Category Archives: FinTech

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CFPB Issues Advanced Notice of Proposed Rulemaking on Section 1033 for Consumer-Authorized Access to Financial Data

On October 22, 2020, the CFPB issued an advance notice of proposed rulemaking (ANPR) soliciting comments on implementation of Section 1033 of the Dodd-Frank Act. As outlined in the ANPR, Section 1033 will require consumer financial service providers to give consumers access to financial account data in a usable electronic format. This data includes information … Continue Reading

OCC Releases Final True Lender Rule

On October 27, 2020, the OCC released its final True Lender Rule. As discussed earlier on this blog, the OCC’s rule is designed to clarify the “true lender” doctrine, a legal test utilized by courts and regulators to determine whether a bank or its non-bank partner is the actual lender in a credit transaction. The … Continue Reading

State Attorneys General Challenge FDIC’s Madden Fix

In early August 2020, several state attorneys general filed suit against the Office of the Comptroller of the Currency (OCC) challenging the OCC’s proposed “Madden Fix.” Notably, while the Federal Deposit Insurance Corporation (FDIC) also issued their own Madden Fix, the agency was not named as a defendant in the initial lawsuit. As such, it … Continue Reading

State Attorneys General Challenge OCC Madden Fix

Last Wednesday, the attorneys general of Illinois, California, and New York filed a lawsuit in the United States District Court for the Northern District of California challenging the Office of the Comptroller of the Currency’s proposed “Madden Fix.” This proposed rule, which we have discussed in detail, is designed to resolve some of the legal … Continue Reading

OCC Proposes Clarification to True Lender Doctrine

Earlier this week, the OCC released a proposed rule designed to address the “true lender” doctrine, a legal test utilized by courts and regulators to determine whether a bank or its non-bank partner is the actual lender in a credit transaction. This doctrine has led to uncertainty in the fintech and bank-partnership spaces, in large … Continue Reading

OCC, FDIC Issue Long-Awaited Valid-When-Made “Madden Fix”

Recently, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) issued final rules designed to resolve the uncertainty created by the Second Circuit Court of Appeals’ decision in Madden v. Midland Funding, 786 F.3d 246 (2d Cir. 2015). In Madden, the court called into doubt the valid-when-made doctrine, … Continue Reading

California’s Proposed “Mini-CFPB” May Increase Scrutiny of Auto Lenders and Other Industry Participants

Earlier this month, California Gov. Gavin Newsom revealed plans to create a state version of the federal Consumer Financial Protection Bureau (CFPB) as part of the state’s proposed 2020-2021 budget. According to the governor’s Budget Summary, “[t]he federal government’s rollback of the CFPB leaves Californians vulnerable to predatory businesses and leaves companies without the clarity … Continue Reading

The CFPB (Yes, the CFPB!) Offers New Compliance Tools for Innovation

Companies that offer innovative consumer financial products and services have new tools to help them stay in compliance with federal consumer financial laws. In a refreshing twist from prior policy, the Consumer Financial Protection Bureau (CFPB) announced last week that it had revamped its No-Action Letter Policy and released a Compliance Assistance Sandbox and a … Continue Reading

California’s Bot Transparency Law Goes into Effect on July 1, 2019

California wants to ensure that consumers know what they are talking to. On July 1, 2019, California’s new bot disclosure law will take effect, requiring bots to be upfront about their inhumanity.  The law prohibits bots from communicating with a person in California with the intent to mislead as to their artificial identity for the … Continue Reading

First Federal Legislation Proposed Relating to Protection of Biometrics

Amidst privacy concerns and booming technological innovation, Sens. Roy Blunt (R-Mo.) and Brian Schatz (D-Hawaii) have introduced a bill proposed as the “Commercial Facial Recognition Privacy Act of 2019” (CFRPA) targeting arguably the most “personal” biometric identifier—our face. While several states have enacted legislation relating to protection of biometric identifiers, this is the first federal … Continue Reading

Cryptocurrencies: Currency, Commodity, Security or Something Else?

Courts and regulators continue to struggle with how to define cryptocurrencies. The latest installment of this ongoing debate came from an unlikely source: a state appellate court’s opinion on a criminal matter. Specifically, on January 30, 2019, the Third District Court of Appeal for the State of Florida entered an order reversing a trial court’s … Continue Reading

ICO and Cryptocurrency Enforcement Update

September 11, 2018, was a big day for Initial Coin Offering (ICO) and crypto-related enforcement activity. In the Eastern District of New York, Judge Raymond Dearie issued an order neglecting to dismiss an indictment against Maksim Zaslavskiy for securities fraud relating to Zaslavisky’s involvement with an ICO for “REcoin” and another referred to as “Diamond.” This case … Continue Reading

HUD and DOJ Challenge Facebook’s Advertising Platforms under the Fair Housing Act

The U.S. Department of Housing and Urban Development (HUD) has filed an administrative complaint against Facebook alleging discriminatory advertising in violation of the Fair Housing Act (FHA). HUD alleges that housing advertisers can use Facebook’s advertising tools and algorithms to exclude applicants based on protected categories such as race, sex, or national origin. Four days … Continue Reading

OCC: Fintechs May Now Apply for Bank Charters

The Office of the Comptroller of the Currency announced, in a highly anticipated decision, that it would begin to consider special-purpose charter applications from fintech entities. This move, which has been the subject of months of industry speculation, came mere hours after the Department of the Treasury endorsed a national charter for fintech companies. This … Continue Reading

SEC Action Highlights Importance of Specific Language in Directors and Officers Insurance for Fintech and Other Startup Companies

The founder of Mozido, the fintech startup once claimed to be valued at $5.6 billion, has been named as a defendant in a civil lawsuit filed by the Securities and Exchange Commission (SEC). The complaint names Michael Liberty (and others) individually and also names corporate entities related to Mozido as defendants. This action by the … Continue Reading

Five Privacy Practices Every Company Should Address in the Wake of the FTC’s Enforcement Action against PayPal

Privacy is serious business. This was made clear in the Federal Trade Commission’s (FTC) recent announcement that it had settled its complaint against Venmo, PayPal’s peer-to-peer payment service, for misrepresentations to consumers regarding privacy and security settings. Although the terms of the settlement do not become final until approval by the FTC on or about … Continue Reading

Parallel Universe or Coincidence: The CFPB’s New Data Consumer Protection Principles’ Relationship to GDPR

On October 18, 2017, the Consumer Financial Protection Bureau (CFPB) outlined nine non-binding Consumer Protection Principles (the Principles) for the access and sharing of consumer information between third-party companies. The Principles focus on the consumer experience, specifically consumers’ enhanced control over their financial lives. The CFPB envisions a marketplace in which consumers are in the … Continue Reading

Upending Trade Finance through Blockchain Technology

Trade finance, in both domestic and international financial transactions, is often utilized when one company seeks to import a shipment of goods from a supplier (or exporter). These transactions comprise an enormous amount of global trade. It is estimated that approximately 80 to 90 percent of world trade relies on trade finance. In fact, almost … Continue Reading

Foreign No More: Transferring Data on Demand U.S. Companies and GDPR Data Portability

Much has been written about the consternation and concern of businesses around the world regarding the European Union’s General Data Protection Regulation (GDPR), which takes effect on May 25, 2018. The GDPR applies to companies operating within the EU that control or process data. Notably, it also applies to companies outside the EU that offer … Continue Reading

Bitcoin and Bankruptcy: What You Need to Know about the Value of Bitcoin and Other Cryptocurrencies in Bankruptcy

It is hard to peruse the internet or even mainstream media outlets without hearing about bitcoin. What is this ubiquitous bitcoin? It depends on whom you ask. A CNN Money articled defined bitcoin as “a new currency that was created in 2009 by an unknown person using the alias Satoshi Nakamoto.” The IRS has recently … Continue Reading

OCC Addresses Long-Standing Questions on Vendor Management Programs

The Office of the Comptroller of the Currency (OCC) recently issued supplemental guidance (Bulletin 2017-21) on third-party risk management. Responding to questions raised by banks and federal savings associations since the release of the OCC’s Bulletin 2013-19 on vendor management issues, the OCC provided additional insight on topics in the 2013 Bulletin and the application … Continue Reading

The Bank Next Door: Part I – Using Social Media to “Friend” Customers

[This post is the first in a series of post which will examine the risks, rewards, innovative uses, and changing legal landscape of social media use by financial services institutions. Future blog posts will examine topics such as: monitoring and managing consumer complaints through social media, disgruntled employee use of social media, and control over content and message. … Continue Reading

Banks Should Prepare for Increased Collaboration between IT, Legal and BSA/AML Compliance Departments under New FinCEN Guidance

Last month, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued an Advisory which provided substantial guidance to financial institutions regarding the scope of information that must be provided in Suspicious Activity Reports (SARs) arising from cyber-events, cyber-enabled crime, and cyber-related information under the Bank Secrecy Act (BSA). When are financial institutions required to … Continue Reading

CFPB Sends Clear Message That FinTech Start-Ups Have Same Obligations as Established Companies

In a clear message to FinTech start-ups, on September 27, 2016, the Consumer Financial Protection Bureau (CFPB) ordered online lender Flurish, Inc. to pay $1.83 million in refunds and a civil penalty of $1.8 million for failing to deliver the promised benefits of its products. Flurish, a San Francisco based company doing business as LendUp, … Continue Reading
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