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U.S. SDNY dismisses FDCPA case against student loan trusts for time-barred violations
On August 16, the U.S. SNDY dismissed as time-barred a student loan debt class-action brought against student loan trusts, servicing agents and a law firm. The suit, brought by a class of New York residents holding student loan debt, alleged defendants collected student loan debt without proper documentation. Plaintiffs brought three sets of claims: FDCPA claims against the servicing agents and law firm defendants, New York State General Business Law (GBL) § 349 claims against all defendants, and Judiciary Law (JL) § 487 claims against the law firm defendant.
However, the court found that all the plaintiffs’ claims were time-barred. The FDCPA claims have a one-year limitations period, GBL claims have a three-year limitations period, and JL claims have a six-year limitations period. Based on injury and violation dates, the plaintiffs’ FDCPA, GBL and JL claims expired in 2015, 2017 and 2020, respectively. In addition, although equitable tolling did apply to plaintiffs’ FDCPA and GBL claims, the extraordinary circumstances warranting such tolling ended shortly after September 18, 2017, when the CFPB released a report describing the defendants’ conduct. As such, even with equitable tolling, the plaintiffs’ claims were time-barred.
On the same day, in the CFPB’s case against several of the same defendants alleging similar conduct, defendants filed a petition for certiorari with U.S. Supreme Court (covered previously in InfoBytes here and here) requesting that the Court review the following questions: (i) when should an enforcement action that is initiated by an agency head unconstitutionally insulated from removal be dismissed to remedy that separation-of-powers violation?; and (ii) whether passive securitization vehicles used to acquire and pool consumer loans are “covered persons” because they “engage[] in offering or providing a consumer financial product or service” under the CFPA.
CFPB releases beta platform for small business lending data filing platform
On August 27, the CFPB launched a beta platform for the small business lending data collection rule under Section 1071 of the Dodd-Frank Act. Financial institutions and their technology Participants can upload sample data test files to test the platform, explore its features and provide feedback. The beta platform is for testing purposes only, and data submitted will not count towards compliance with small business lending data reporting requirements. Test files are available in the CFPB’s repository. Finally, the Bureau states that it is imperative that participants avoid using actual customer data.
CFPB issues filing instructions, other resources for nonbank registration
On August 23, the CFPB issued a Filing Instructions Guide and launched the Nonbank Registry webpage to help nonbank entities understand, register and comply with the Nonbank Registration Rule (the Rule). As previously covered by InfoBytes, the Rule, which was issued on June 3 and becomes effective on September 16, will require certain nonbanks (subject to public orders resulting from regulatory actions) to register and file reports with the CFPB.
The Rule includes three separate submission periods.
- For larger participant CFPB-supervised covered nonbanks, the registration submission period is October 16 through January 14, 2025.
- For other CFPB-supervised covered nonbanks, the submission period is January 14, 2025, through April 14, 2025.
- For all other covered nonbanks, the submission period is April 14, 2025, through July 14, 2025.
The CFPB’s Nonbank Registry webpage links to various resources for filers, including the Filing Instructions Guide, an executive summary of the Rule, a sample registration form, and instructions for viewing state regulatory actions in NMLS. The CFPB notes that other resources will be added soon, including Quick Reference User Guides and additional sample forms. The Nonbank Registry Portal will likely go live on October 16 enabling nonbanks to start the registration process.
The Nonbank Registry webpage states that the CFPB plans to publish certain information from the registry online for public and regulatory use, along with summary reports and aggregations. It also provides a nonbank registry technical assistance email address (NBRHelp@cfpb.gov) for submission of requests for technical help with using the Nonbank Registry.
CFPB offers additional guidance for BNPL lenders during compliance transition
On August 16, the CFPB published a blog post on the CFPB’s approach to working collaboratively with the buy now pay later (BNPL) industry to develop an effective regulatory approach to BNPL loans. The blog post stated the CFPB was seeking to provide guidance to BNPL lenders to ensure that rules applied to BNPL lenders protected consumers while encouraging innovative technological or business practices by new market entrants. To this end, the CFPB issued an interpretive rule in May clarifying how federal laws like TILA and Regulation Z apply to BNPL loans (covered by InfoBytes here).
Following issuance of the interpretive rule, including the receipt of comments submitted in response to the interpretive rule, the CFPB reported that the BNPL industry has responded positively with many lenders working to comply with the clarified regulations. To provide additional guidance to lenders who are transitioning their systems to comply with the interpretive rule, the CFPB plans to release a set of FAQs next month, responding to questions received in comments and issued raised during the CFPB’s meetings with BNPL providers. Additionally, the CFPB stated that it will not seek penalties for rule violations during a BNPL’s lender compliance transition if lenders act “in good faith and expeditious manner” through the transition.
GOP pens letter to CFPB on medical debt credit proposal
On August 14, GOP members of the House Financial Services Committee sent a letter to CFPB Director Rohit Chopra voicing concerns about the CFPB’s proposed rule to ban the use of medical information for credit eligibility determinations. As previously covered by InfoBytes, the CFPB’s proposed rule would amend the FCRA to remove the medical financial information exception thus limiting the credit reporting of medical debt. In their letter, the GOP Congress members argued the CFPB’s proposal would weaken the accuracy and completeness of consumer credit reports, increasing risk in the financial system and causing negative effects on the availability of credit.
The letter noted that in the 50 years since the FCRA was enacted, creditors have been allowed to use medical debt information to determine credit eligibility. The letter noted that, in 2003, Congress acknowledged that medical debt information was “beneficial to understanding the full picture” of a consumer’s financial situation when enacting privacy protections for the use of such information. GOP members suggested that the proposed rule may be supported by current political biases, pointing out that the CFPB has had the authority to amend Regulation V, which permits creditors to use medical information for over a decade but only now seeks to prohibit the inclusion of medical debt on credit reports.
In their primary argument opposing the proposed rule, GOP members stated the CFPB did not provide sufficient data to support the claim that there were more inaccuracies in reporting medical debt than other types of debt. They also argued that the existence of some inaccuracies in medical debt reporting should not prevent creditors from knowing the debt burden of potential borrowers, particularly considering available dispute processes under the FCRA. Additionally, the members argued that the CFPB failed to provide evidence that medical debt information was insufficiently predictive to justify exclusion from credit reports.
Finally, the members argued that the proposed rule might have unintended consequences, such as making it more difficult for borrowers, especially low-income borrowers, to obtain credit and to increase the cost medical procedures to compensate providers for increased difficulty in collecting on medical debt.
CFPB releases 2025 filing instructions guide for small business lending data
Recently, the CFPB published updated its filing instructions guide for small business lending data that lenders will begin collecting in 2025. This guide provided instructions for financial institutions on how to collect, prepare and submit small business lending data for the reporting period from July 18, 2025, to December 31, 2025. Key updates from the 2024 guide included changes to reporting period dates, application and action taken dates, and validation requirements. The guide provided a set of resources to help small businesses (i) file the small business lending data; (ii) identify which data to collect and how to include such data in the report; (iii) validate the data; and (iv) comply with the CFPB’s small business lending rule.
CFPB opinion finds TILA applies to certain contracts for deed
On August 13, the CFPB released an advisory opinion regarding home purchases under a “contract for deed” and how the purchases must comply with federal mortgage protections. The advisory opinion stated the contract for deed transactions, secured by the buyer’s dwelling, were subject to specific TILA and Regulation Z protections. The CFPB issued this opinion to reinforce its previous classification of certain contracts for deed as consumer credit under the CFPA. In some cases, investigational targets were challenging other expansive CFPB interpretations of what constituted consumer credit (covered by InfoBytes here).
The Bureau explained that a contract for deed, also known as a land contract or agreement for deed, is a type of home loan in which the buyer makes periodic payments to the seller who retains the deed until the loan is repaid. According to the CFPB, TILA’s definition of “credit” includes contracts for deed as they allow buyers to acquire property and defer payment, creating a debt obligation. Additionally, in contract for deed transactions the buyer’s obligation to repay the property’s value over time constitutes a debt under TILA. The Bureau also highlighted that such transactions are considered “residential mortgage loans” under TILA when secured by the buyer’s dwelling thereby entitling buyers to residential mortgage loan protections. The opinion underscored the importance of compliance with TILA’s disclosure requirements and other protections, such as good-faith assessments of consumers’ ability to repay loans.
The CFPB also relied on TILA’s legislative history to support its determination that sellers using contracts for deed must comply with applicable TILA and Regulation Z requirements, depending on the nature of the contract and whether the seller is considered a creditor under TILA.
The CFPB also released a supplementary report that provides further context and elaborates on its interpretation of the law regarding contracts for deed.
CFPB proposes $3M fine in settlement with credit repair software company and CEO
On August 8, the CFPB proposed a stipulated final judgment and order to the U.S. District Court for the Central District of California against a credit repair software company. If approved by the District Court, this order would settle the CFPB’s allegations that a software company and its CEO violated the Telemarketing Sales Rule (TSR), the CFPA and approve a fine $1 million for the company and $2 million for the CEO — as well as enjoin them from future actions. In a complaint previously covered by InfoBytes, the CFPB found the defendants provided credit repair tools and services to businesses who offered these credit repair services to consumers; the CFPB alleged the defendants provided substantial assistance to their customers and violated the TSR and charged advance fees for credit repair services. An advance fee includes any fees charged to a customer enrolled in a credit repair service, monthly fees, or fees charged following removal from a consumer’s credit report. Credit repair services remove derogatory information from a person’s credit history.
The Bureau now seeks to permanently restrain the defendants from assisting anyone knowingly using telemarketing for credit repair services and charging advance fees for those services. It also seeks to enjoin the defendants from violating the TSR related to offering credit repair services. Additionally, the CFPB asked the court for several screening updates to identify suspect companies preemptively, among other compliance duties. The Bureau and the defendants have agreed to this order, which now awaits approval by the District Court. The defendants neither admitted nor denied the allegations in the complaint.
California’s Attorney General supports CFPB medical debt rule
On August 12, the California Attorney General (AG) submitted a comment letter in support of the CFPB’s proposed rule to ban using medical information for credit eligibility determinations. As covered by InfoBytes, the proposed rule would amend the FCRA to remove the medical financial information exception and limit credit reporting of medical debt. The AG noted how the CFPB’s efforts aligned with California’s SB 1061, which also targeted the exclusion of medical debt from credit scores.
This was not the first time the AG supported medical payment reforms; he previously wrote to federal agencies urging them to adopt consumer protections for patients using medical credit cards and installment loans to pay for healthcare-related bills (covered by InfoBytes here). The AG suggested the CFPB expand the definition of “medical information” to include all forms of medical bill payments made by or on behalf of patients for medical care, services, or devices. He argued this broader definition would ensure that all medical-related expenses, regardless of the payment method, were excluded from consumer credit reports.
The proposal also addressed the feasibility of financial institutions distinguishing between medical and non-medical debt. Credit card companies can exclude medical debt from credit reports through their merchant systems, suggesting these proposed changes might be implemented more easily.
CFPB: Credit card delinquencies can be credited to loosened lending standards
On August 6, the CFPB published a blog post regarding a rise in credit card delinquencies since the Covid-19 pandemic. The Bureau reported an increase in credit scores and a decrease in credit card delinquencies during the pandemic because of pandemic aid and forced savings, whereas 2022 and 2023 exhibited an increase in delinquencies. The Bureau pointed to “loosened” lending standards during the pandemic as a key reason why credit card delinquencies were about two percentage points higher than in 2019.
According to the blog post, credit cards originated in 2021, 2022 and 2023 became delinquent more rapidly than credit cards originated in previous years. Specifically, about 8 percent of credit cards in 2022 and 2023 became delinquent around two years after origination; in 2016, the same percentage of delinquency occurred after about four years. Furthermore, the CFPB referenced data from the Fed’s Senior Loan Officer Opinion Survey to support its claim that “new credit cards were opened for borrowers who were relatively riskier despite lenders saying they were tightening standards in 2020.” The post concluded that a small but “significant” portion of those riskier borrowers went delinquent soon after getting the card.