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  • Superior Court rules phone calls, email are not alternatives to an ADA-compliant website

    Courts

    On May 21, a California Superior Court granted summary judgment to a visually-impaired plaintiff, ruling that “auxiliary aids” in the form of phone calls or email replies do not meet the Americans with Disabilities Act’s (ADA) burden of providing “full and equal enjoyment of…any place of public accommodation.” According to the order, the defendants, who operate a restaurant and website, argued in part that the plaintiff could have called or emailed the restaurant to obtain information from the website. However, the judge ruled that “email and telephone options do not provide effective communication ‘in a timely manner’ nor do they protect the independence of the visually impaired” because they force a wait for a call back or reply email. As to whether the defendants’ website qualified as a “place of public accommodation within the meaning of the ADA,” the judge ruled that—while courts are split about whether “public accommodations” are limited to physical spaces—the defendants’ restaurant website fell within the category of a public accommodation under a “plain reading” of the statute, and the DOJ’s interpretation of websites under Title III of the ADA. In addition to awarding $4,000 in statutory damages, the court issued an injunction to the defendants, ordering them to comply with Web Content Accessibility Guidelines 2.0 AA to ensure their website is ADA compliant.

    Courts Americans with Disabilities Act State Issues DOJ

  • Louisiana governor signs amendments relating to consumer loan licensing

    State Issues

    On May 15, the Louisiana governor signed SB171, which amends a state statute that prescribes when a person acquiring or controlling ownership interest in a consumer loan licensee must obtain approval from the state’s commissioner. Under SB171, written approval by the commissioner must now be received for any person acquiring or controlling “[25] percent or more of the ownership interest in a licensee”—an amount previously set at 50 percent or more. The amendments also strike the requirement that “[a]ny person who acquires or anticipates acquiring a [75] percent interest in a licensee shall file for a new license prior to acquiring ownership of said interest either incrementally over a period of time or as one transaction.” The amendments became effective upon signature by the governor.

    State Issues State Legislation Licensing Consumer Lending

  • SEC obtains court order halting allegedly fraudulent initial coin offering

    Securities

    On May 29, the SEC announced it obtained a court order halting an alleged fraud involving an initial coin offering (ICO) that raised as much as $21 million from investors in the U.S. and overseas. In addition, the court approved an emergency asset freeze and appointed a receiver for the firm allegedly responsible for the scheme, the SEC said in its press release. According to the SEC’s complaint filed May 22 in California federal court, the firm’s president and one of two firms he controls allegedly violated the antifraud and registration provisions of the federal securities laws, by, among other things, (i) making misleading statements to investors about the nature of business relationships with the Federal Reserve and nearly 30 well-known companies, and (ii) including “fabricated, misleading, and/or unauthorized” testimonials from corporate customers on the firm’s website designed to “establish a presence and seeming expertise.” A second firm controlled by the defendant has also been charged with violating antifraud provisions. Among other things, the SEC seeks permanent injunctions, the return of profits associated with the fraudulent activity, plus interest and penalties, and a ban prohibiting the president from participating in ICOs in the future.

    Securities Digital Assets Initial Coin Offerings SEC Fraud Fintech

  • OFAC updates Ukraine-/Russia-related FAQs to address authorized wind-down activities permitted under certain general licenses

    Financial Crimes

    On May 25, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) published two additional FAQs to provide additional guidance on authorized wind-down activities outlined within General Licenses (GL) 12C, 14, and 15. (See previous InfoBytes coverage here concerning GL 14 and here for GL 12C and GL 15.) Specifically, the FAQs discuss conditions under which a U.S. person is authorized to receive scheduled principal and interest payments from identified blocked persons for a loan or bond in existence before the April 6 sanctions against Russian oligarchs or entities. The FAQs also address sanction implications for a foreign entity—that is itself not blocked—who pays dividends to a blocked person holding less than 50 percent equity interest.

    Visit here for additional InfoBytes coverage on Ukraine/Russian sanctions.

    Financial Crimes OFAC Sanctions Ukraine Russia International Department of Treasury

  • New Jersey Attorney General seeks to partner with Department of Education on for-profit investigations

    State Issues

    On May 17, the New Jersey Attorney General, Gurbir Grewal, sent a letter to the Secretary of Education, Betsy Devos, regarding concerns that the Department of Education (Department) is no longer investigating fraudulent activities at for-profit colleges. Grubir cited work that State Attorneys General did with the Department during the previous administration regarding these investigations and noted that the cooperation between his office and the Department has “ground to a halt.” The letter concludes with Grubir requesting the Department continue several investigations that are in progress and offers to assist in sharing information and supplementing resources or, if the Department chooses not to pursue the investigations, to allow the New Jersey Attorney General to “pick up where [the Department] leave[s] off.”

    State Issues State Attorney General Department of Education For-Profit College Student Lending

  • 9th Circuit affirms credit reporting agency’s code data did not violate the FCRA

    Courts

    On May 29, the U.S. Court of Appeals for the 9th Circuit affirmed summary judgment for a national credit reporting agency, holding that the company did not violate the Fair Credit Reporting Act (FCRA) in its reporting of short sales executed by the plaintiffs. The decision results from a proposed class action suit alleging that the credit reporting agency violated the FCRA by reporting short sales executed between 2010 and 2011 with code numbers that misreported the data as foreclosures. In September 2016, the lower court found that the credit reporting agency provided creditors with clear instructions on how to interpret the code system and Fannie Mae’s Desktop Underwriter program misinterpreted the “settled” code number “9” as a foreclosure, which was not the credit reporting agency’s fault. In affirming the lower court’s decision, the 9th Circuit held that the credit reporting agency “clearly and accurately disclosed to [consumers] all information that [the company] recorded and retained that might be reflected in a consumer report.” Additionally, the panel noted that the credit reporting agency was not required to report that Fannie Mae mishandled the code data when it became aware of it.

    Courts Ninth Circuit FCRA Credit Reporting Agency Short Sale Foreclosure Fannie Mae Appellate

  • VA issues policy guidance on VA refinance loans in response to the Economic Growth, Regulatory Relief and Consumer Protection Act

    Federal Issues

    On May 25, the Department of Veterans Affairs (VA) issued Circular 26-18-13 discussing the impact of “The Protecting Veterans from Predatory Lending Act of 2018” (the Act), which was included in the recently enacted bipartisan regulatory relief bill, Economic Growth, Regulatory Relief and Consumer Protection Act, S. 2155, previously covered by InfoBytes here. The Act addresses “loan churning” of VA-guaranteed refinance loans and sets out new requirements for VA eligibility. As of May 25, a lender (broker or agent included), a servicer, or issuer of an Interest Rate Reduction Refinance Loan (IRRRL) must, among other things:

    • Recoup Fees. Certify that certain fees and costs of the loan will be recouped on or before 36 months after the loan note date;
    • Establish a Net Tangible Benefit. Establish that when the previous loan had a fixed interest rate (i) the new fixed interest rate is at least 0.5 percent lower or (ii) if the new loan has an adjustable rate, that the rate is at least 2 percent lower than the previous loan. In each instance, the lower rate cannot be produced solely from discount points except in certain circumstances; and
    • Apply a Seasoning Period. Follow a seasoning requirement for all VA-guaranteed loans. A loan cannot be refinanced by an IRRRL or a VA cash-out refinance (if the new principle amount is less than the loan being refinanced) until (i) 210 days after the date of the first payment made on the loan and (ii) the date of the sixth monthly payment is made on the loan.

    The circular is rescinded on January 1, 2020.

    Federal Issues Department of Veterans Affairs Refinance IRRRL S. 2155 Bank Regulatory Predatory Lending EGRRCPA

  • District of Columbia mayor passes bill to make code consistent with FTC, federal court interpretations of unfair or deceptive trade practices

    State Issues

    On May 21, District of Columbia Mayor Muriel Bowser signed B22-0185/D.C. Act 22-367 to, among other things, update portions of the District of Columbia’s Official Code concerning the term “unfair or deceptive trade practice” to make it consistent with interpretations made by the FTC and federal courts. Language under the Consumer Protection Clarification and Enhancement Amendment Act of 2018, has been amended to read as follows: “It shall be a violation of this chapter for any person to engage in an unfair or deceptive trade practice, whether or not any consumer is in fact misled, deceived, or damaged thereby.” The amendments also increase the civil penalty for first violations of the act to not more than $5,000 per violation, and to not more than $10,000 for repeat violations. The act will take effect following a 30-day congressional review period.

    State Issues State Legislation Consumer Protection FTC

  • Court orders Department of Education to cease collection efforts on student loans used for defunct for-profit school

    Courts

    On May 25, the U.S. District Court for the Northern District of California granted in part a preliminary injunction barring the U.S. Department of Education (Department) from continuing collection efforts on student loans used for programs at a now defunct for-profit college. The for-profit school closed in 2015 after a federal fraud investigation by the Department. The decision results from a December 2017 putative class action filed by former students of the school against the Department. The complaint alleged the Department violated the Administrative Procedures Act (APA) and the Privacy Act of 1974 by its December 2017 announcement that it would use an “average earnings” metric to determine what to charge students for the value of the education they received at the college. According to the former students, the previous policy—which measured the job placement rate of graduates—would have provided full loan forgiveness for the federal student loans used for the defunct school. In response to the students’ motion for a preliminary injunction, the court granted the students’ request to prevent the Department from using the “average earnings” metric, but denied the motion to require the Department to use the previous job placement metric. Additionally, among other things, the judge denied the students’ request to order the Department to remove all negative credit reporting but did order the Department to cease collection efforts on the loans.

    Courts Department of Education Debt Collection Student Lending Lending Consumer Finance

  • Department of Education plans to use servicers, not private debt collectors, to assist delinquent borrowers

    Federal Issues

    On May 23, the Department of Education (Department) affirmed plans to begin using “‘enhanced servicers’ to assist delinquent borrowers prior to default” instead of private debt collection agencies. The affirmation was made in a reply brief supporting the Department’s motion to dismiss an action filed by collection agencies in the U.S. Court of Federal Claims that challenged the Department’s decision to award contracts to two private debt collectors. The Department argues in the reply brief that the challenge is moot because the Department cancelled the solicitation under which the contracts were awarded to pursue a new collection plan using “enhanced servicers.” According to the brief, the new collection approach will “place a greater emphasis on customer service and early outreach to address delinquencies with a full range of early options for borrowers.”

    Federal Issues Department of Education Student Lending Debt Collection Servicing Consumer Finance

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