InfoBytes Blog
Filter
Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
Virginia issues new guidance for electronic notaries
On March 11, the Virginia secretary of state will require every electronic notarial certificate to include: (i) county/city within Virginia where the electronic notary public was physically located at the time the notarization was performed; and (ii) whether the notarization was done in person or by remote notarization. The requirement follows the passage of HB2064, which amends and reenacts certain provisions of the Virginia Code, relating to electronic notary and remote notarization. HB2604 is effective March 11, 2021.
Virginia enacts comprehensive consumer data privacy framework
On March 2, the Virginia governor enacted the Consumer Data Protection Act (VCDPA), which establishes a framework for controlling and processing consumers’ personal data in the Commonwealth. Virginia is now the second state in the nation to enact a comprehensive consumer privacy law. In 2018, California became the first state to put in place significant consumer data privacy measures (covered by a Buckley Special Alert). As previously covered by InfoBytes, under the VCDPA, consumers will be able to access their personal data; make corrections; request deletion of their data; obtain a copy of their data in a portable format; and opt out of targeted advertising, sale of their data, or “profiling in furtherance of decisions that produce legal or similarly significant effects concerning the consumer.” The VCDPA also outlines controller responsibilities, including a requirement that, among other things, controllers must enter into data processing agreements with data processors that outline instructions for processing personal data and require the deletion or return of personal data once a service is concluded. While the VCDPA explicitly prohibits a private right of action, it does grant the state attorney general excusive authority to enforce the law and seek penalties of no more than $7,500 per violation. Additionally, upon discovering a potential violation of the VCDPA, the attorney general must give the data controller written notice and allow the data controller 30 days to cure the alleged violation before the attorney general can file suit. The VCDPA takes effect January 1, 2023.
Virginia legislature advances privacy bill
Recently, the Virginia Senate and House advanced identical bills (see SB 1392 and HB 2307), which would establish a framework for controlling and processing consumers’ personal data in the Commonwealth. Highlights of the bill include:
- Applicability. The bill will apply to “persons that conduct business in the Commonwealth or produce products or services that are targeted to residents of the Commonwealth and that (i) during a calendar year, control or process personal data of at least 100,000 consumers or (ii) control or process personal data of at least 25,000 consumers and derive over 50 percent of gross revenue from the sale of personal data.” Notably, financial institutions, data governed by federal regulations, nonprofit organizations, and certain protected health information are exempt from coverage.
- Consumers’ rights. Under the bill, consumers will be able to access their personal data; make corrections; request deletion of their data; obtain a copy of their data in a portable format; and opt out of targeted advertising, sale of their data, or “profiling in furtherance of decisions that produce legal or similarly significant effects concerning the consumer.”
- Controllers’ responsibilities. Data controllers under the bill will be responsible for (i) limiting the collection of data to what is required and reasonably necessary for a specified purpose; (ii) not processing data for reasons incompatible with the specified purpose; (iii) securing personal data from unauthorized access; (iv) not processing data in violation of state or federal anti-discrimination laws; (v) obtaining consumer consent in order to process sensitive data; (vi) ensuring contracts and agreements do not waive or limit consumers’ data rights; and (vii) providing clear and meaningful privacy notices.
- Data processing agreements/data protection assessments. The bill requires controllers to enter into data processing agreements with data processors that outline instructions for processing personal data and require the deletion or return of personal data once a service is concluded. Controllers must also conduct data protection assessments for all processing activities that involve targeted advertising, the sale of personal data, certain profiling activities, sensitive data, and any processing activities that present a heightened risk of harm to consumers.
- Private right of action and state attorney general enforcement. The bill explicitly prohibits a private right of action. Instead, it grants the state attorney general excusive authority to enforce the law and seek penalties of no more than $7,500 per violation. The attorney general may also recover reasonable expenses, including attorney fees, for any initiated action.
- Right to cure. Upon discovering a potential violation of the bill, the attorney general must give the data controller written notice. The data controller then has 30 days to cure the alleged violation before the attorney general can file suit.
The two bills next move to a reconciliation process, and if passed and signed into law, the bill will take effect January 1, 2023.
Virginia issues modified stay at home order identifying banks and financial institution as essential retail businesses
On December 10, the governor of Virginia issued a modified stay at home order limiting travel and gatherings for Virginia residents and operations for certain businesses. However, banks and other financial institutions with retail functions are considered essential retail businesses and may continue to remain open during normal business hours. All businesses, including essential retail businesses, are advised to adhere to the Guidelines for All Business Sectors.
Virginia stays residential foreclosure proceedings
On November 9, 2020 the Virginia governor signed House Bill 5115, which places restrictions on foreclosures. The law provides tenants who are defendants in a unlawful detainer action for failure to pay rent with a 60-day continuance, and a 30-day stay of foreclosure proceedings for owners of one-to-four-family units or larger residential dwelling units, if those tenants or owners provide “written proof” (as defined in the bill) that they were affected by Covid-19. Stays must be requested within 90 days following the end of the declared emergency, and the bill itself is set to expire 90 days after the end of the declared emergency.
Virginia directs additional funds for rent and mortgage relief
On October 7, Virginia’s governor announced his direction of $12 million in additional funding from the federal CARES Act to Virginia’s Rent and Mortgage Relief Program. The program was first launched in June with $50 million in funding available for renters and homeowners. In September, the program began allowing landlords to apply for payments on behalf of tenants.
Virginia governor announces expansion of grant program for small businesses, nonprofits
On September 21, the Virginia governor announced the expansion of the Rebuild VA, the $70 million economic recovery fund for small businesses and nonprofits impacted by Covid-19. As a result of the expanded eligibility requirements, businesses that received funding from the federal CARES Act and supply chain partners of businesses whose normal operations were impacted by the Covid-19 pandemic will be eligible to receive grants of up to $10,000. The Rebuild VA funding may be used for, among other things, payroll support, employee salaries, and mortgage payments, rent, and utilities. The announcement provides additional information regarding eligibility for the grants.
Virginia Supreme Court grants temporary statewide moratorium on evictions
On August 7, the Virginia Supreme Court, at the request of the governor, granted a temporary statewide moratorium on eviction proceedings in Virginia. The order suspends the issuance of writs of eviction pursuant to unlawful detainer actions, unless such writs are unrelated to a failure to pay rent. The moratorium is effective through September 7.
4th Circuit affirms arbitration clause waiving statutory rights is unenforceable
On July 21, the U.S. Court of Appeals for the Fourth Circuit affirmed a district court’s denial of defendants’ motion to compel arbitration, holding that the arbitration agreements operated as prospective waivers of federal law and were thus unenforceable. According to the opinion, a group of Virginia borrowers filed suit against two online lenders owned by a sovereign Native American tribe and their investors (collectively, “defendants”). In the action, the plaintiffs contended that they obtained payday loans from the defendants, which included annual interest rates between 219 percent to 373 percent—an alleged violation of Virginia’s usury laws and the Racketeer Influenced and Corrupt Organizations Act (RICO). The defendants moved to compel arbitration, which the district court denied, concluding that choice-of-law provisions—such as “‘[t]his agreement to arbitrate shall be governed by Tribal Law’; ‘[t]he arbitrator shall apply Tribal Law’; and the arbitration award ‘must be consistent with this Agreement and Tribal Law’”—prospectively excluded federal law, making them unenforceable.
On appeal, the 4th Circuit agreed with the district court despite a “strong federal policy in favor of enforcing arbitration agreements.” Most significantly, the appellate court rejected the defendants’ assertion that the choice-of-law provisions did not operate as a prospective waiver. The court noted that while the choice-of-law provisions “do not explicitly disclaim the application of federal law, the practical effect is the same,” as they limit an arbitrator’s award to “remedies available under Tribal Law,” effectively preempting “the application of any contrary law—including contrary federal law.” Moreover, the appellate court concluded that under the arbitration agreement, borrowers would be unable to effectively pursue RICO claims against the defendants, and more specifically, would be unable to “effectively vindicate a federal statutory claim for treble damages” under RICO. Thus, because federal statutory protections and remedies are unavailable to borrowers under the agreement, the appellate court concluded the entire agreement is unenforceable.
Virginia announces temporary moratorium on evictions
On June 8, Virginia announced a temporary moratorium on residential eviction proceedings through June 28. The order suspending evictions remains in effect through June 28. Eviction proceedings are halted for a period of almost three weeks while the governor implements a rent relief program.