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Virginia Federal Court Applies Continuing Violation Theory to Extend FHA Statute of Limitations
On January 29, the U.S. District Court for the Western District of Virginia invoked the continuing violation theory in refusing to bar an otherwise untimely Fair Housing Act discrimination claim. Nat’l Fair Hous. Alliance, Inc. v. HHHunt Corp., No. 11-131, 2013 WL 335877 (W.D. Va. Jan. 29, 2013). The case against the defendant architect centered on the design and construction of two apartment complexes in North Carolina. The parties agreed that the FHA’s two year statute of limitations had not run on claims relating to one of the projects. Standing alone, the claims relating to the other apartment complex were outside the two year limitation. The plaintiffs argued, however, that the two allegedly wrongful designs together established a pattern or practice of discriminatory acts, the last of which having occurred within the statutory time frame, served to save all claims from the time limitation. The court found this theory viable and denied the defendant’s motion for summary judgment. In doing so the court held that multiple design and construction projects that are “sufficiently related” can constitute a pattern or practice that warrants extending the statute of limitations period. Whether the two apartment construction projects at issue were so related, the court reasoned, raised a genuine issue of material fact that prevented summary judgment.
NACHA Finalizes Guidelines for Use of Quick Response Codes for Consumer Bill Pay
Recently, NACHA – The Electronic Payments Association’s Council for Electronic Billing and Payment, released final guidelines to facilitate the use of Quick Response (QR) codes for a variety of consumer bill payment functions, including viewing bills, making payments, enrolling for eBills, and setting up payees in online banking. The guidelines provide voluntary standards for using QR codes in both biller direct and consolidator/aggregator billing and payment models, and provides recommends for (i) QR code size, (ii) data to be included in the QR code, and (iii) layout of the data represented in the QR code. The guidelines are intended to establish a single QR code format that can be printed on a paper bill and scanned by a consumer’s mobile phone using a biller, mobile banking, or generic QR code reader to allow billers and service providers to enable QR encoding in a standardized format, provide certainty for biller and banking clients, and ensure a consistent consumer experience.
Fannie Mae Updates Servicer Selection Form and Process, Publishes First Issue of New Quarterly Compliance Newsletter
On February 1, Fannie Mae issued a Servicing Notice requiring servicers to submit a Servicer Selection Form (Form 200) to Fannie Mae for each law firm the servicer will retain for default-related services. If a law firm practices in multiple jurisdictions, Fannie Mae requires a servicer to submit a Servicer Selection Form for each jurisdiction in which the servicer intends to retain the firm. The notice also provides a link to a step-by-step guide for completing and submitting Form 200.
On February 5, Fannie Mae published the first issue of The Quarterly Compass, a new newsletter providing projected timelines on upcoming key Fannie Mae initiatives and changes that may impact lenders’ and vendors’ operations, systems, and processes. The first issue includes, among other things, (i) a Quarterly Initiatives Timeline, (ii) a ULDD Phase 2 update, and (iii) information about loan delivery updates.
California Supreme Court Holds Online Download Purchase Transactions Not Covered By Song-Beverly Credit Card Act
On February 4, the California Supreme Court held, in a 4-3 split ruling, that the personal privacy protections afforded consumers by the Song-Beverly Credit Card Act do not apply when the item purchased is downloaded via the Internet. Apple Inc. v. Sup. Ct. Los Angeles Cty., No. S199384, 2013 WL 406586 (Cal. Feb. 4, 2013). However, the court did not consider whether the Song-Beverly Act privacy provisions apply to the broader category of online transactions that do not involve a downloadable product. In this case, a customer filed a putative class action against an online digital media retailer, alleging that the retailer’s practice of requiring customers to provide their telephone number and address before accepting credit card payment for downloadable media purchases violates Section 1747.08 of the Song-Beverly Act, which prohibits retailers from requiring personal information as a condition to completing credit card transactions. Citing the statutory language and legislative history, the court explained that while Song-Beverly was intended to protect personal privacy, it was not meant to do so at the risk of increasing fraud. Further, the court determined that fraud protections provided in Song-Beverly, which allow retailers to request proof of identification, are not available to online retailers selling downloadable products. The court also reasoned that in later enacting the California Online Privacy Protection Act, the state legislature demonstrated that it can unambiguously address online transactions, and that it sought to strike a different balance between privacy protections and online commerce than did the Song-Beverly Act. Therefore, the court held, online transactions involving downloadable products fall outside the scope of Song-Beverly. The court invited the legislature to revisit consumer privacy in connection with online transactions.
Special Alert: Detailed Analysis of CFPB's Mortgage Servicing Rules
On January 17, the CFPB issued final rules amending Regulation Z (TILA) and Regulation X (RESPA) to implement certain mortgage servicing standards set forth by the Dodd-Frank Act and to address other issues identified by the CFPB. The rule amending Regulation Z includes changes to (i) periodic billing statement requirements, (ii) notices about adjustable rate mortgage interest rate adjustments, and (iii) rules on payment crediting and payoff statements. The rule amending Regulation X addresses (i) force-placed insurance requirements, (ii) error resolution and information request procedures, (iii) information management policies and procedures, (iv) standards for early intervention with delinquent borrowers, (v) rules for contact with delinquent borrowers, and (vi) enhanced loss mitigation procedures. This Alert includes a detailed analysis of these nine topics and also provides links to each of the model forms amended or added by the rule. For ease of reference, this Alert contains a detailed, hyper-linked table of contents. Click here to download our detailed analysis of CFPB's Mortgage Servicing Rules.
FTC Announces Mobile Privacy Enforcement Action, Issues Mobile Privacy Staff Report
On February 1, the FTC announced that it is requiring a social networking application company to pay $800,000 and make certain compliance enhancements to resolve allegations that the firm (i) misled and deceived users by automatically collecting and storing personal information from users’ mobile device address books even if the users had not selected that option and despite claims that the application collected only certain non-personal user information, and (ii) violated the Children’s Online Privacy Protection Act Rule by collecting personal information from approximately 3,000 children under the age of 13 without first getting parents’ consent. Pursuant to the consent decree, in addition to the monetary penalty, the company must establish a comprehensive privacy program, and obtain independent privacy assessments every other year for the next 20 years.
Concurrently, the FTC released a staff report that provides disclosure policy and other guidance to mobile platforms, application developers, advertising networks and analytics companies, and application developer trade associations. For example, the report urges platforms to (i) provide just-in-time disclosures to consumers and obtain affirmative express consent before allowing applications to access sensitive content like geolocation; (ii) consider providing just-in-time disclosures and obtaining affirmative express consent for other content that consumers may find sensitive; and (iii) consider developing icons to depict the transmission of user data. With regard to application developers, the report recommends, for example, that developers (i) provide just-in-time disclosures and obtain affirmative express consent before collecting and sharing sensitive information; and (ii) improve coordination and communication with advertising networks and other third parties that provide services for applications. During a call announcing the report, the FTC explained that the report is intended to influence industry standards, and that the Commission staff will reference the report for future policymaking. The FTC also noted that the National Telecommunications and Information Agency is developing a code of conduct on mobile application transparency, and, if strong privacy codes are developed, the FTC will view adherence to such codes favorably in connection with its law enforcement work.
FTC Chairman Announces Plans to Step Down
On February 1, the FTC announced that Chairman John Leibowitz plans to step down on February 15, 2013. Mr. Leibowitz has been a Commissioner since September 2004, and has served as Chairman for the past four years. During his tenure, the FTC has prioritized consumer privacy and financial fraud enforcement and policy development. With regard to privacy initiatives during his time as Chairman, the FTC issued a landmark report setting forth best privacy practices for all businesses, and recently updated the Children’s Online Privacy Protection Rule.
CFPB Launches Inquiry into Financial Products Marketed through Higher Learning Institutions
On January 31, the CFPB issued a notice and request for comment about how current and future arrangements between institutions of higher education and financial institutions could be structured “to promote positive financial decision-making among young consumers.” The inquiry also is designed to help the CFPB “develop a clearer picture of the financial products and services that are being offered to college students, as well as consumers’ experiences using those products and services.” Specifically, with regard to campus affinity relationships, the CFPB wants to know, among other things, (i) what types of campus affinity products are being offered to students, what features do they have, how are they being marketed, and what are their terms and conditions, including fees, (ii) what information about students is being provided to the education institution, (iii) the nature and volume of student complaints, (iv) what benefits are education institutions realizing through affinity relationships, and (v) the extent to which these products are bundled with student identification cards. The CFPB also seeks similar information about other financial products marketed to students. The CFPB is seeking comments from various stakeholders, including students, institutions of higher education, and financial institutions by March 18, 2013.
CFPB Names Acting Deputy Director
On January 31, the CFPB announced that Steve Antonakes will serve as acting Deputy Director, following the previously announced departure on the same day by Deputy Director Raj Date. Mr. Antonakes currently serves as the CFPB’s Associate Director for Supervision, Enforcement, and Fair Lending. He will retain all the responsibilities of that position while also serving as acting Deputy Director. Mr. Antonakes is a former state financial services regulator who joined the CFPB in November 2010 and last year was promoted from Assistant Director for Large Bank Supervision. Mr. Date was the first Deputy Director of the CFPB, and brought to the position his experience as a strategy consultant and bank executive.
Democratic Lawmakers Seek Information Regarding Independent Foreclosure Review Settlements
On January 31, Senator Elizabeth Warren (D-MA) and Representative Elijah Cummings (D-MD), House Oversight Committee Ranking Member, sent a letter to the Federal Reserve Board and the OCC seeking documents and information regarding the regulators’ decision to enter into settlements with certain mortgage servicers subject to consent orders issued in April 2011 to (i) resolve allegations that the firms engaged in improper mortgage servicing and foreclosure practices and (ii) end the Independent Foreclosure Review process established by the prior consent orders. The lawmakers are seeking (i) all documents regarding the performance of the independent consultants engaged by the servicers to conduct the foreclosure reviews, (ii) all documents created by the servicers or the consultants to update the regulators on the status of the foreclosure review process, (iii) all documents compiled by the regulators indicating the total amount of settlement funds paid to each consultant, (iv) the number of borrowers who requested review, by gender, race, zip code, and property value, (v) the total number of reviews initiated by each contractor, and (vi) the average time each contractor required to complete a review of a borrower’s file.
On the same day, House Financial Services Committee Ranking Member Maxine Waters (D-CA) sent a separate letter requesting that the regulators ensure the final agreements entered in lieu of the foreclosure reviews include certain specific provisions, including (i) reordering of the matrix categories, (ii) requirements that principal reduction be provided as a form of indirect relief, and (iii) appointment of an independent monitor. Representative Waters also seeks information about payments to the consultants and how the regulators decided on the $8.5 billion settlement amount. Finally, a recent report noted that Representative Carolyn Maloney (D-NY) initiated her own inquiry into the settlements and payments to the consultants. According to the report, the letter may be used to support a request that the regulators claw back some of the payments made to the consultants.