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Utah amends consumer lending requirements
On March 24, the Utah governor signed HB 319, which modifies provisions related to consumer lending in the state, including registration, reporting, and operational requirements for deferred deposit lenders. Among other things, the provisions require deferred deposit lenders to provide borrowers at least 30 days’ notice of default before initiating a civil action, allowing a borrower the opportunity to remedy the default. HB 319 also requires deferred deposit lenders seeking to renew a registration to report, for the immediately preceding calendar year, the total number of loans extended, the total dollar amount loaned, the number of borrowers who were extended loans, and the percentage of loans that were not repaid based on the terms of the loan, among other items. HB 319 further allows third party debt collection agencies to charge a “convenience fee” when debtors use a credit or debit card for the transaction of business, provided the convenience fee amount is disclosed prior to being charged and the debtor is given an alternative payment method that does not carry a fee. The amendments take effect 60 days following adjournment of the legislature.
Utah modifies credit reporting notification requirements
On March 24, the Utah governor signed HB 412, which modifies requirements for creditors when submitting negative credit reports to credit reporting agencies. Creditors are now required to provide written notification to the affected party “no more than 30 days after the day on which the creditor submits the negative credit report to the credit reporting agency.” Creditors may provide the written notice in-person, via first class mail, or electronically if the party consented to receive notices by email. The amendments take effect 60 days following adjournment of the legislature.
Washington state amends debt buyer provisions
On March 18, the Washington governor signed Substitute HB 2476, which clarifies the definition of a debt buyer and outlines prohibited activities. Among other activities, debt buyers are now (i) prohibited from bringing legal actions without providing evidence that the original debt contains the debtor’s signature, or for claims based on a credit card debt for which a signature does not exist, “a copy of the most recent monthly statement recording a purchase transaction, payment, or other extension of credit” (requirements related to breaches of contracts and electronic transactions are also provided); (ii) prohibited from seeking default judgments without providing evidence of the original debt; and (iii) required to provide certain disclosures when bringing legal action, including “[t]hat the action is being brought by, or for the benefit of, a person or entity engaged in the business of purchasing” debts for collection purposes, the date the claim was purchased, the identity of the debt purchaser, and “[t]hat the action is being commenced within, and is not barred by an applicable statute of limitations.” The amendments take effect 90 days after the adjournment of the session, and are applicable to “delinquent or charged off claims purchased for collection purposes by a debt buyer on or after the effective date of this section.”
11th Circuit reverses dismissal of “shotgun” FDCPA, FCRA, TCPA pleadings
On March 16, the U.S. Court of Appeals for the Eleventh Circuit partially reversed a district court’s dismissal of a lawsuit against several defendants for alleged violations of the FDCPA, the FCRA, and the TCPA, holding that the plaintiff’s third amended complaint was not filled with “shotgun pleadings.” The matter revolves around several statutory and common-law claims arising from the defendants’ allegedly-unlawful debt collection attempts, which were dismissed multiple times by the district court as “shotgun pleadings.” In her third amended complaint—which alleged 10 causes of action—the plaintiff contended, among other things, that the defendants failed to respond to letters she sent to dispute the alleged debt and failed to notify credit reporting agencies (CRA) of the dispute. The plaintiff also alleged that certain defendants called her cell phone multiple times using an automatic telephone dialing system. The district court entered final judgment in favor of all the defendants, minus the CRA defendant, stating, among other things, that the plaintiff continued to “‘lump the defendants together. . .and provide generic and general factual allegations as if they applied to all defendants.’”
On appeal, the 11th Circuit concluded that the district court erred in dismissing six of the 10 counts as shotgun pleadings. “While not at all times a model of clarity, [the third amended complaint] is reasonably concise, alleges concrete actions and omissions undertaken by specific defendants, and clarifies which defendants are responsible for those alleged acts or omissions,” the appellate court wrote. However, the appellate court agreed that the district court correctly dismissed two counts for failing to state a claim related to claims concerning one of the defendant’s alleged attempts to collect delinquent tax payments owed to the IRS. According to the appellate court, since “tax obligations do not arise from business dealings or other consumer transactions they are not ‘debts’ under the FDCPA.’”
5th Circuit will review CFPB constitutionality case en banc
On March 20, the U.S. Court of Appeals for the Fifth Circuit issued an opinion ordering that—“on the Court’s own motion”—it will conduct an en banc hearing on whether the CFPB’s single-director leadership structure is constitutional. The order vacates the appellate court’s March 3 opinion (covered by InfoBytes here), in which it previously determined that there was no constitutional issue with allowing the Bureau director to only be fired for cause. According to the now-vacated opinion, the majority concluded that the claim that the Bureau’s structure is unconstitutional “find[s] no support. . .in constitutional text or in Supreme Court decisions.” The 5th Circuit’s prior decision came the same day the U.S. Supreme Court heard oral arguments in Seila Law LLV v. CFPB on the same issue.
Indiana amends UCCC provisions for consumer credit sales and loans
On March 18, the Indiana governor signed SB 395, which amends the state’s Uniform Consumer Credit Code (UCCC) to revise provisions related to consumer credit sales and consumer loans, among other things. Amendments include those that (i) authorize a seller to contract for and receive—subject to certain conditions—a nonrefundable prepaid finance charge based on the amount financed for an agreement for a consumer credit sale entered into after June 30, 2020 (precomputed consumer credit sales are prohibited); (ii) outline conditions related to the maximum allowed credit service charges for consumer credit sales; (iii) state that the amount of an authorized nonrefundable prepaid finance charge cannot be more than $75, $150, or $200, based on the amount financed, for consumer loan agreements entered into after June 30, 2020, where the loan is not secured by an interest in land (precomputed consumer loans are prohibited); and (iv) make conforming changes with respect to supervised loans, as well as conforming technical amendments throughout the UCCC to reflect the amendments. SB 395 also amends the effective date from July 1 of each even-numbered year to January 1 of each odd-numbered year for the adjustment of various dollar amounts in the UCCC based on changes in the Consumer Price Index. While certain amendments take effect upon the bill’s passage, most of the amendments become effective July 1.
Indiana Department of Financial Institutions issues statement on essential businesses
On March 23, Indiana Department of Financial Institutions (DFI) issued a statement reiterating that Indiana’s Executive Order 20-08 deems the following financial institutions as essential businesses that are encouraged to stay open and adhere to social distancing guidelines: banks, currency exchanges, consumer lenders, including, but not limited to, credit unions, pawnbrokers, consumer installment lenders and sales finance lenders, title companies, appraisers, financial markets, trading and futures exchanges, payday lenders, affiliates of financial institutions, entities that issue bonds, related financial institutions, and institutions selling financial products.
Georgia governor issues shelter in place executive order for specific populations
On March 23, Georgia’s governor issued an Executive Order ordering specific populations to shelter in place and limiting the number of persons gathered in a single location. The order does not address financial institutions or otherwise identify categories of essential business, and expires on April 6.
Kansas Department of Credit Unions releases list of Covid-19 resources
On March 23, the Kansas Department of Credit Unions issued a statement to Kansas chartered credit unions including a list of Covid-19 resources that may be helpful. The list includes resources from both the federal government and the state of Kansas.
Rhode Island regulator encourages banks and credit unions to meet customer needs
On March 23, the Rhode Island Division of Banking issued a bulletin encouraging state-chartered banks and credit unions to take steps to meet the financial services needs of customers and communities impacted by Covid-19. This includes providing alternative service options in light of facility closures, waiving certain fees, increasing ATM cash withdrawal limits, easing restrictions on cashing checks, increasing credit card limits, and offering payment accommodations to borrowers. The Division emphasized that prudent efforts to modify the terms of an existing loan for affected customers will not be subject to regulatory criticism. Finally, the Division noted that it is willing to provide supervisory and regulatory relief to affected financial institutions.