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Consumer Financial Services Watch

News and developments related to consumer financial products and services

Client of Blast Fax Solutions Provider Hit with $22 Million TCPA Judgment

Posted in Litigation & Enforcement Actions, Privacy & Information Security

By: Joseph C. Wylie II, Molly K. McGinleyNicole C. Mueller

A new decision once again highlights the dangers that companies face if their independent contractors engage in conduct that violates the Telephone Consumer Protection Act, and highlights the need to monitor contractor compliance with the TCPA. In City Select Auto Sales, Inc. v. David/Randall Assocs., Inc., a federal court in New Jersey recently found a roofing company, David/Randall Associates, liable for $22.4 million under the TCPA for the actions of its blast fax solutions provider, Business to Business Solutions (B2B). Continue Reading

K&L Gates Adds CFPB Deputy Enforcement Director as Consumer Financial Services Partner in Washington, D.C., Office

Posted in Bureau of Consumer Financial Protection (CFPB), Litigation & Enforcement Actions

By: Steven M. Kaplan

The Washington, D.C., office of global law firm K&L Gates LLP welcomes former Consumer Financial Protection Bureau (CFPB) deputy enforcement director for litigation Ori Lev as a partner in the firm’s consumer financial services practice.

Lev arrives at K&L Gates following nearly 20 years of public service at a variety of United States government agencies. Prior to the CFPB, he served as the chief of enforcement for the Department of the Treasury’s Office of Foreign Assets Control and as a litigator for the Department of Justice (DOJ) and the Federal Trade Commission (FTC). His extensive practice includes litigation, government enforcement, and regulatory compliance affecting banks and other consumer financial services companies.

To read the full news advisory, click here.

U.S. Supreme Court Allows DOL Interpretation on Overtime for Mortgage Loan Officers

Posted in Litigation & Enforcement Actions, Mortgage Lending, Other Federal Agencies & GSEs

By: Thomas H. Petrides, John L. Longstreth

On March 9, 2015, the U.S. Supreme Court held that the U. S. Department of Labor (DOL) could issue a controversial “Administrator’s Interpretation,” which had concluded in 2010 that loan officers in the mortgage banking industry generally do not qualify as exempt from overtime under the administrative exemption of the federal Fair Labor Standards Act (FLSA).  The Supreme Court reversed a ruling of the U.S. Court of Appeals for the D.C. Circuit that had struck down the DOL administrative ruling. Continue Reading

CFPB Targets Pre-Dispute Arbitration Agreements in Consumer Financial Services Contracts in New Report to Congress

Posted in Bureau of Consumer Financial Protection (CFPB), Credit Cards, Litigation & Enforcement Actions

By: Andrew C. Glass, Robert W. SparkesRoger L. Smerage

In the wake of the Great Recession, numerous federal government actors have sought to limit, and in some cases, eliminate, the inclusion of pre-dispute arbitration agreements in consumer financial services contracts.  For instance, in 2010, as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), Congress amended the federal Truth-in-Lending Act to prohibit the use of pre-dispute arbitration provisions in residential mortgage contracts and home-equity line-of-credit agreements.  See 15 U.S.C. § 1639c(e)(1).  Now, acting pursuant to a mandate provided by the Dodd-Frank Act, see 12 U.S.C. § 5518(a), the Consumer Financial Protection Bureau (“CFPB”) has joined the hunt.  On March 9, 2015, the CFPB issued a report to Congress that appears to put the use of such agreements in all consumer financial services agreements – including credit card, checking account, and payday loan agreements – in the agency’s cross-hairs.

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The Supreme Court to Consider Whether Spousal Loan Guarantors Are “Applicants” for Credit under ECOA

Posted in Bureau of Consumer Financial Protection (CFPB), Fair Lending/Anti-Discrimination, Litigation & Enforcement Actions

By: Andrew C. Glass, Olivia Kelman

The United States Supreme Court has granted certiorari to decide whether the Equal Credit Opportunity Act (“ECOA”) excludes loan guarantors from the definition of “applicants” entitled to bring suit under the Act. See Hawkins v. Community Bank of Raymore, No. 14-520 (U.S. Mar. 2, 2015). Specifically, the Court will decide whether the Federal Reserve Board exceeded its authority in its 2003 amendment to Regulation B, the regulation implementing ECOA, to purportedly bring guarantors within the ambit of ECOA’s protection. The Court’s decision may have far-reaching implications for lenders extending credit guaranteed by a non-borrower.
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A Primer on Insurance Coverage Issues under the Telephone Consumer Protection Act

Posted in Litigation & Enforcement Actions, Privacy & Information Security

By: Steven P. WrightGregory N. BlaseSamantha A. Miko

In the past several years, plaintiffs’ attorneys around the country have exploited a once-unknown 1991 law, the Telephone Consumer Protection Act (“TCPA”), to obtain headline-grabbing, multimillion-dollar judgments and settlements from some of the country’s largest financial services companies. Because financial services companies are often required to communicate with customers by telephone, these companies have attracted an undue amount of attention from the TCPA plaintiffs’ bar. Seemingly, each new day brings another lawsuit or settlement, and so, it is no surprise that the TCPA remains a hot topic in the financial services and related industries. In this alert, we explore current trends in insurance coverage claims attendant to TCPA class action claims.

To read the full alert, click here.

K&L Gates Congressional Meet & Greet – Congressman French Hill (R-AR-2)

Posted in Bureau of Consumer Financial Protection (CFPB)

4 March 2015
8:30 a.m. ET
Congressional Meet & Greet

K&L Gates is pleased to invite you to our March 4th meet and greet breakfast with Congressman French Hill (R-AR-2).

Congressman Hill was elected in November 2014 to represent Arkansas’s 2nd Congressional District. The 2nd District includes White County, Van Buren County, Conway County, Perry County, Saline County, Faulkner County, and Pulaski County.

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New York DFS Clarifies New Debt Collection Regulations

Posted in Litigation & Enforcement Actions, Mortgage Servicing, Preemption & Federalism

By: Steven M. Kaplan, Gregory N. BlaseChristopher E. Shelton

Responding to industry questions about New York’s new debt collection regulations, most of which take effect on March 3, 2015, the Department of Financial Services has published a detailed FAQ on its website. We previously analyzed the regulations in a client alert.

As we anticipated in our alert, the FAQ confirms that “debt servicers, including companies that service student loans, home equity loans or mortgages … who collect or attempt to collect a debt that was not in default at the time it was obtained for collection are not” subject to the regulations. This parallels how the federal Fair Debt Collection Practices Act (“FDCPA”) is interpreted.
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Navigating HUD’s New Single Family Housing Policy Handbook

Posted in FHA/VA, Mortgage Lending, Mortgage Servicing, Other Federal Agencies & GSEs, Personal Property Financing

By: Phillip L. SchulmanHolly Spencer BuntingKrista CooleyEmily J. Booth-Dornfeld, Christa Bieker

Last fall the Department of Housing and Urban Development (“HUD”) issued the first section of its new Single Family Housing Policy Handbook (“Single Family Handbook” or “Handbook”). The Single Family Handbook is designed to achieve a consolidated, authoritative source of single-family housing policy. In addition to consolidating all policy into a single document, the Handbook makes numerous substantive changes to Federal Housing Administration (“FHA”) requirements. The Handbook will be effective for FHA-insured loans with case numbers assigned on and after June 15, 2015. This client alert analyzes key changes introduced by the Handbook.

To read the full alert, click here.

Department of Justice Settles Its First Discrimination Case against a “Buy Here, Pay Here” Used Car Dealership

Posted in Fair Lending/Anti-Discrimination, Litigation & Enforcement Actions, Other Federal Agencies & GSEs, Personal Property Financing

By: Melanie Brody, Anjali Garg

On February 10, 2015, the Department of Justice (DOJ) and the North Carolina Attorney General announced a settlement against two “buy here, pay here” used car dealerships and the companies’ presidents. The settlement resolves allegations under the Equal Credit Opportunity Act, its implementing regulation (Regulation B), the North Carolina Unfair and Deceptive Trade Practices Act, and the North Carolina Uniform Commercial Code, that the companies engaged in “reverse redlining” by allegedly targeting African American borrowers for used car loans using unfair and predatory terms.

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