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OFAC updates FAQs related to Iranian humanitarian goods manufacturing
On June 5, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued updated Iran-related FAQs related to Executive Order (E.O.) 13902 concerning the treatment of Iranian manufacturers that provide humanitarian goods. As previously covered by InfoBytes, E.O, 13902 authorizes the Secretary of the Treasury, in conjunction with the Secretary of State, to impose asset blocking sanctions on any person determined to operate in the construction, mining, manufacturing or textile sectors of the Iranian economy, or any additional sector as they may jointly determine. Additionally, EO 13902 authorizes the imposition of certain sanctions on any person determined to have engaged in, or any foreign financial institution determined to have knowingly facilitated, a significant transaction involving one of the aforementioned sectors of the Iranian economy. The FAQs state that OFAC will not target persons in Iran manufacturing humanitarian goods, such as “medicines, medical devices, or products used for sanitation or hygiene” as long as the products are “solely for use in Iran and not for export from Iran.” The FAQs also define Iranian economy sectors, specify what constitutes as “significant goods or services,” and clarify the interpretation of “‘knowingly’ and ‘significantly reduced’” for purposes of E.O. 13902. Additionally, on June 8, OFAC added several Iran-related designations to its Specially Designated Nationals List.
Texas securities regulator halts cryptocurrency investment business
On June 5, the Texas State Securities Board (TSSB) issued an emergency cease and desist order against a New York-based cryptocurrency investment business for allegedly violating the state Securities Act by soliciting investments in Texas without obtaining the required state licenses and engaging in fraud connected to the offer of the sale of securities. Among other things, the TSSB alleged that the business’s website advertised false information, including fake photos of its “expert team” and testimonials from purportedly “satisfied clients,” and failed to disclose material facts related to how profits are generated through its purported cryptocurrency mining operation, important security information, and risks associated with cryptocurrency investments. According to the order, the business claimed investors could generate returns between 20 and 75 percent within 24 hours depending on how much is invested in the company’s mining operation. The TSSB also alleged that while the business claimed to possess the appropriate licensure to engage in cryptocurrency mining investments, the business did not have the required registrations or licenses and the investment plans “have not been registered by qualification, notification or coordination at any time material hereto, and no permit has been granted for their sale in Texas at any time material hereto.”
7th Circuit holds recoverable costs under FDCPA do not include damages or compensation for expenses
On June 5, the U.S. Court of Appeals for the Seventh Circuit affirmed a district court’s holding that the costs recoverable under the FDCPA and Rule 54(d) of the Federal Rules of Civil Procedure do not include damages or compensation for the plaintiff’s time and mailing expenses related to litigation. According to the opinion, the plaintiff filed suit against a debt collector alleging various violations of the FDCPA for failing to verify that the plaintiff owned the debt after it was disputed and for sending a demand letter with the plaintiff’s personal information in an envelope viewing screen. The debt collector made an offer of judgment to the plaintiff for “$1,101, ‘plus costs to be awarded by the Court.’” The plaintiff sought costs that included damages under the FDCPA while the debt collector argued that the offer was only for “taxable costs as a prevailing party.” After the district court concluded that the plaintiff had accepted the offer of judgment, it entered judgment for the award of $1,101 and instructed the plaintiff to file a bill of costs “‘limited to those contemplated by [Federal Rule of Civil Procedure] 54(d).’” The plaintiff demanded over $24,000 for “hundreds of hours” spent litigating the action, over $150 in “mailing costs,” $1,000 in “additional damage costs,” and over $47,000 in punitive damages. The district court denied the costs under Rule 54(d) and awarded final judgment for the $1,101 in statutory damages.
On appeal, the 7th Circuit disagreed with the plaintiff’s assertion that the costs he submitted were recoverable under Section 1692k(a) of the FDCPA, concluding that “damages are not part of the costs ‘properly awardable under’ § 1692k(a),” which contains both provisions for damages and for costs; therefore, if costs included damages, “the damages provisions would be superfluous.” The appellate court went on to state that “[w]ithout a special definition in the [FDCPA], the ‘costs’ it contemplates are simply those awardable under Federal Rule of Civil Procedure 54(d),” which do not include the damages or compensation sought by the plaintiff.
CFPB outlines plans for consumer financial law taskforce
On June 8, the CFPB published a blog post written by Todd Zywicki, the Chair of the Taskforce on Federal Consumer Financial Law, which discusses the future plans of the taskforce. In addition to the March request for information (RFI) seeking input on consumer protection areas for the taskforce to focus its research and analysis on (covered by InfoBytes here), the post notes that the taskforce intends to gain feedback from other public forums as well in order to produce a two-volume report. The first volume, among other things, will contain a history of consumer financial protection laws, a cost-benefit analysis of financial products and services, and an outline of the current regulatory framework. The second volume will include a set of recommendations for the Bureau “on ways to improve and strengthen the application of financial laws and regulations.” Through the fall, the taskforce will (i) analyze the comments received from the RFI; (ii) hold a public hearing; and (iii) participate in public listening sessions with the Bureau’s four advisory committees.
FTC releases expanded data on consumer Covid-19 complaints
On June 11, the FTC released new interactive complaint data dashboards, which provide national and state-level breakdowns on consumer complaints related to Covid-19. The expanded reporting provides data on several categories, including fraud, identity theft, and unwanted calls. According to one of the dashboards, “of the total fraud reports indicating a dollar loss, 87.8% [also referenced] a payment method,” with credit cards, bank account debits, and internet/mobile methods representing the top three categories. The FTC reports that consumers have submitted over 91,000 Covid-19-related complaints during 2020 as of June 8, and reported losing almost $60 million to Covid-19-related fraud.
FHFA extends Covid-19 origination flexibilities to July 31
On June 11, the Federal Housing Finance Agency (FHFA) announced the extension of several temporary origination flexibilities put in place to assist borrowers during the Covid-19 pandemic. Specifically, FHFA has extended until at least July 31, the following flexibilities: “(i) alternative appraisals on purchase and rate term refinance loans; (ii) alternative methods for verifying employment before loan closing; (iii) expanding the use of power of attorney and remote online notarizations to assist with loan closings; and (iv) authority to purchase mortgages in forbearance.” The extensions are reflected in updates to the following Fannie Mae Lender Letters LL-2020-03, LL 2020-04, LL-2020-06, and Covid-19 selling FAQs. Similar updates include Freddie Mac’s Guide Bulletin 2020-23 and Covid-19 selling-related FAQs.
Multistate regulator group to address pandemic's effect on financial infrastructure
On June 11, the Conference of State Bank Supervisors (CSBS) announced the creation of the new Covid-19 Recovery Steering Group led by the Texas Banking Commissioner. The steering group will work through CSBS “to guide multistate efforts to respond to the personal hardships and financial infrastructure risks caused by the global pandemic.” Its members include state regulators from Ohio, California, Texas, Louisiana, Indiana, Massachusetts, Tennessee, South Carolina, Iowa, Kentucky, and Minnesota. The steering group will consider financial services oversight changes to both banks and nonbanks in order to focus on protecting consumers and supporting local economies and plans to share best practices and lessons learned among state regulators and the financial services industry. Additionally, the steering group will consider “[c]hanges to state or federal laws or regulations to improve operational flexibility, information sharing and coordination.”
FINRA extends temporary changes to its procedural rules
On June 10, FINRA filed a proposed rule change with the SEC to extend the effective date of previous temporary changes to its procedure rules, previously covered here. The previous rule change modified certain timing, method of service, and other procedural requirements contained in FINRA rules. The amendments extend the rule changes through July 31, 2020.
CFTC extends no-action relief to market participants in light of Covid-19
On June 10, the Commodity Futures Trading Commission announced that it has extended through September 30, 2020, certain aspects of its no-action relief issued in response to Covid-19. The CFTC’s staff letter extends previously issued no-action guidance regarding certain regulatory requirements for persons who are registered with the CFTC as futures commission merchants, introducing brokers, swap dealers, retail foreign exchange dealers, and floor brokers. Certain relief for members of designated contract markets or swap execution facilities that are not registered with the CFTC is also extended. Those relying on relief are expected to establish and maintain a supervisory system to oversee activities of personnel who are working from remote locations during Covid-19.
FBI warns of increased mobile banking cyber threats
On June 10, the Federal Bureau of Investigation issued a Public Service Announcement (PSA) cautioning mobile banking application users to remain vigilant of cyber activity. Specifically, the PSA indicated, with a more than 50 percent increase in mobile web application usage since the start of the year, that cyber actors may attempt to steal login credentials through the introduction of trojans embedded in other software and the deployment of fake banking applications, designed to trick consumers into entering their credentials. The PSA provides three recommendations for all mobile banking application users and organization: (i) use strong passwords (at least eight characters); (ii) use multifactor authentication and not share multifactor PINs; and (iii) contact the financial institution if a banking application appears suspicious. Finally, the PSA reminds consumers that financial institutions will not ask for login credentials over the phone.