. The AG’s original action was part of the FTC’s “Operation Corrupt Collection”—a nationwide enforcement and outreach effort established by the FTC, CFPB, and more than 50 federal and state law enforcement partners to target illegal debt collection practices (covered by InfoBytes here).
According to the AG’s press release announcing the consent judgment, the defendant’s debt collection operation allegedly called consumers and made false claims and threats to convince people to pay debts the operation had no authority to collect. The complaint contended that employees frequently used spoofing software to reinforce claims that they were law enforcement officers, government officials, process servers, and law firm personnel to intimidate consumers into paying the alleged debts, and told consumers to immediately respond or be held in contempt of court. Employees also allegedly threatened to file lawsuits, garnish wages and tax returns, place liens on homes and car titles, freeze bank accounts, send law enforcement to consumers’ homes and/or places of employment, and arrest consumers.
Under the terms of the consent judgment, the defendant is required to pay more than $1.6 million in consumer restitution and up to $900,000 in civil penalties, and is permanently enjoined, restrained and prohibited from participating in the debt collection industry. Court approval of the stipulated judgment is pending.
DFPI amends requirements for Increased Access to Responsible Small Dollar Loans Program
On May 10, the California Department of Financial Protection and Innovation (DFPI) issued a notice of approval of amendments to regulations under the California Financing Law (CFL) related to the agency’s pilot program for increased access to responsible small-dollar loans (RSDL program). The RSDL program, which became operative in 2014, allows finance lenders licensed under the CFL and approved by the DFPI commissioner to charge specified alternative interest rates and charges, including an administrative fee and delinquency fees, on loans subject to certain requirements.
The approved amendments, among other things, increase the upper dollar loan limit from $2,500 to $7,500, require applicants to submit mandatory policies and procedures for addressing customer complaints and responding to questions from loan applicants and borrowers, require lenders report additional information about the finders they use, and allow lenders to use qualified finders to disburse loan proceeds, collect loan payments, and issue notices and disclosures to borrowers. (See also DFPI’s final statement of reasons, which outlines specific revisions and discusses the agency’s responses to public comments.) The amendments are effective July 1.
Georgia updates license exemption provisions
On May 2, the Georgia governor signed HB 891, which updates provisions related to licensing exemptions. The bill establishes that, starting on July 1, in addition to all other fees, license fees, fines, or other charges now or hereafter levied or assessed on the licensee, there is a fee of 0.125 percent of the gross loan amount. Further, such per loan fee becomes due on the making of any such loan, including, but not limited to, the closing of a loan, the renewal or refinancing of a loan, or a modification of a loan which results in the execution of a new or amended loan agreement. Additionally, the bill clarifies that the Department of Banking and Finance can issue cease and desist orders to persons that are not licensed. The bill also establishes that an individual cannot engage in the business of making installment loans or acting as an installment lender in Georgia unless that person is licensed. Among other things, the bill also makes conforming changes, provides definitions, and repeals conflicting laws.
Georgia amends mortgage lender/broker licensing provisions
On May 2, the Georgia governor signed SB 470, which amends state provisions related to mortgage lender and broker licensing. Among other things, the act: (i) defines a “covered employee” as “any employee of a mortgage lender or mortgage broker who is involved in residential mortgage loan related activities for property located in Georgia,” including but not limited to, “a mortgage loan originator, processor, or underwriter, or other employee who has access to residential mortgage loan origination, processing, or underwriting information”; (ii) adds “covered employee” to the list of persons for whom the Department of Banking and Finance may not issue a license or must revoke a license due to a felony conviction; and (iii) authorizes the Department to obtain conviction data with respect to a “covered employee.” The act is effective immediately.