A Look at the California DFPI’s Debt Collection Oversight Measures Thus Far

Since the California Department of Protection and Financial Innovation's (DFPI) formal establishment at the beginning of this year, a number of issues have come into focus as key agency priorities. Among these, debt collection is one of the highest priority issues for the new department—which has been busy to that end. Here, we highlight the DFPI's recent debt collection-focused public statements and materials related to legislation and rulemakings, COVID-19 protections, and enforcement actions.

What Bank of America’s new $25 minimum wage means for everyone else

From McDonald’s to Chipotle, numerous companies in the US have been raising wages for workers at the bottom of the pay scale amid a labor squeeze facing the US services industry.

TCPA TALE: 16 Years After Call is Made Appellate Court Finally Sinks TCPA Suit for Lack of Standing

Real quick, the Third Circuit Court of Appeals held today that a violation of the TCPA does not automatically confer standing. This is the first time the Court has reached the issue directly–although it did so in the context of an unpublished decision. Decision here: Lesye

Credit Scores ‘May Lose Some Power’ After Covid, Fed Warns

The Federal Reserve Bank of New York warned that credit scores -- the all-powerful number that can determine if a consumer is able to qualify for a loan, rent a home or even buy car insurance -- might have gotten less reliable during the coronavirus pandemic. Scores for homeowners who took advantage of payment relief on their mortgages actually rose an average of 14 points over the course of the pandemic, according to a new analysis by the New York Fed. That was a bigger jump than the seven-point increase seen among borrowers that didn’t take forbearance on their loans.

FCC Creates Public Database to Track Compliance with New Robocall-Killing Program

The Federal Communications Commission is moving ahead with a program requiring telephone service providers to verify the origins of phone calls—potentially eliminating spoof and robocalls—and is creating a new public database to track compliance among carriers. This summer, telephone service providers in the U.S. will be required to comply with the Secure Telephone Identity Revisited, or STIR, and Signature-based Handling of Asserted Information Using toKENs, or SHAKEN, which requires tracking and accurately displaying the true caller ID of incoming calls. Compliance with these standards will be tracked in a new Robocall Mitigation Database and posted publicly for all to see, according to a notice posted in the Federal Register.

Health care in America ‘is completely out of whack’ as millions face medical debt collections

Health care costs in the U.S. continue to grow year after year, leaving Americans with more and more debt.

Biden’s stimulus bill’s affect on student loans: What to know

According to a recent Pew Research study, 49% of workers who lost income after the pandemic hit are still earning less money than they were before. To provide some relief, the federal government paused student loan repayment and set the interest rate to 0% for some federal student loans. However, the loss of income has made it more difficult for borrowers who are still responsible for repaying their loans to afford their monthly payments.

As home prices rise, so does mortgage debt

Mortgages got a little bit more expensive this week — with the emphasis on “little.” Freddie Mac said Thursday that the average interest on a 30-year fixed-rate mortgage is back up to 3%, with fees of 0.6%. That is still incredibly low by historical standards. Those low rates are in turn tempting homebuyers to borrow more money to pay those rising home prices.

Banks to offer credit cards to people without credit scores

It will soon be possible to get a credit card even if you don’t have a credit score. As early as this fall, banks such as JPMorgan Chase, Wells Fargo and U.S. Bancorp will launch a collective pilot program that factors in data from applicants’ savings and checking accounts to boost their chances of getting a credit card, the Wall Street Journal reported.

IRS can seize unemployment tax refunds for unpaid debts

The IRS began issuing refunds this week to Americans who overpaid taxes on unemployment benefits collected last year – but some individuals could have their checks seized to offset unpaid debts. The money is "subject to normal offset rules," the IRS said, meaning that it can be used to cover "past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support or certain federal nontax debts (i.e., student loans)."

FTC Sues Frontier Communications for Misrepresenting Internet Speeds

The Federal Trade Commission, along with law enforcement agencies from six states, sued Internet service provider Frontier Communications, alleging that the company did not provide many consumers with Internet service at the speeds it promised them, and charged many of them for more expensive and higher-speed service than Frontier actually provided. 

Judge rules DeVos must testify in lawsuit over student loan forgiveness

A federal judge on Wednesday said that former Education Secretary Betsy DeVos must testify in a class-action lawsuit over her handling of student loan forgiveness claims, ruling that “exceptional circumstances” justify the rare deposition of a former Cabinet secretary. Judge William Alsup rejected the joint effort by DeVos and the Biden administration to prevent her from having to testify in the case. The lawsuit is being brought on behalf of roughly 160,000 borrowers who applied to the Education Department for loan forgiveness, on the grounds that they were defrauded by their for-profit colleges.

CFPB Publishes Brief on Characteristics of Mortgage Borrowers During the COVID-19 Pandemic

The CFPB Office of Research recently published a special issue brief detailing trends among borrowers in forbearance and delinquent on their mortgages since the onset of the COVID-19 pandemic.  The brief covers characteristics for three groups of borrowers with mortgage loans: those with loans in forbearance, those with loans that were 60-plus days delinquent, and those with loans that were current.

FCC to Consider Proposed Rulemaking on Call Authentication

The Federal Communications Commission will consider a Further Notice of Proposed Rulemaking  (FNPRM) during its Thursday, May 20 meeting“ to fight illegal robocalls by proposing to accelerate the date by which small voice service providers that originate an especially large amount of call traffic must implement the STIR/SHAKEN caller ID authentication framework,” according to the meeting notice.

First-time jobless claims fall to new pandemic low of 444K as layoffs ease and 22 states cut off federal bonus

WASHINGTON — The number of Americans seeking unemployment aid fell last week to 444,000, a new pandemic low and a sign that the job market keeps strengthening as consumers spend freely again, viral infections drop and business restrictions ease.

FTC Sending More than $147,000 in Refunds to People Affected by Student Loan Debt Relief Scam

The Federal Trade Commission is sending more than $147,000 in full refunds to people affected by a student loan debt relief scam.

House Passes Comprehensive Debt Collection Improvement Act That Would Expand Multiple Consumer Finance Laws

Last week, the U.S. House of Representatives passed a bill, H.R. 2547, on a strict party-line vote. Titled "The Comprehensive Debt Collection Improvement Act, the bill would amend several consumer finance statutes for the first time in decades and impose new requirements and limitations on debt collectors, among others. Its fate now rests in the U.S. Senate.

The State of Household Debt in America

American households are becoming increasingly indebted. In 2003, total household debt was $7.23 trillion, but that figure has recently doubled to $14.56 trillion in 2020. With just under 130 million households in the country, this equates to an average of $118,000 of debt per household. Here’s how the various forms of U.S. household debt compare.

Hundreds of PPP Loans Went to Fake Farms in Absurd Places

The shoreline communities of Ocean County, New Jersey, are a summertime getaway for throngs of urbanites, lined with vacation homes and ice cream parlors. Not exactly pastoral — which is odd, considering dozens of Paycheck Protection Program loans to supposed farms that flowed into the beach towns last year.

FDIC Issues Request for Information on Digital Assets

WASHINGTON — The Federal Deposit Insurance Corporation (FDIC) today announced that it is gathering information and soliciting comments from interested parties about insured depository institution’ current and potential digital asset activities.

FCC Creates Public Database to Track Compliance with New Robocall-Killing Program

The Federal Communications Commission is moving ahead with a program requiring telephone service providers to verify the origins of phone calls—potentially eliminating spoof and robocalls—and is creating a new public database to track compliance among carriers. This summer, telephone service providers in the U.S. will be required to comply with the Secure Telephone Identity Revisited, or STIR, and Signature-based Handling of Asserted Information Using toKENs, or SHAKEN, which requires tracking and accurately displaying the true caller ID of incoming calls. Compliance with these standards will be tracked in a new Robocall Mitigation Database and posted publicly for all to see, according to a notice posted in the Federal Register.

TCPA Case Dismissed Because Agents Lacked Authority

Under the TCPA, liability attaches to the party who makes the call. Easy enough. But it goes further than that. The FCC has interpreted the TCPA to reach sellers who can be held liable for the acts of “a third-party marketer . . . under federal common law principles of agency.” In re Joint Petition Filed by Dish Network, LLC, et al., 28 F.C.C. Rcd. 6574 at par. 1 (2013). This agency principle includes “apparent authority and ratification.” Id., par. 28.

FTC Data Shows Huge Spike in Cryptocurrency Investment Scams

Since October 2020, consumers have reported losing more than $80 million to cryptocurrency investment scams, an increase of more than ten-fold year-over-year, according to a new data analysis from the Federal Trade Commission. In a new consumer protection data spotlight, the FTC breaks down the contents of nearly 7,000 reports received from consumers about these scams in the last quarter of 2020 and the first quarter of 2021. The median amount consumers reported losing to the scams was $1,900.

Cybersecurity: How talking about mistakes can make everyone safer

The healthiest way to approach keeping people safe from online threats is to talk about misjudgements and errors – and to do so in a way that lets them understand that almost everyone has made a cybersecurity mistake at some point. Encouraging discussion around the threats people have faced can go a long way to helping others becoming more aware of what to look out for – and to avoid falling victim to cyber criminals themselves.

After National Search, the DFPI Hires ‘Fintech’ Legal Expert to Lead New Financial Technology and Innovation Office

SACRAMENTO – After a nationwide search, the California Department of Financial Protection and Innovation (DFPI) announced today it has hired Christina Tetreault to lead the new Office of Financial Technology and Innovation, which will provide a national model for fostering responsible innovation by offering early guidance to entrepreneurs developing financial products and services in California.

U.S. Banks Could Shed 200,000 Jobs in Decade in Efficiency Drive

(Bloomberg) — U.S. banks could cut as many as 200,000 jobs in the next decade as they try to boost efficiency to compete with fintech and other upstarts encroaching on their territory, according to Wells Fargo & Co.

Agencies Extend Comment Period on Request for Information on Artificial Intelligence

WASHINGTON, D.C. – Five federal financial regulatory agencies announced today they will extend the comment period on the request for information on financial institutions’ use of artificial intelligence (AI) until July 1, 2021.

ATTORNEY GENERAL HERRING’S CONSUMER PROTECTION SECTION HAS RECOVERED MORE THAN $403 MILLION SINCE 2014

RICHMOND (May 14, 2021) – During Attorney General Mark R. Herring’s time in office, his enhanced Consumer Protection Section has recovered more than $403 million in relief for consumers and payments for violators. Attorney General Herring’s Consumer Protection Section protects Virginians from being exploited by abusive, deceptive, predatory, or illegal business practices. Following a major reorganization and enhancement in 2016, the OAG’s Consumer Protection Section has been even more effective in fighting for the rights of Virginians. Additionally, since 2014, Attorney General Herring’s Consumer Protection Section has transferred approximately $59 million to the General Fund.

CFPB Takes Action Against Debt-Settlement Company for Charging Consumers Unlawful Fees

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) requested today that a federal district court enter a final judgment and order that, if entered by the court, would require DMB Financial, LLC to pay consumers at least $5.4 million for charging unlawful fees and failing to provide required disclosures to its customers, and a civil penalty. The CFPB alleges that DMB’s actions violated the Telemarketing Sales Rule (TSR) and the Consumer Financial Protection Act (CFPA).

Operators of Student Loan Debt Relief Scheme Banned From Providing Debt Relief Services as Part of Settlement with FTC

The operators of a student loan debt relief scheme are banned from providing debt relief services and have agreed to settle Federal Trade Commission charges that they collected illegal upfront fees and falsely promised to lower or even eliminate consumers’ loan payments or balances.

FTC Data Shows Huge Spike in Cryptocurrency Investment Scams

Since October 2020, consumers have reported losing more than $80 million to cryptocurrency investment scams, an increase of more than ten-fold year-over-year, according to a new data analysis from the Federal Trade Commission.

Small business owners missed out on thousands of dollars in loans when PPP funding ran out early

When the Paycheck Protection Program ran out of funding the first week of May – weeks ahead of its May 31 deadline – it was a huge surprise to the staff of El Museo del Barrio in New York. The Latino cultural institution in upper Manhattan was counting on a second-draw loan from the program to recover from the serious impact of the pandemic, which closed the museum for months and meant it had to cancel two major fundraising galas.

Senators urge CFPB to “reconsider” QM delay

Compliance attorneys and mortgage industry lobbyists aren’t the only ones wishing the Consumer Financial Protection Bureau (CFPB) would proceed with the General Qualified Mortgage Final Rule as it had initially planned. The same day the CFPB announced plans to delay the compliance date, Sens. Mark Warner (D-VA) and Tim Scott (R-SC) fired off a letter to CFPB Acting Director Dave Uejio, urging the agency to “reconsider” the move. “We urge the Bureau to allow the General QM Final Rule to proceed as intended and commit to a longer-term approach to monitoring the broader housing market implications of mortgage lending under the rule,” the pair wrote.

Bank of America reaches $75 mln settlement over excessive fees

May 14 (Reuters) - Bank of America Corp agreed to pay $75 million to settle a lawsuit accusing the second-largest U.S. bank of extracting overdraft fees it didn't earn from customers with savings and checking accounts, court papers show.

eBay takes significant step into financial services with embedded lending product

eBay launched a lending product for its 300,000 UK-based small and medium-sized business (SMBs) sellers on Wednesday, named Capital for eBay Business Sellers (CEBS), per Finextra. CEBS is being offered in partnership with embedded finance platform YouLend, which is backed by institutional investors like Allianz Global Investors. It allows SMBs to apply for loans through eBay UK's platform and access funding between £500 ($641.18) to £1 million ($1.3 million). The lending application process should take only minutes, and funds will often be distributed the same day as the application.

Debt Collectors Spending Big to Block a Crackdown

Two months ago, debt collectors won a victory when congressional lawmakers allowed stimulus checks to be garnished by creditors and government agencies.

U.S. Households Borrow More Than Ever, Just Not on Credit Cards

(Bloomberg) -- Americans increased their borrowing to a record of $14.6 trillion in March, driven by home and auto loans. But the growth masked what Federal Reserve Bank of New York researchers called a “confounding” decline in credit-card balances during a quarter when retail sales soared and travel resumed.

Governor Cuomo Signs Legislation Protecting New Yorkers’ COVID-19 Stimulus Payments from Debt Collectors

Governor Andrew M. Cuomo today signed legislation (S.5923-A/A.6617-A) protecting New Yorkers' COVID-19 stimulus payments from being garnished by debt collectors. All relief payments to New Yorkers under these federal acts, including stimulus payments, tax refunds, rebates, and tax credits to support individuals and children qualified for or received prior to the effective date, will be protected. This legislation also creates a carve-out for claims brought by individuals who have an interest in the relief payments to ensure that these funds can be collected to pay child and spousal support and to collect payments in situations involving fraud. 

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