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Financial Services Law Insights and Observations


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  • Nevada approves regulation on earned wage access

    State Issues

    On June 20, the Nevada Secretary of State approved Regulation NAC 604D, LCB File No. R096-23 (the Regulation), issued by the Nevada Department of Business and Industry, Financial Institutions Division, which established provisions to implement SB 290 (the Act) relating to earned wage access (covered by InfoBytes here).

    The Regulation established the commissioner’s interpretation of the term “indirectly” as used in the definition of “employer-integrated earned wage access services” in the Act. As the Legislative Counsel’s Digest for the Regulation explained, “S.B. 290 defines employer-integrated earned wage access services to mean the delivery to a user of access to earned but unpaid income determined based on employment, income or attendance data obtained directly or indirectly from an employer.” In this context, the Regulation provided that data obtained “indirectly” from an employer means “verified data of the employment, income, or attendance of the user that is:” (i) “Obtained from an integrated system”; (ii) “Not directly obtained from the system of an employer”; and (iii) “Not directly obtained from the user.” The Regulation further provides that an “owner” was “a person who holds an ownership interest of at least 10 percent or more in an applicant for the issuance of a license as a provider that is a business entity.” The Regulation also clarified that providers are prohibited from charging cancellation fees of any kind.

    The Regulation set forth $1,000 fees each for (i) the initial application for a license; (ii)  the initial issuance of a license as a provider; (iii) the annual renewal of such a license; and (iv) the reinstatement of an expired license. Furthermore, the Regulation provided that each application for licensure by a provider that is a business entity must be accompanied by a list consisting of each person who holds an ownership interest in the applicant.

    Pursuant to the Regulation, licensees will be required to report specific activity-based information to the state, including, non-exhaustively, the (i) total number and value of fees and expedited delivery fees paid by users within the prior year; (ii) the number of users with outstanding proceeds at the time of reporting and the value of such outstanding proceeds; (iii) the total number of requests for reimbursement of overdraft or NSF fees in the prior year; and (iv) voluntary tips received. Licensees will also be required to submit audited financial statements by April 15 each year (or, if not available, unaudited financial statements by April 15, followed by audited financial statements by June 30 of that same year). Licensees must retain records for at least six years and must not engage in misleading advertising. With respect to supervision, the Regulation establishes an hourly fee of $75 that the commissioner will charge for any supervision, examination, audit, investigation or hearing conducted pursuant to the provisions of the Act and provided that the commissioner can revoke or suspend licenses for any violations and has broad authority to request information during examinations or investigations.

    This Regulation will go into effect on July 1. 

    State Issues Licensing Nevada Earned Wage Access

  • OCC announces Tropical Storm Hilary disaster relief

    On August 21, the OCC issued a proclamation providing discretion to OCC-regulated institutions to close offices affected by Tropical Storm Hilary in California, Nevada, and Arizona “for as long as deemed necessary for bank operation or public safety.” The proclamation directs institutions to OCC Bulletin 2012-28 for further guidance on actions they should take in response to natural disasters and other emergency conditions. According to the OCC, only bank offices directly affected by potentially unsafe conditions should close, and institutions should make every effort to reopen as quickly as possible to address customers’ banking needs.

    Find continuing InfoBytes coverage on disaster relief here.

    Bank Regulatory Federal Issues OCC Disaster Relief California Nevada Arizona

  • Nevada requires licenses for EWA providers

    The Nevada governor recently signed SB 290 (the “Act”) outlining several requirements for providers of earned wage access (EWA) products. EWA products allow individuals to access their earned income before receiving their regular paycheck. To operate such services in Nevada, providers must obtain a license from the Nevada Commissioner of Financial Institutions. The licensing requirements apply to both “employer-integrated” services, where the provider receives verified data directly from the employer or the employer’s payroll service to deliver unpaid wages, and “direct-to-consumer” services where the provider delivers unpaid wages after verifying the earned income based on data not obtained from the employer or their payroll service. Notably, the Act specifies that EWA products are not loans or money transmissions under Nevada law and are not subject to existing laws governing these products. The Act outlines application and fee requirements (licenses will be issued via the Nationwide Multistate Licensing System and Registry) and requires licensed EWA providers to submit annual reports to the commissioner by April 15 of each year.

    Providers of EWA products are also subject to certain prohibitions, which include: (i) sharing any fees, voluntary tips, gratuities, or other donations with an employer; (ii) the use of credit reports or credit scores to determine eligibility for an EWA service; (iii) the imposition of late fees or penalties for nonpayment by users; (iv) the reporting of a user’s nonpayment to a consumer reporting agency or a debt collector; (v) coercion of users to make payments through civil action; and (vi) restrictions on using a third-party collector or debt buyer to pursue collections from a user.

    Additionally, EWA providers must, among other things, (i) implement policies and procedures to respond to questions and complaints raised by users (responses must be provided within 10-business days of receipt); (ii) disclose to the user his or her rights, as well as all related fees, prior to entering an agreement; (iii) allow users to cancel their EWA agreements at any time without being charged a fee; (iv) conspicuously disclose that any tips, gratuities, or donations paid by the user do not directly benefit any specific employee of the EWA provider or any other person (providers must also allow users to select $0 as an amount for such a tip); (v) comply with the EFTA when seeking payment of outstanding proceeds, fees, or other payments from a user’s depository account; and (vi) reimburse users for any overdraft or non-sufficient funds fees incurred as a result of the provider attempting to collect payment on a date earlier than disclosed to the user or in an amount different from what was disclosed.

    On or before September 30, the commissioner is required to prescribe application requirements. EWA providers who were engaged in the offering of EWA services as of January 1, 2023, may continue to provide services until December 31, 2024, if the provider submits an application for licensure by January 1, 2024, and otherwise complies with the Act’s provisions. The Act becomes effective immediately for the purpose of adopting any regulations and performing any preparatory administrative tasks that are necessary to carry out the provisions of the Act and on July 1, 2024, for all other purposes.

    Licensing State Issues State Legislation Nevada Earned Wage Access Consumer Finance NMLS

  • Nevada to regulate student loan servicers and lenders

    On June 14, the Nevada governor signed AB 332 (the “Act”) which provides for the licensing and regulation of student loan servicers. The Act also implements provisions for the regulation of private education loans and lenders. Among other things, the Act requires, subject to certain exemptions, persons servicing student loans to obtain a license from the Commissioner of Financial Institutions. Specifically, the Act states that a person seeking to act as a student loan servicer is exempt from the application requirements only if the commissioner determines that the person’s servicing performed in the state is conducted pursuant to a contract awarded by the U.S. Secretary of Education.

    The Act also outlines numerous requirements relating to licensing applications, including that the commissioner may participate in the Nationwide Multistate Licensing System and Registry (NMLS), and may instruct NMLS to act on his or her behalf to, among other things, collect and maintain records of applicants and licensees, collect and process fees, process applications, and perform background checks. The commissioner is also permitted to enter into agreements or sharing arrangements with other governmental agencies, the Conference of State Bank Supervisors, the State Regulatory Registry, or other such associations. Additional licensing provisions set forth requirements relating to licensing renewals, reinstatements, surrenders, and denials; liquidity standards; and bond requirements. The commissioner is also granted general supervisory, investigative, and enforcement authority relating to student loan servicers and student education loans and may impose civil penalties for violations of the Act’s provisions. The commissioner must conduct investigations and examinations at least once a year (with licensees being required to pay for such investigations and examinations). The Act further provides that the student loan ombudsman shall enter into an information sharing agreement with the office of the attorney general to facilitate the sharing of borrower complaints.

    With respect to private education lenders, the Act establishes certain protections for cosigners of private education loans and prohibits private education lenders from accelerating the repayment of a private education loan, in whole or in part, except in cases of payment default. A lender may be able to accelerate payments on loans made prior to January 1, 2024, provided the promissory note or loan agreement explicitly authorizes an acceleration based on established criteria. The Act also sets forth responsibilities for lenders in the case of the total and permanent disability of a private education loan borrower or cosigner, including cosigner release requirements. Additional provisions outline prohibited conduct and create requirements and prohibitions governing lenders’ business practices. Furthermore, private education lenders are not exempt from any applicable licensing requirements imposed by any other specific statute.

    The Act becomes effective immediately for the purpose of adopting any regulations and performing any preparatory administrative tasks that are necessary to carry out the provisions of the Act and on January 1, 2024 for all other purposes.

    Licensing State Issues State Legislation Nevada Student Loan Servicer Student Lending Consumer Finance NMLS

  • Nevada enacts health data privacy measures

    Privacy, Cyber Risk & Data Security

    On June 16, the Nevada governor signed SB 370 (the “Act”) to enact provisions imposing broad restrictions on the use of consumer health data. The Act is intended to cover health data and persons or entities not covered by the Health Insurance Portability and Accountability Act. The Act defines a regulated entity as a person who conducts business in the state of Nevada or produces or provides products or services that are targeted to consumers in the state that “determines the purpose and means of processing, sharing or selling consumer health data.” Exempt from the Act’s requirements are government agencies, financial institutions and data that is collected, maintained or sold subject to the Gramm-Leach-Bliley Act and certain other federal laws, law enforcement agencies, and third parties that obtain consumer health data from a regulated entity through a merger, acquisition, bankruptcy or other transaction, among others.

    The Act increases privacy protections, and outlines several requirements, such as (i) entities must maintain a consumer health data privacy policy that clearly and conspicuously discloses the categories of health data collected and specifies how the data will be used, collected, and shared (including with third parties and affiliates); (ii) entities must obtain voluntary consent from consumers prior to collecting, sharing, and selling their health data, and are required to provide a means by which a consumer can revoke such authorization; (iii) entities are restricted from geofencing particular locations to collect and sell data; and (iv) entities are required to develop specific security policies and procedures. Consumers are also empowered with the right to have their health data deleted and may request a list of all third parties with whom the regulated entity has shared or sold their health data. The Act details prohibited practices and outlines numerous compliance elements relating to access restrictions, responding to consumers, and processor requirements.

    Furthermore, a violation of the Act constitutes a deceptive trade practice. While the Act does not create a private right of action, under existing law a court has authority “to impose a civil penalty of not more than $12,500 for each violation upon a person whom the court finds has engaged in a deceptive trade practice directed toward an elderly person or a person with a disability.  Additionally, under existing law if a person violates a court order or injunction brought by the Commissioner of Consumer Affairs, the Director of the Department of Business and Industry, the district attorney of any county in the state or the attorney general, “the person is required to pay a civil penalty of not more than $10,000 for each violation.” Willful violations may incur an additional penalty of not more than $5,000, as well as injunctive relief.

    The Act is effective March 31, 2024.

    Privacy, Cyber Risk & Data Security State Issues State Legislation Medical Data Nevada HIPAA Consumer Protection

  • Nevada amends licensing and regulation provisions

    On June 15, the Nevada governor signed SB 355 (the “Act”) to amend several provisions relating to existing state law, which provides for the licensure and regulation of various financial institutions by the Commissioner of Financial Institutions. Among other things, the Act prohibits the commissioner “from requiring an applicant for a license to establish a new depository institution to identify the physical address of the proposed depository institution in the application for the license.” Additionally, while the Act requires data collectors that own, license, or maintain personal information to provide notice to the state attorney general and certain other persons of certain breaches of security involving personal information, the amendments now exempt persons licensed to engage in the business of lending in Nevada from these requirements.

    The Act sets forth numerous other provisions, including (i) removing the requirement that debt collection agencies notify a medical debtor via registered or certified mail before taking any action to collect a medical debt; (ii) authorizing certain financial institution employees to temporarily delay certain financial transactions involving the suspected exploitation of an older person or vulnerable person (and setting forth certain liability exemptions); and (iii) authorizing an employee of a licensee to engage in the business of lending in the state at a remote location if authorized by the licensee and specific criteria are met (the Act also outlines prohibited conduct for persons working remotely). Remote work provisions apply to employees of a mortgage company, including mortgage loan originators, so long as the mortgage company provides authorization. The Act also exempts remote locations from certain mortgage transaction recordkeeping requirements, and instead stipulates that a mortgage company must “keep and maintain records of all mortgage transactions made by an employee at a remote location in accordance with the requirements established by the Commissioner of Mortgage Lending by regulation.”

    The Act becomes effective immediately for the purpose of adopting any regulations and performing any preparatory administrative tasks that are necessary to carry out the provisions of the Act.  The remaining provisions take effect October 1, 2023, and January 1, 2024.

    Licensing State Issues State Legislation Nevada

  • Nevada expands collection agency licensing requirements

    On June 16, the Nevada governor signed SB 276 (the “Act”) to revise certain provisions relating to debt collection agencies and make amendments to the state’s collection agency licensing law. While existing law requires collection agencies to be licensed, the amendments expand the type of activities that trigger collection agency licensure. Notably, the Act now requires any “debt buyer” to hold a license, which is defined as “a person who is regularly engaged in the business of purchasing claims that have been charged off for the purpose of collecting such claims, including, without limitation, by personally collecting claims, hiring a third party to collect claims or hiring an attorney to engage in litigation for the purpose of collecting claims.” Mortgage servicers, however, are now exempt unless the “mortgage servicer is attempting to collect a claim that was assigned when the relevant loan was in default.” The amendments also repeal provisions governing foreign collection agencies and now require that such agencies be licensed in the same fashion as domestic collection agencies.

    In addition to licensed mortgage servicers the amendments also exclude others from the definition of the term “collection agency,” including an expanded list of certain financial institutions (as well as their employees), persons collecting claims that they originated on their own behalf or originated and sold, and other persons not deemed to be debt collectors under federal law. The term “collection agent” has also been refined to exempt persons who do not act on behalf of a collection agency from requirements governing collection agents.

    The Act revises requirements relating to “compliance managers” (formerly referred to as “collection managers”) – including an avenue to request a waiver from the Nevada compliance manager examination requirement if certain experiential requirements are met – and makes changes to certain record retention and application requirements, including amendments to the frequency with which the commissioner reviews a licensee’s required bond amount (annually instead of semiannually). A provision requiring applicants to pursue branch licenses for second or remote locations is also repealed. Instead, collection agencies must simply notify the commissioner of the location of the branch office. Further, collection agencies are now required to display license numbers and certificate identification numbers of compliance managers on any website maintained by the collection agency.

    Additionally, the Act now authorizes collection agents to work remotely provided the agents meet certain criteria, including: (i) signing a written agreement prepared by the collection agency that requires the agent to maintain agency-appropriate security measures to ensure the confidentiality of customer information; (ii) refraining from disclosing details about the remote location to a debtor; (iii) refraining from conducting collection activity-related work with a debtor or customer in person at the remote location; (iv) allowing work conducted from the remote location to be monitored; and (v) completing various compliance and privacy training programs. Remote collection agents must adhere to certain practices requirements and restrictions set forth by both the Act and the FDCPA. Collection agencies must also maintain records of remote collection agents, provide oversight and monitoring of collection agents that work remotely, develop and implement a written security policy governing remote collection agents, and establish procedures to ensure collection agents working remotely are not acting in an illegal, unethical, or unsafe manner.

    Finally, the Act imposes new prohibitions against collection agencies and their agents and employees. Among other things, a collection agency (and its compliance manager, agents, or employees) is banned from suing to collect a debt when it knows or should have known that the applicable statute of limitations has expired. The amendments further clarify that the applicable limitation period is not revived upon “payment made on a debt or certain other activity relating to the debt after the time period for filing an action based on a debt has expired.” Certain notice must also be given to a medical debtor notifying that such a payment does not revive the applicable statute of limitations. A collection agency may also not sell “an interest in a resolved claim or any personal or financial information related to the resolved claim.”

    The Act becomes effective immediately for the purpose of adopting any regulations and performing any preparatory administrative tasks that are necessary to carry out the provisions of the Act and on October 1, 2023 for all other purposes. “Debt buyers” have until January 1, 2024 to submit a collection agency license application pursuant to the new provisions.

    Licensing State Issues State Legislation Nevada Student Loan Servicer Student Lending Consumer Finance NMLS

  • Split 9th Circuit: Nevada’s medical debt collection law is not preempted


    The U.S. Court of Appeals for the Ninth Circuit recently issued a split decision upholding a Nevada medical debt collection law after concluding the statute was neither preempted by the FDCPA or the FCRA, nor a violation of the First Amendment. SB 248 took effect July 1, 2021, in the wake of the Covid-19 pandemic, and requires debt collection agencies to provide written notification to consumers 60 days “before taking any action to collect a medical debt.” Debt collection agencies are also barred from taking any action to collect a medical debt during the 60-day period, including reporting a debt to a consumer reporting agency.

    Plaintiffs, a group of debt collectors, sued the Commissioner of the Financial Institutions Division of Nevada’s Department of Business and Industry after the bill was enacted, seeking a temporary restraining order and a preliminary injunction. In addition to claiming alleged preemption by the FDCPA and the FCRA, plaintiffs maintained that SB 248 is unconstitutionally vague and violates the First Amendment. The district court denied the motion, ruling that none of the arguments were likely to succeed on the merits.

    In agreeing with the district court’s decision, the majority concluded that SB 248 is not unconstitutionally vague with respect to the term “before taking any action to collect a medical debt” and that any questions about what constitute actions to collect a medical debt were addressed by the statute’s implementing regulations. With respect to whether SB 248 violates the First Amendment, the majority held that debt collection communications are commercial speech and thus not subject to strict scrutiny. As to questions of preemption, the majority determined that SB 248 is not preempted by either the FDCPA or the FCRA. The majority explained that furnishers’ reporting obligations under the FCRA do not include a deadline for when furnishers must report a debt to a CRA and that the 60-day notice is not an attempt to collect a debt and therefore does not trigger the “mini-Miranda warning” required in a debt collector’s initial communication stating that “the debt collector is attempting to collect a debt.”

    The third judge disagreed, arguing, among other things, that the majority’s “position requires setting aside common sense” in believing that the FDCPA does not preempt SB 248 because the 60-day notice is not an action in connection with the collection of a debt. “The only reason that a debt collector sends a Section 7 Notice is so that he can later start collecting a debt,” the dissenting judge wrote. “It is impossible to imagine a situation where a debt collector would send such a notice except in pursuit of his goal of ultimately obtaining payment for (i.e., collecting) the debt.” The dissenting judge further argued that by delaying the reporting of unpaid debts, SB 248 conflicts with the FCRA’s intention of ensuring credit information is accurately reported.

    Courts State Issues Appellate Ninth Circuit Debt Collection Medical Debt Nevada FDCPA FCRA Covid-19 Credit Reporting Agency

  • Minnesota enacts small-dollar consumer lending and money transmitter amendments; Georgia and Nevada also enact money transmission provisions

    On May 24, the Minnesota governor signed SF 2744 to amend several state statutes relating to financial institutions, including provisions concerning small-dollar, short-term consumer lending, payday lending, and money transmitter requirements. Changes to the statutes governing consumer small loans and consumer short-term loans amend the definition of “annual percentage rate” (APR) to include “all interest, finance charges, and fees,” as well as the definition of a “consumer short-term loan” to mean a loan with a principal amount or an advance on a credit limit of $1,300 (previously $1,000). The amendments outline certain prohibited actions and also cap the permissible APR on a loan at no more than 50 percent and stipulate that lenders are not permitted to add other charges or payments in connection with these loans. The changes apply to loans originated on or after January 1, 2024. The amendments also make several modifications to provisions relating to payday loans with APRs exceeding 36 percent, including requirements for conducting an ability to repay analysis. These provisions are effective January 1, 2024.

    Several new provisions relating to the regulation and licensing of money transmitters are also outlined within the amendments. New definitions and exemptions are provided, as well implementation instructions that provide the state commissioner authority to “enter into agreements or relationships with other government officials or federal and state regulatory agencies and regulatory associations in order to (i) improve efficiencies and reduce regulatory burden by standardizing methods or procedures, and (ii) share resources, records, or related information obtained under this chapter.” The commissioner may also accept licensing, examination, or investigation reports, as well as audit reports, made by other state or federal government agencies. To efficiently minimize regulatory burden, the commissioner is authorized to participate in multistate supervisory processes coordinated through the Conference of State Bank Supervisors (CSBS), the Money Transmitter Regulators Association, and others, for all licensees that hold licenses in the state of Minnesota and other states. Additionally, the commissioner has enforcement, examination, and supervision authority, may adopt implementing regulations, and may recover costs and fees associated with applications, examinations, investigations, and other related actions. The commissioner may also participate in joint examinations or investigations with other states.

    With respect to the licensing provisions, the amendments state that a “person is prohibited from engaging in the business of money transmission, or advertising, soliciting, or representing that the person provides money transmission, unless the person is licensed under this chapter” or is a licensee’s authorized delegate or exempt. Licenses are not transferable or assignable. The commissioner may establish relationships or contracts with the Nationwide Multi-State Licensing System and Registry and participate in nationwide protocols for licensing cooperation and coordination among state regulators if the protocols are consistent with the outlined provisions. The amendments also outline numerous licensing application and renewal procedures including net worth and surety bond, as well as permissible investment requirements.

    The same day, the Nevada governor signed AB 21 to revise certain provisions relating to the licensing and regulation of money transmitters in the state. The amendments generally revise and repeal various statutory provisions to establish a process for governing persons engaged in the business of money transmission that is modeled after the Model Money Transmission Modernization Act approved by the CSBS. Like Minnesota, the commissioner may participate in multistate supervisory processes and information sharing with other state and federal regulators. The commissioner also has expanded examination and enforcement authority over licensees. The Act is effective July 1.

    Additionally, the Georgia governor signed HB 55 earlier in May to amend provisions relating to the licensing of money transmitters (and to merge provisions related to licensing of sellers of payment instruments). The Act addresses licensee requirements and prohibited activities, outlines exemptions, and provides that applications pending as of July 1, “for a seller of payment instruments license shall be deemed to be an application for a money transmitter license as of that date.” Notably, should a license be suspended, revoked, surrendered, or expired, the licensee must, “within five business days, provide documentation to the department demonstrating that the licensee has notified all applicable authorized agents whose names are on record with the department of the suspension, revocation, surrender, or expiration of the license.” The Act is also effective July 1.

    Licensing State Issues Fintech Digital Assets State Legislation Minnesota Georgia Nevada Consumer Finance Consumer Lending Payday Lending Money Service / Money Transmitters Virtual Currency

  • Nevada Supreme Court affirms ruling in default notice suit


    On April 7, the Nevada Supreme Court denied a petition for rehearing and reaffirmed its prior conclusion that, under Nevada law, when a notice of rescission is recorded after a notice of default, the rescission cancels the acceleration triggered by the notice of default, and resets a statutory 10-year period for automatically clearing a lien on real property. NRS § 106.240 “provides a means by which liens on real property are automatically cleared from the public records after a certain period of time,” and specifically “provides that 10 years after the debt secured by the lien has become ‘wholly due’ and has remained unpaid, ‘it shall be conclusively presumed that the debt has been regularly satisfied and the lien discharged.’” The specific question before the Nevada Supreme Court was what effect a notice of rescission has on NRS § 106.240’s 10-year period when the notice is recorded after a notice of default. The Nevada Supreme Court upheld the lower court’s decision determining that “because a notice of rescission rescinds a previously recorded notice of default, the notice of rescission ‘effectively cancelled the acceleration’ triggered by the notice of default, such that NRS 106.240’s 10-year period was reset.”

    Courts State Issues Nevada Mortgages Consumer Finance


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