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  • California enacts new consumer protections on disclosures and marketing

    State Issues

    On June 14, the Governor of California approved SB 1096 (the “Act”) to amend the Consumers Legal Remedies Act and regulate mailed solicitations about consumer financial products. Subject to certain exceptions, the amendment will require covered persons to include a disclosure statement in enlarged, bold type on the front of any envelope containing a solicitation for a consumer financial product or service that would be sent by physical mail. The bolded disclosure must state clearly that the content would be an advertisement and that the recipient will “not [be] required to make any payment or take any other action in response to this offer.”

    The Act also specified unfair or deceptive acts or practices, including, among other things, misrepresenting the terms of a transaction, inserting unconscionable provisions in contracts, and advertising prices for goods or services that do not include all mandatory fees or charges, subject to certain exceptions. It also will prohibit deceptive representations using geographic origin designations or making false claims about a product’s sponsorship or benefits. The legislation will extend to mortgage brokers and lenders and prohibit them from using a home improvement contractor to negotiate the terms of a loan secured by the home that would be used to finance a home improvement contract or any portion of such a contract. Additionally, the bill will address issues related to advertising and promoting events concerning veterans’ benefits. If it were to be the case, the Act will mandate that any such promotion disclose that the event was not sponsored by or affiliated with the VA, the California Department of Veterans Affairs, or any other congressionally-chartered or recognized organization for veterans, or any of their auxiliaries. The Act will go into effect on January 1, 2025.

    State Issues State Legislation California Department of Veterans Affairs Consumer Finance Deceptive

  • Illinois enacts Interchange Fee Prohibition Act within state budget

    State Issues

    Recently, the Governor of Illinois signed into law the state’s new budget (the “budget”) which will include a provision cited as the Interchange Fee Prohibition Act (the “Act”). The Act’s language was originally proposed as an amendment to a separate act, HB 4951, but the language was instead inserted in the state budget.

    The Act will ban credit card issuers and any other entity that facilitates or processes electronic payments from charging an interchange fee on the tax or gratuity of a transaction. The Act defines an interchange fee as a fee “established, charged, or received” by a payment card network as compensation for its involvement in a transaction. The Act specified that it will be a merchant’s responsibility to bifurcate the tax/gratuity surcharges from the good’s subtotal. Alternatively, a merchant may submit tax information to the issuer’s bank no later than 180 days after the transaction for reimbursement. A credit card issuer cannot change the composition of its interchange fees to offset the amount that will be saved by merchants under this Act. A violation of the Act will result in a civil penalty of $1,000 per transaction, and the issuer must refund the merchant any interchange fees collected on taxes or gratuities.

    Sen. Dick Durbin (D-IL) welcomed the Act’s passage claiming it would “bring down costs and eliminate fees” in electronic transactions. The Act will go into effect on July 1, 2025.

     

    State Issues State Legislation Illinois Interchange Fees Fees

  • Connecticut amends its Money Transmission Act

    State Issues

    On June 6, Connecticut enacted HB 5211 (the “Act”), amending laws regulating virtual currency and money transmission. The Act updated "permissible investment" to include additional forms of assets and clarified that “cash” will include demand deposits and cash equivalents, such as international wires in transit to the payee, transmission receivables funded by debit cards or credit cards, and AAA-rated mutual funds. The Act also stated that after October 1, 2024, the owning, operating, solicitation, marketing, advertising, or facilitation of virtual currency kiosks will be considered to “money transmission” business and thus will require persons to be state licensed as a money transmitter.

    Additionally, the Act will require money transmission licensees to maintain a detailed accounting plan on winding down operations, as well as meet certain conditions to terminate a licensee’s businesses. Furthermore, the Act will require licensees to communicate third party disclosure information to consumers, as well as provide a physical receipt for transactions to senders. The Act also expanded the banking commissioner’s authority to adopt forms and orders governing digital assets to expressly include nonfungible tokens.

    State Issues Money Service / Money Transmitters Connecticut State Legislation Consumer Protection Cryptocurrency

  • Connecticut amends its Money Transmission Act

    State Issues

    On June 6, Connecticut enacted HB 5211 (the “Act”), amending laws regulating virtual currency and money transmission. The Act updated "permissible investment" to include additional forms of assets and clarified that “cash” will include demand deposits and cash equivalents, such as international wires in transit to the payee, transmission receivables funded by debit cards or credit cards, and AAA-rated mutual funds. The Act also stated that after October 1, the owning, operating, solicitation, marketing, advertising, or facilitation of virtual currency kiosks will be considered to “money transmission” business and thus will require persons to be state licensed as a money transmitter.

    Additionally, the Act will require money transmission licensees to maintain a detailed accounting plan on winding down operations, as well as meet certain conditions to terminate a licensee’s businesses. Furthermore, the Act will require licensees to communicate third party disclosure information to consumers, as well as provide a physical receipt for transactions to senders. The Act also expanded the banking commissioner’s authority to adopt forms and orders governing digital assets to expressly include nonfungible tokens. 

    State Issues State Legislation Money Service / Money Transmitters Cryptocurrency Consumer Protection

  • New York Attorney General sues crypto companies, alleging billion-dollar pyramid scheme targeting immigrant communities

    State Issues

    On June 6, New York Attorney General Letitia James announced legal actions against two companies (with the same founders) for allegedly participating in illegal pyramid schemes. The complaint alleged these schemes defrauded hundreds of thousands of investors, including more than 11,000 New Yorkers, out of more than a billion dollars in crypto-assets. The AG alleged that the companies’ activities specifically preyed upon immigrant communities, notably New Yorkers of Haitian descent, using prayer groups and digital communication channels like social media to make false promises of high returns.

    According to the complaint, one of the companies offered fraudulent returns from mining cryptocurrency, but never delivered on the promised profits and bonuses, eventually collapsing in 2019. The complaint then alleged the promoters of the collapsed company founded a new company that also promised high returns and bonuses.  According to the complaint, from 2019 to 2023, investors deposited more than $1 billion worth of cryptocurrency into the new company, yet a minuscule fraction (less than $26 million) was actually used for trading on the company’s platform before its collapse in May 2023.

    The Attorney General’s legal action will seek a permanent ban on the company and the associated individuals from conducting any securities or commodities business within New York and disgorgement and damages for the victims.

    State Issues State Attorney General Cryptocurrency Fraud Martin Act New York

  • Colorado tightens regulations related to debt settlement and collection practices

    State Issues

    On June 6, the Governor of Colorado signed into law HB 1380 (the “Act”) which revised the state’s consumer protection laws related to debt collection, credit services organizations, and debt management service providers. Key provisions of the law included:

    • Debt collectors must now include their name and the original creditor’s name in legal actions against consumers and possess full authority to settle the debt.
    • Credit services organizations will be required to provide the state administrator with essential business information (including name and address) and pay an annual notification fee.
    • The state administrator can issue cease-and-desist orders and impose penalties of up to $1,500 per violation of the Code.
    • Debt-management service providers cannot provide their services to consumers unless they have prepared a debt management plan for the individual that, among other things, lists all the creditors that the service provider expects to participate, and not to participate, in the plan, as well as those that it expects to participate but will not grant concessions to the consumer.
    • Providing the state administrator the ability to adopt rules regarding debt settlement service fees by March 1, 2025, provided the rules do not “unduly limit consumer access to debt management services programs based on available state and national data.”

    The Act’s amendments will go into effect 91 days following final adjournment of the General Assembly, subject to approval by Colorado voters if a referendum would be filed.

    State Issues Colorado Debt Collection State Legislation Consumer Finance

  • Connecticut amends provisions of its Emergency Mortgage Assistance Payment program

    State Issues

    On May 28, the Governor of Connecticut signed SB 283 (the “Act”) into law, introducing amendments to the Connecticut Housing Finance Authority’s (CHFA) Emergency Mortgage Assistance Payment (EMAP) program. This law will extend benefits to homeowners who are in foreclosure and forbearance. Under the new legislation, homeowners must enter into a repayment agreement directly with the CHFA, which will now receive the monthly payments previously made to the loan originator.

    The Act will modify the criteria for financial hardship eligibility, remove utility and heating expenses from the total housing expense calculation, and grant the CHFA authority to factor in equity in determining a homeowner’s ability to repay timely. Additionally, the CHFA will provide greater flexibility regarding the repayment agreement terms, along with several other amendments. The Act’s provisions will go into effect on October 1.

    State Issues State Legislation Mortgages Connecticut

  • Georgia bans CBDCs for government use

    State Issues

    Recently, Georgia enacted HB 1053 (the “Act”) which will prohibit government agencies from engaging with central bank digital currencies (CBDCs). Specifically, the legislation will prevent state government agencies from accepting CBDCs as a form of payment or from participating in any pilot programs involving CBDCs. Georgia representatives banned CBDCs within government operations citing potential “privacy and security concerns” for individuals and businesses, called them an “unacceptable expansion” of federal authority, and were concerned that a CBDC could disrupt the current banking systems and “diminish” community bank and credit unions’ roles in the financial system. The ban will go into effect on July 1.

    State Issues State Legislation Georgia CBDC Privacy Digital Currency Central Bank Digital Currency

  • New Jersey proposes disparate impact discrimination rule

    State Issues

    On June 3, New Jersey Attorney General, Matthew Platkin, and the state’s Division on Civil Rights announced a proposed rule that described and clarified prohibitions against disparate impact discrimination under the New Jersey Law Against Discrimination (LAD), including employment, housing, places of public accommodation, credit, and contracting. The proposed rule provided examples of policies and practices that may result in a disparate impact on members of a protected class under the LAD.

    The proposed rule aimed to clarify that the LAD outlawed practices or policies that have an adverse impact on members of a protected class, regardless of whether there was intent to discriminate. Such practices or policies were only permissible if they were necessary to attain an important and legitimate non-discriminatory goal and there was no alternative method that was less discriminatory and equally effective in achieving that goal. The rule would codify largely the existing legal standard and burdens of proof used in New Jersey and Federal courts when reviewing claims of disparate impact discrimination pursuant to the LAD for determining whether a practice or policy was discriminatory unlawfully, along with the framework used in evaluating claims of disparate impact. Comments on the proposed rule must be received by August 2.

    State Issues New Jersey State Attorney General Discrimination

  • Colorado extends its money transmitter regulations

    State Issues

    On June 3, Colorado enacted HB 1328, (the “Act”), which will extend the state’s regulation of money transmitters until September 2030. The law had previously been scheduled to sunset on September 1. The Act will implement the recommendations of the Department of Regulatory Agencies, as specified in the Department's sunset review of the regulation of money transmitters. Specifically, the Act will (i) authorize the State Banking Board to suspend a money transmitter’s license and issue cease and desist orders; (ii) expand the requirement to furnish surety bond coverage to include all money transmission, rather than any exchange; (iii) increase the maximum penalty for failure to allow an examination from $100 to $1,000 per day the refusal continues and for failure to report up to $750 per day; and (iv) expand the licensing exemption to cover out-of-state banks. The Act will go into effect 90 days following the adjournment of the General Assembly, assuming a referendum petition will not be filed. 

    State Issues State Legislation Colorado Money Service / Money Transmitters Licensing Fintech Enforcement

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