Financial services companies - banks, non-bank lenders and loan servicers, auto finance companies, student loan companies, debt collectors, credit card issuers, non-traditional finance companies, and other market participants - face numerous legal challenges today, including government investigations and enforcement actions, a shifting regulatory landscape, novel civil litigation theories and other litigation risks. Especially as the Consumer Financial Protection Bureau and other regulators issue guidance and promulgate new rules and regulations impacting the consumer finance industry, it is now more critical than ever that corporate counsel stay abreast of these developments and related enforcement and litigation trends in order to manage institutional risks. Recognizing this need, Goodwin's LenderLaw Watch monitors, chronicles and analyzes news and legal issues impacting our clients and the consumer finance industry.

Recent DOJ & CFPB Consent Orders Highlight ECOA Risks For Servicers

Synchrony Bank (formerly known as GE Capital Retail Bank) made two direct mail offers to its credit card holders, but it did not send the offers to Spanish-speaking customers.  The Bank self-reported its actions, resulting in consent orders with the Consumer Financial Protection Bureau and the Department of Justice, which…

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IN FAIRNESS TO ALL: Complying With FCRA Disclosure Requirements When Evaluating And Hiring ...

Employers use a number of tools to assess any potential hire, and to evaluate existing employees.  When using a credit report for these purposes, employers need to be wary of the Fair Credit Reporting Act’s (“FCRA”) (15 U.S.C. 1681 et seq.) provisions.  The FCRA has strict procedures, requiring that employers…

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FTC Settles with Auto Lender over Improper Servicing, Collection, and Quality Control Practices

The Federal Trade Commission (FTC) recently announced a $5.5 million monetary and injunctive settlement with auto lender Consumer Portfolio Services, Inc. (CPS) concerning allegations that the company used illegal tactics in servicing and collecting consumers’ auto loans, and failed to adopt proper quality controls, in violation of Section 5 of…

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Mortgage Industry Wins Significant Ruling In Ninth Circuit, Largely Ending Consolidated MERS Cases

Lenders scored a victory in the Ninth Circuit on June 12, 2014, with the court largely affirming dismissal of claims by plaintiffs in multidistrict litigation challenging the lending industry’s use of Mortgage Electronic Registration Systems, Inc. (MERS). The appeal stemmed from dozens of putative class actions and individual borrower cases…

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"If I go there will be trouble, and if I stay it will be double": Second Circuit Provides ...

Move to federal court or stay in state court—an essential strategic question for defendants of state-court-filed class actions.  Pace of litigation, applicable discovery rules, court familiarity with class actions—the right forum can make a significant difference in litigating a class action.  Although the first choice of forum belongs to the…

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Mobile Banking in the 21st Century: More Freedom for Consumers, More Red Tape for Financial ...

On June 11, as a result of the growing use of mobile banking services across the country, the CFPB announced that it was conducting a request for information into the benefits and consequences of expanding mobile financial services.  Its focus is underserved and remote communities, but any actions the CFPB…

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Second Circuit Chooses Pragmatism

In SEC v. Citigroup Global Markets Inc.,___ F.3d __, no. 11-5227-cv (June 4, 2014) (“Citigroup II”), a three-judge panel of the Second Circuit affirmed the SEC’s ability to negotiate settlements without obtaining specific factual admissions from the settling defendants.  The Court reasoned that there is a distinction between trials and settlement,…

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CFPB Targets NonBank Compliance Plans

On May 22, the CFPB released its fourth “Supervisory Highlights” publication, giving financial services providers a preview of the CFPB’s future enforcement priorities. This edition drew attention to regulatory compliance in nonbank financial entities like debt collectors, payday lenders, and consumer credit reporting firms. While those industries have been subject to…

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New CFPB Amendments Require Prompt Servicer Response to Borrower Complaints and Requests for ...

On January 10, 2014, new CFPB amendments to Regulation X (implementing the Real Estate Settlement Procedures Act) and Regulation Z (implementing the Truth in Lending Act) became effective, imposing new requirements on loan servicers to respond to inquiries from residential mortgage loan borrowers within statutorily-specified time periods. An understanding of…

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