Category: Litigation & Enforcement Actions

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2021 Consumer Financial Services Symposium – Virtual Edition: Panel 1 – FinTech Trends, Developments, and New Directions
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Potential Major Change for U.S. Prepaid Products: PayPal vs CFPB Court Vacates Two Significant Restrictions in CFPB’s Prepaid Account Rule
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COVID-19: Echoes Don’t Fade: Lessons Learned From the Home Affordable Modification Program for the Next Wave of Mortgage Class Action Litigation
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COVID-19: New England States Embrace Remote Notarization as Connecticut, Maine, New Hampshire, Rhode Island, and Vermont Temporarily Eliminate “In-Person” Requirements
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COVID-19: Defending Class Actions in Massachusetts in the Wake of COVID-19
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COVID-19: Impact on Consumer Financial Service Providers
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The Massachusetts Supreme Judicial Court Considers the Effect of a State-Mandated Default Notice on the Validity of Non-Judicial Foreclosures
8
The Shifting Currents of Arbitration: The Supreme Court of Texas Reverses Course, Holding That the Availability of Class Arbitration Is for the Courts to Decide
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Absent But Not Forgotten: The Second Circuit Addresses the Impact of Arbitration on Absent Class Members
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Federal Court Strikes Down FinTech Charter

2021 Consumer Financial Services Symposium – Virtual Edition: Panel 1 – FinTech Trends, Developments, and New Directions

Wednesday
21 April 2021
1:00 – 2:00 p.m. ET

Virtual – Login information will be sent after you complete your registration.
1 hour of CLE/CPD credit available in: Pennsylvania, California, Texas, Illinois, New York, Australia, and the UK
REGISTER HERE by 20 April 2021.

Moderator: Andrew C. Glass, Panelists: Gregory N. Blase, Jeremy M. McLaughlin, Judith Rinearson, Melissa Koide

Please join K&L Gates for our 2021 Consumer Financial Services Symposium – Virtual Edition. This symposium will consist of a series of webinars over the course of several weeks. Below is a description of our first webinar that will focus on FinTech, and we invite you to register. Separate blog posts and invitations for the other webinars in this series will be forthcoming.

Our first webinar will address recent developments in FinTech compliance and litigation, covering issues ranging from machine learning in credit underwriting and attendant fairness questions to the use of non-fungible tokens (NFTs) with respect to consumer protection law. We will also address developments that the financial services industry is likely to see under the Biden administration, including the use of technology in extending credit and making other credit-related decisions. Attendees will have an opportunity to submit questions during this webinar.

COVID-19: Echoes Don’t Fade: Lessons Learned From the Home Affordable Modification Program for the Next Wave of Mortgage Class Action Litigation

By Brian M. Forbes and Robert W. Sparkes, III

As the country grapples with the impacts of the COVID-19 pandemic, financial service providers should hold fast to the adage that those who forget the past are destined to repeat it. The last financial crisis centered in large part on the mortgage industry, both in its inception and its slow climb to stabilization. Like the last crisis, a growing percentage of homeowners are not able to make their mortgage payments, requiring loan servicers to employ various loss mitigation tools to reduce individual’s financial hardships. While the COVID-19 pandemic is impacting nearly all sectors of the economy, the mortgage industry can look back to past experiences to help mitigate present and future risks. If past is prologue, one risk likely to increase in the coming months is class action litigation.

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COVID-19: New England States Embrace Remote Notarization as Connecticut, Maine, New Hampshire, Rhode Island, and Vermont Temporarily Eliminate “In-Person” Requirements

By Lindsay Sampson BishopAbigail P. HemnesChristopher J. Valente, and R. Nicholas Perkins

Among the dilemmas facing companies trying to conduct business through the COVID-19 crisis is the question of how to notarize documents while complying with social-distancing guidelines. As offices adapt to remote work and businesses are ordered to reduce person-to-person contact wherever possible, documents must still be notarized for many traditional commercial activities to continue. In response to COVID-19 and related governmental actions, some states are temporarily easing their notarization requirements to permit remote notarization through the use of videoconferencing technology. Consequently, individuals seeking to have a document notarized no longer need to appear in person before a notary in these states for the duration of the COVID-19 crisis.

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COVID-19: Defending Class Actions in Massachusetts in the Wake of COVID-19

By Brian M. ForbesRobert W. Sparkes, III, and Michael R. Creta

The novel coronavirus (“COVID-19”) has caused severe business disruptions throughout Massachusetts. Many companies doing business in Massachusetts have been forced to indefinitely shut their doors, while others are facing supply problems or decreased product demand. In addition to navigating these choppy economic waters, business leaders must also consider the risks likely to follow the current crisis.

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COVID-19: Impact on Consumer Financial Service Providers

A Summary of Federal and State Statutes, Rules and Orders

By David E. FialkowBrian M. Forbes, and Jeffrey S. Patterson

The coronavirus (“COVID-19”) pandemic has been and will continue to be a major business disrupter that will have a substantial impact on the consumer financial services industry in the weeks and months to come. Notably, federal, state and local governments and agencies are acting swiftly and changing the rules by which consumer financial services companies are to do business in the short and long term. K&L Gates LLP (“K&L Gates”) has developed a COVID-19 Task Force to closely monitor these developments and is tracking them in several jurisdictions across the firm’s footprint. Below is a summary, current as of March 30, 2020, of key new and proposed statutes, rules, and orders that are likely to impact consumer financial services companies. Keeping track of these almost daily developments to foreclosure, eviction, debt collection, student loans and other business lines, which vary state to state, is critical for consumer financial services companies to respond to their customers. As with previous nationwide crises, how these companies implement and apply these changes will have a substantial impact on post-pandemic compliance, litigation, and risks. K&L Gates has team members assigned to each of the states listed below who are able to help answer your questions and help companies address ongoing issues associated with the pandemic. Please click on a jurisdiction below for more information:

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The Massachusetts Supreme Judicial Court Considers the Effect of a State-Mandated Default Notice on the Validity of Non-Judicial Foreclosures

By Andrew C. GlassGregory N. BlaseJeremy M. McLaughlin, and Hollee M. Boudreau

The Massachusetts Supreme Judicial Court (“SJC”) heard argument on February 13, 2020, on whether compliance with a state-mandated default notice could, nevertheless, void foreclosure sales in Massachusetts. Specifically, the SJC examined whether the provision of the state-mandated notice has the potential to deceive a borrower where it describes a period for reinstating a loan that varies (to the benefit of the borrower) from the period contained in the mortgage.

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The Shifting Currents of Arbitration: The Supreme Court of Texas Reverses Course, Holding That the Availability of Class Arbitration Is for the Courts to Decide

By Andrew C. Glass and Robert W. Sparkes, III

In 2004, the Supreme Court of Texas first addressed the issue of whether an arbitrator or a judge decides if an arbitration agreement permits (or prohibits) class arbitration. [1] Purportedly following the lead of the U.S. Supreme Court in Green Tree Financial Co. v. Bazzle, [2] the Texas Court held then that arbitrators “should rule on class certification issues when the contracts at issue commit[] all disputes arising out of the agreement to the arbitrator.” [3] Read More

Absent But Not Forgotten: The Second Circuit Addresses the Impact of Arbitration on Absent Class Members

By: Andrew C. Glass and Robert W. Sparkes, III

In their 2013 concurrence in Oxford Health Plans LLC v. Sutter, Justice Samuel Alito, joined by Justice Clarence Thomas, questioned whether absent class members “will be bound by the arbitrator’s ultimate resolution of th[e] dispute” in a class arbitration.[1] Justice Alito suggested that where an arbitration agreement provides “no reason to think that the absent class members ever agreed to class arbitration,” an affirmative answer was unlikely.[2] He posited that “an arbitrator’s erroneous interpretation of contracts that do not authorize class arbitration cannot bind someone who has not authorized the arbitrator to make that determination.”[3] Taken to its logical end, Justice Alito’s rationale would support an argument that class arbitrations should be limited to adjudicating only the claims of class members who affirmatively opt in to the class arbitration proceedings.

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Federal Court Strikes Down FinTech Charter

By Daniel S. Cohen

On October 21, Judge Victor Marrero of the United States District Court for the Southern District of New York issued an order in Lacewell v. Office of the Comptroller of the Currency (No. 18-cv-8377) striking down the Office of the Comptroller of the Currency’s (“OCC”) special purpose national bank charter for fintechs (“FinTech Charter”). After years of challenging the FinTech Charter—a charter authorizing fintechs to engage in non-depository banking activities—the New York Department of Financial Services (“NYDFS”) has, for now, succeeded in overturning the charter. The OCC defended its authority by arguing that 12 CFR Part 5.20(e)(1) is consistent with the National Bank Act (“Act”) and authorizes the OCC to issue special purpose charters to nondepository banking institutions. The Court disagreed, finding that the National Bank Act only authorizes the OCC to charter depository institutions. The Court concluded that the Act allows the OCC to charter institutions engaged in the “business of banking,” and the “business of banking” necessarily includes accepting deposits. Therefore, the FinTech Charter is beyond the OCC’s authority.

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