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Financial Services Law Insights and Observations

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  • Nevada authorizes pilot program for marijuana banking

    State Issues

    On June 5, the Nevada governor signed AB 466, requiring the State Treasurer to create a pilot program, authorized to operate from October 1, 2019 through June 30, 2023, for the establishment of one or more closed-loop payment processing systems that enable certain persons to engage in financial transactions relating to marijuana.

    The closed-loop payment processing system established under the pilot program must be designed to, among other things: (i) provide marijuana establishments and medical marijuana establishments a safe, secure and convenient method of paying state and local taxes; (ii) prevent revenue from the sale of marijuana from going to criminal enterprises, gangs and drug cartels, and; (iii) prevent lawful financial transactions relating to marijuana from being used as a cover or pretext for unlawful activities. The bill requires the State Treasurer to adopt regulations to carry out the pilot program and requires that the State Treasurer submit a report concerning the pilot program on or before December 1, 2020, and every 6 months thereafter.

    State Issues State Legislation State Regulators Medical Marijuana

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  • Maine enacts consumer privacy law for internet service providers

    State Issues

    On June 6, the Maine governor signed S.P. 275/L.D. 946, which requires certain broadband Internet access services to receive express, affirmative consent from a customer before disclosing, selling, or permitting access to a customer’s personal information. Among other things, the provisions stipulate that a customer may revoke his or her consent at any time, and forbid providers from refusing service or charging a penalty or offering a discount based on the customer’s decision to provide or not provide consent. Furthermore, providers must include a “clear, conspicuous and nondeceptive notice at the point of sale,” as well as on the provider’s public website, concerning the provider’s obligations and the customer’s rights. Requirements for safeguarding customers’ personal information are also outlined. The Act applies only to providers operating in Maine that provide Internet access service to customers that are physically located and billed for services received in Maine.  The new law will take effect July 1, 2020.

    State Issues State Legislation Privacy/Cyber Risk & Data Security Consumer Protection

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  • Oregon enacts new vendor data breach notification requirements

    State Issues

    On May 24, the Oregon Governor signed SB 684, which amends the state’s data breach notification provisions related to third-party vendors. Among other provisions, the amendments require vendors that are contracted to maintain or access personal information on behalf of a covered entity to (i) notify the covered entity “as soon as is practicable but not later than 10 days” after discovering a security breach or believing a breach has occurred; and (ii) notify the state Attorney General if a security breach involves personal information of more than 250 consumers, or an undetermined amount of consumers, provided that the covered entity has not already done so. SB 684 also updates the definition of personal information to include usernames in combination with other authentication factors used to access a consumer’s account, and establishes that a covered entity or vendor may “affirmatively defend” against allegations it has not adequately safeguarded personal information by showing that it maintained reasonable security measures for protecting personal information in compliance with HIPAA or the Gramm-Leach-Bliley Act, as applicable. The amendments take effect January 1, 2020.

    State Issues State Legislation Data Breach Privacy/Cyber Risk & Data Security Third-Party

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  • Maryland amends statute of limitations for UDAP actions against mortgage servicers

    State Issues

    On May 25, the Maryland governor signed HB 0425, which amends the state’s statute of limitations applicable to certain civil actions relating to unfair, abusive, or deceptive trade practices (UDAP) filed against a mortgage servicer. Specifically, the bill requires that an action filed by a homeowner alleging damages arising out of a UDAP violation shall be filed within the earlier of: (i) 5 years after a foreclosure sale of the residential property; or (ii) 3 years after the mortgage servicer discloses its UDAP violation to the homeowner. The bill is effective October 1.

    State Issues State Legislation UDAP Mortgage Servicing Mortgages Foreclosure

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  • Oregon removes sunset on GAP waiver statutes

    State Issues

    On May 24, the Oregon governor signed SB 366, which repealed the sunset provision on statutes establishing the conditions under which creditors can offer guaranteed asset protection (GAP) waivers in connection with the sale of an automobile. Chapter 523, Oregon Laws 2015 allows creditors to offer GAP waivers to consumers outside of the regulation of the Insurance Code while specifying certain requirements for offering the waivers. Section 11 of Chapter 523, would have repealed these GAP waiver provisions on January 2, 2020. The bill repeals Section 11, allowing for the GAP waiver provisions to remain in effect. The bill is effective January 1, 2020.

    State Issues State Legislation GAP Waivers Auto Finance

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  • Oregon requires consumers to repay title, payday loans before lender makes new loan

    State Issues

    On May 30, the Oregon Governor signed HB 2089, which, among other things, prohibits title loan and payday loan lenders from making a new loan to a consumer until seven days after the consumer has fully repaid a previous title loan or payday loan. In addition, lenders may not make or renew a title loan or payday loan with an interest rate exceeding 36 percent annually, excluding a one-time allowable origination fee. These amendments apply to loan contracts, including renewals, executed on or after January 1, 2020.

    State Issues State Legislation Consumer Lending Payday Lending

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  • Nevada updates Military Lending Act provisions

    State Issues

    On May 28, the Nevada governor signed SB 201, which, among other things, updates existing Nevada law referring to the federal Military Lending Act (MLA). Specifically, the bill eliminates the current state law provisions that adopt the MLA by referring generally to the federal law and instead specifically adopts the language of certain MLA provisions for lending to a covered service member or a dependent of a covered service member. The bill thus includes language that (i) prohibits a lender from charging an annual percentage rate greater 36 percent; (ii) requires a lender to make certain disclosures before extending certain consumer credit; and (iii) prohibits certain additional loan terms in a transaction, such as a requirement that the loan be repaid by allotment. The bill also requires the Commissioner of Financial Institutions to adopt regulations to administer, carry out, and enforce the MLA provisions. The new provisions were effective on May 28 for the purpose of adopting any regulations and performing any other preparatory administrative tasks that are necessary to carry out the provisions of this act, and on October 1, 2019, for all other purposes.

    State Issues State Legislation Military Lending Military Lending Act

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  • Minnesota adds mortgage originator licensing exemption

    State Issues

    On May 22, the Minnesota governor signed HF 990, which exempts manufactured home dealers and salespersons from the state’s licensing requirements for residential mortgage originators. Under the bill, manufactured home dealers or salespersons qualify for the exemption if they (i) perform only clerical or support duties in connection with assisting a consumer in filling out a loan application; (ii) do not receive any direct or indirect compensation from any individual or company, in excess of the customary salary or commission, for assisting consumers with loan applications; and (iii) provide specified disclosures. The bill takes effect on August 1.

    State Issues State Legislation Licensing Mortgages Mortgage Origination

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  • Florida establishes blockchain task force

    State Issues

    On May 23, the Florida governor signed SB 1024, which establishes the “Florida Blockchain Task Force” within the Department of Financial Services to “explore and develop a master plan for fostering the expansion of the blockchain industry in the state, to recommend policies and state investments to help make this state a leader in blockchain technology, and to issue a report to the Governor and the Legislature.” Within 90 days of signing, the bill requires that a majority of the 13 required members of the task force must be appointed and the task force must hold its first meeting. The task force is required to, among other things, study blockchain technology and submit a report to the Governor and the Legislature with recommendations for implementing blockchain technology in the state and recommendations for specific implementations to be developed by relevant state agencies. The bill took effect on May 23.

    State Issues State Legislation Fintech Blockchain Virtual Currency

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  • Illinois amends Residential Mortgage License Act

    State Issues

    On May 10, the Office of the Illinois Secretary of State published in the Illinois Register a notice by the Department of Financial and Professional Regulation of adopted amendments to certain parts of its Residential Mortgage License Act. In general, the amendments impact independent loan processor licensing as well as residential mortgage loan bond and advertising requirements. Specifically, an independent loan processing entity must employ one or more licensed mortgage loan originators (MLO) to be in compliance with the Act’s supervision and instruction requirements. In addition, any advertisement appearing in the state by a licensee concerning residential mortgage loans must clearly and conspicuously include the following: (i) the Nationwide Multistate Licensing System and Registry (NMLS) Consumer Access homepage; and (ii) a licensee’s unique NMLS identifier. If a MLO is advertised, licensees are also required to include the MLO employee’s individual NMLS unique identifier, in addition to listing the licensee’s NMLS unique identifier. Furthermore, licensees are prohibited from including a NMLS unique identifier in any advertisement related to “activities other than residential mortgage lending or brokering” unless certain criteria are met. The amendments became effective immediately.

    State Issues State Legislation Mortgages Licensing Mortgage Origination NMLS

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