InfoBytes Blog
Filter
Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
California regulator advises businesses to only collect needed data under CCPA
On April 2, The California Privacy Protection Agency issued Enforcement Advisory No. 2024-01 reminding businesses that data minimization is a foundational principle the California Consumer Privacy Act. The Advisory noted that the Agency has observed certain businesses collecting unnecessary and disproportionate amounts of personal information and emphasized that minimization principles would apply to processing consumer requests. As such, the Advisory highlighted the requirements of minimization, including the concept that the collection, use, sharing, and retention of personal information must be reasonable and proportionate to the purposes identified, considering the minimum personal information required, the potential negative impacts on consumers, and the existence of additional safeguards that addressed the applicable negative impacts. As part of the discussion, the Advisory also discussed two scenarios: one described an opt-out procedure, and the other described verification in connection with a consumer request. For the opt-out procedure, the Advisory reminded businesses that businesses may not verify a consumer’s identity to process an opt-out (it may, however, ask the consumer for the information necessary to complete the request). For the verification procedures, the Advisory outlined a possible process for analyzing whether additional verification information would be required, such as whether the business stores driver license information.
Washington enacts SB 6025 addressing certain lending practices
On March 25, the Governor of the State of Washington signed SB 6025 (“the Act”) into law. The Act would prohibit covered entities from (i) making loans disguised as personal property sale or leaseback transactions; (ii) offering cash rebates as a cover for installment sales; or (iii) making loans with interest rates or charges surpassing legal limits, among other things. The Act also amended portions of Washington State’s Consumer Loan Act (CLA). The Act would provide that non-bank services companies may be lenders under the CLA if such company would hold the “predominate interest in the loan” or “totality of the circumstances indicate that the [company] is the lender.” These changes will go into effect on June 6.
West Virginia updates licensing of mortgage brokers and lenders
On March 26, the Governor of West Virginia signed into law SB 613, a bill that amended certain statutes regarding mortgage broker, lender, and loan originator licensing requirements. The bill updated definitions relating to the licensure and regulation of mortgage brokers, lenders, and loan originators, permitted the Commissioner of Financial Institutions to participate in the multistate licensing and examination process, and updated net worth requirements to use generally accepted accounting principles. The bill also established new information requirements for applicants and individuals involved in a change of control, requiring fingerprints, credit reports, and judicial findings to be provided to the NMLS and Registry.
This bill also amended the West Virginia Mortgage Licensing Act to permit employees of a mortgage broker, lender, or servicer to perform remote work, subject to appropriate data security requirements, monitoring, and others. SB 613 will go into effect on June 3.
Kansas updates UCCC provisions including credit card surcharges
On March 29, the Governor of Kansas signed into law HB 2247, a comprehensive bill that updated UCCC provisions in an effort to regulate the credit industry more efficiently, and moved provisions from the UCCC to the Kansas Mortgage Business Act, among other things. The bill amended provisions relating to credit card surcharges—allowing retailers and other persons to impose a surcharge on a customer who uses a credit card payment if such retailer or person provided a clear and conspicuous disclosure of the surcharge amount at the point of entry or sale or in advance of the transaction. The bill nearly tripled the “threshold amount” on certain consumer loans and leases from $25,000 to $69,500. The bill also clarified license requirements, among other things. HB 2247 will go into effect on July 1.
Maine amends its telephone solicitor violations to include the reassigned numbers database
On March 25, the Governor of Maine approved a new bill, HP 1433, that would require telephone solicitors to leverage the reassigned numbers database. As previously covered by InfoBytes, the FCC created the reassigned numbers database in 2018 to reduce the number of calls inadvertently made to reassigned numbers. This new law would ban telephone providers from calling an individual in combination with the previously codified violations regarding the national or state do-not-call registries. The new law stated that a telephone solicitor would not violate the new law if the solicitor could demonstrate that he used the reassigned numbers database to verify that a person’s telephone number has not been reassigned before calling it. This bill will go into effect on July 16.
West Virginia enacts act to prevent unfair real estate service agreements
Recently, West Virginia passed a new law, HB 5346, titled the Unfair Real Estate Services Agreements Act (the “Act”). This new Act will amend the Code of West Virginia with respect to real estate service agreements. The Act would make the entering into of an “Unfair Real Estate Services Agreement” a deceptive act, including any real estate services agreement between a licensed real estate service provider and a consumer that included terms that would purport to run with the land or be binding to future owners of interest, purport to create a property lien, allow for assignment of the contract without timely notification to the owner of the property, or create a listing agreement for a property that has been listed for over a year past its listing date. Under the law, any unfair real estate service agreement created after the bill’s effective date would be void, and parties may bring a civil action against a real estate service provider. The Act will go into effect on June 6.
West Virginia updates its bank recordkeeping requirements to equate copies with originals
On March 27, the Governor of West Virginia signed into law HB 4837, which amended the state’s general banking services code to permit banks to photographically or photo-statically reproduce its checks, documents, records, or other instruments (other than notes, securities, and investments) and use such photographic copies (e.g., scans) as substitutes for the originals. Under the law, the photographic copy would be deemed an original counterpart, having the same force and effect as the original, and would constitute admissible evidence in court. While the law would permit the bank to destroy the original copy, the bank must retain either the original or photographic reproductions of the documents for five years from the date of the last entry. Finally, the law would limit actions against any bank for “any balance, amount or proceeds from any time, savings or demand deposit account based on the contents of records” to a five-year retention period. This bill will go into effect after 90 days from passage: June 6.
Complaint filed against the USDA alleging discriminatory loan practices
On March 29, the U.S. District Court for the District of Columbia received a complaint by two Black farmers, among others as part of a class action, alleging that the United States Department of Agriculture (USDA) disproportionately denied them federal farm loans. The plaintiffs alleged the USDA admitted to having a pattern and practice of discrimination against racial and ethnic minorities. The complaint delved into a complex story and long-standing claims from the two primary plaintiffs, with one farmer sharing that a loan manager stated, “I don’t lend to your kind” (italics omitted).
The plaintiffs asserted six causes of action. The first cause of action was under ECOA, where the plaintiffs alleged the USDA violated the ECOA by discriminating based on race. Second, the plaintiffs asserted a cause of action for discrimination under the APA. Third, the plaintiffs asserted a due process claim under the Fifth Amendment, alleging that the USDA allocated funds disproportionally in favor of White farmers. Fourth, the plaintiffs sought a writ of mandamus barring USDA Committeemen from intervening in the loan process. Fifth, the plaintiffs asserted a claim for declaratory relief seeking a declaration that the USDA violated their rights. Finally, the plaintiffs asserted a claim to compel the production of requested documents under FOIA.
District Court severs NJFCRA requirement that agencies must provide credit disclosures in 10 languages
On March 27, the U.S. District Court for the District of New Jersey granted in part and denied in part both the Attorney General for the State of New Jersey’s (AG) motion for summary judgment and a plaintiff international trade association’s motion for summary judgment. In particular, the court held that the New Jersey Fair Credit Reporting Act’s (NJFCRA) 2019 amendment requiring national consumer reporting agencies (NCRAs) to provide consumer reports in a language other than English (if requested) was not preempted by the federal Fair Credit Reporting Act. However, the court stopped short of requiring NCRAs to provide the disclosures in “at least ten languages” in addition to Spanish on First Amendment grounds, explaining that the requirement imposed under the NJFCRA only required a rational basis and while a rational basis existed for Spanish (due to, among other things, the high percentage of Spanish speaking constituents in New Jersey), it did not exist for the additional languages given the relatively lower prevalence of those other languages. Accordingly, the court severed the provision that mandated that credit file disclosures be provided in at least 10 languages.
District Court grants MSJ in FCRA case in favor of defendant
Recently, a plaintiff sued under the FCRA, alleging that the defendant debt collector failed to conduct a reasonable investigation into a disputed credit report item. The plaintiff claimed to be a victim of identity theft and contended that an outstanding telephone debt should not have been listed on his credit report. The defendant maintained that it had performed its duties reasonably, relying on information from the phone company for which it acted as a debt collector. The defendant moved for summary judgment on the grounds that the plaintiff had not provided any evidence to support the claim of an unreasonable investigation by defendant. The U.S. District Court for the Southern District of Florida granted the motion for summary judgment, agreeing with the defendant that the plaintiff had failed to provide any substantial evidence regarding how the defendant’s investigation was conducted or why it was unreasonable.