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  • Missouri AG Announces Investigation Into Tech Company’s Privacy Policies and Use of Consumer Data

    State Issues

    On November 13, Missouri Attorney General Joshua Hawley announced that his office has issued a civil investigative demand (CID) to a major California-based technology company as part of an investigation into suspected violations of the Missouri Merchandising Practices Act and the state’s antitrust laws. The investigation is focused on certain business practices, including, with respect to privacy issues, the company’s collection, use, retention, storage, sale, and dissemination of information and data about its users and their online activities. The CID requests documents and communications related to, among other things, (i) the company’s privacy policies; (ii) the collection and sharing of data that constitutes “personal information” related to the company’s users; (iii) disclosures concerning the collection of consumers’ credit or debit card transactions; (iv) data the company discloses or shares with third parties, and the identification of third-party partners; and (v) how the company tracks users’ online activities. The company has until January 22, 2018 to comply.

    State Issues Privacy/Cyber Risk & Data Security Consumer Data State AG Third-Party

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  • 50-State Class Action Complaint Filed Against Credit Reporting Company in Response to September Data Breach Announcement

    Privacy, Cyber Risk & Data Security

    On November 10, plaintiffs, and the members of the class and subclasses they seek to represent, filed a complaint in the Northern District of Georgia against a major credit reporting company, consolidating individual suits filed against the company since September in each of the 50 states and the District of Columbia. The plaintiffs allege that the company’s data breach (covered previously in InfoBytes)—in which hackers exploited a website application vulnerability to access names, Social Security numbers, birth dates, addresses, driver’s license numbers, as well as roughly 209,000 credit card numbers—has led to, among other things, identity theft, unauthorized credit and debit card charges, and applications for unauthorized student loans.

    The complaint alleges a series of missteps by the company before, during, and after the breach, including: (i) not applying a recommended security patch; (ii) failing to recognize the breach for over three months; (iii) not warning consumers for another month after discovering the breach, thus preventing timely credit freezes or other protection methods; (iv) sending confusing emails and notices to consumers about whose data was compromised and how to protect themselves after the breach; and (v) creating confusion as to whether an arbitration clause included in the terms of service for the company’s credit monitoring website would apply to consumers using the service.

    The plaintiffs seek, among other things, class certification; permanent injunctive relief; disgorgement and restitutions of earnings; compensatory, consequential, general, statutory, and punitive damages; declaratory relief; and attorneys’ fees.

    Privacy/Cyber Risk & Data Security Data Breach Consumer Finance Class Action State Issues

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  • CSBS Accepting Licensing Renewal Applications from Non-Depository Financial Institutions

    State Issues

    On November 1, the Conference of State Bank Supervisors (CSBS) announced it is accepting state license renewal applications through December 31 from non-depository financial institutions that wish to continue operating in 2018. Institutions can submit licensing renewals through the Nationwide Multistate Licensing System (NMLS)—operated by CSBS on behalf of state regulators. However, CSBS warned institutions to apply early, noting that last year “almost 93 percent of renewal applications submitted by November 30 were approved by December 31, [but] only about 49 percent of license renewals requested after December 15 were approved by the end of the year.”

    As previously announced in InfoBytes, the New York Department of Financial Services recently announced that it will transition licensed lenders and sales finance companies to the NMLS, as part of its continued initiative to link with other states and provide enhanced supervision of non-depository institutions.

    State Issues CSBS Licensing NMLS

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  • New York Enters Second Stage in Use of Nationwide Licensing System

    State Issues

    On November 1, the New York Department of Financial Services (NYDFS) announced that it will transition licensed lenders and sales finance companies to the Nationwide Multistate Licensing System (NMLS). NMLS allows companies to apply for, update, and renew licenses in one or more states online. According to the announcement, transitioning to NMLS will allow NYDFS to link with other states and thus provide enhanced supervision of nondepository institutions. As previously covered by InfoBytes, in July, NYDFS began its initiative to manage the licensing and regulation of all nondepository financial institutions operating in the state by transitioning money transmitters to the web-based system.

    State Issues NYDFS NMLS Licensing Lending

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  • Alabama AG Announces Permanent Injunction Against Credit Repair Company

    State Issues

    On October 30, Alabama Attorney General Steve Marshall announced that a state court granted a permanent injunction against a credit repair company and its owner/operators for allegedly engaging in deceptive and illegal credit repair practices. According to the Office of the Attorney General, defendants allegedly (i) used deceptive advertising that guaranteed improved credit scores and made various false promises; (ii) charged consumers before services were completed or charged rates different from those that were advertised; (iii) failed to allow consumers to cancel the service within three days as required by federal law governing credit repair businesses; and (iv) indiscriminately disputed negative credit report items--a practice known as “jamming”—to create the illusion of improved credit and a temporary rise in credit score. The order permanently closes the company, bans the defendants from engaging in any credit repair or consumer finance activity, and prohibits defendants from owning or managing any business in Alabama or involving Alabama consumers.

    State Issues State AG Consumer Finance Credit Scores Fraud

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  • New York AG, Credit Card Servicer Enter Into Agreement to Refund Credit Card Fees

    State Issues

    On October 30, New York Attorney General Eric T. Schneiderman announced an agreement with a credit card servicer and marketer to resolve allegations that the servicer failed to disclose upfront fees in its direct mail marketing materials. According to Attorney General’s office, the servicer failed to disclose a $125 “off-the-top first year fee” for a low-limit card product, which effectively reduced the card’s credit limit from $500 to $375. Under the terms of the agreement, the servicer is required to improve the disclosures in its direct mail marketing and issue refunds of the $125 fee to affected New York consumers.

    State Issues State AG Consumer Finance Credit Cards

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  • Virginia AG Announces Settlement With Internet Lender Over Licensing Claims and Excessive Interest

    State Issues

    On October 25, Virginia Attorney General Mark R. Herring announced a settlement with a Nevada-based internet lender to resolve allegations that the lender violated the Virginia Consumer Protection Act by misrepresenting it was licensed by the state’s Bureau of Financial Institutions and collecting interest exceeding the state’s general usury limit. According to a press release issued by the Attorney General’s office, the settlement requires the lender to provide refunds and interest forgiveness of more than $265,000 to borrowers, and pay the state $50,000 in civil money penalties, costs, and fees. A permanent injunction also prohibits the lender from, among other things, misrepresenting its licensing status and collecting interest exceeding the amount allowed by the state’s general usury statute.

    State Issues State AG Usury Anti-Predatory Lending Consumer Finance Settlement Enforcement

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  • State Attorneys General Announce $220 Million Settlement With German Bank for Allegedly Artificially Manipulating LIBOR Interest Rates

    State Issues

    On October 25, New York Attorney General Eric T. Schneiderman announced, in coordination with 44 other state attorneys general, a $220 million settlement with a German bank (bank) to resolve allegations that the bank manipulated the U.S. Dollar London InterBank Offered Rate (LIBOR) and other benchmark interest rates and defrauded government and non-profit entities across the nation. The settlement is the second related to alleged LIBOR manipulations brought by state attorneys general, and is more than twice the amount announced last year with a London-based financial institution and related international investment bank. (See previous InfoBytes summary here.) According to AG Schneiderman, the multi-state investigation revealed that from 2005 to 2010, the bank failed to disclose to “affected governmental and not-for-profit counterparties” that (i) it had made false LIBOR submissions inflating borrowing costs linked to the London and U.S. dollar interbank offered rates; (ii) bank traders tried to influence other banks’ LIBOR submitters to make rate alterations in order to benefit their own trading positions; and (iii) the bank was cognizant of the fact that other banks manipulated LIBOR submissions and that “LIBOR was a false rate.” Under the terms of the settlement, affected entities will be eligible to receive a portion of the settlement fund, with the remainder to be used for investigation expenses and other purposes.

    State Issues State AG Enforcement LIBOR Settlement

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  • NYDFS Announces Two New Regulations Targeting Title Insurance Practices

    State Issues

    On October 17, the New York Department of Financial Services (NYDFS) adopted two final regulations designed to stop “unscrupulous practices” in the title insurance industry. The final regulations—which are the culmination of a NYDFS’ investigation into the practices of title insurers—supersede “emergency” versions of both regulations that went into effect earlier this year. (See previously InfoBytes coverage here.) Specifically, the first rule clarifies that certain “reasonable and customary” advertising and marketing expenses will be permitted provided “they are without regard to insured status or conditioned directly or indirectly on the referral of title business.” Meals, entertainment, and other forms of inducements are prohibited. According to a NYDFS press release, the state’s “anti-inducement statute is not limited to situations in which there is a direct quid pro quo for business.” The second rule requires, among other things, that title insurance companies or agents function independently from any affiliates through which they generate a portion of their business and make “good faith” efforts to accept business from non-affiliate sources.

    State Issues Consumer Finance NYDFS Kickback Title Insurance Mortgages

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  • Pennsylvania Issues Reminder to Fintech Companies of Licensing Requirements


    On October 6, prompted by the “evolving technological innovations that impact the financial services sector” and the rise of “technology focused companies offering financial services via new delivery mechanisms,” the Pennsylvania Department of Banking and Securities (Department) issued a reminder of the Department’s “long-standing position” that all persons offering financial services to the consumers of the Commonwealth of Pennsylvania must be licensed by the Department and comply with consumer protection requirements before conducting business with Pennsylvania consumers. “The Department regulates financial transactions based upon the transaction offered or delivered, not the method of delivery,” and as a result, fintech companies must comply with all applicable statutes and regulations.

    Fintech State Issues Licensing Compliance Consumer Finance

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