Troutman Pepper Weekly Consumer Financial Services COVID-19 Newsletter – Consumer Protection

United States:

Troutman Pepper Weekly Consumer Financial Services COVID-19 Newsletter

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Like most industries today, Consumer Finance Services businesses
are being significantly impacted by the novel coronavirus
(COVID-19). Troutman Pepper has developed a dedicated COVID-19 Resource Center to guide clients
through this unprecedented global health challenge. We regularly
update this site with COVID-19 news and developments,
recommendations from leading health organizations, and tools that
businesses can use free of charge.

Our bank and loan servicing clients also face novel challenges
affecting their industry due to COVID-19, particularly the
ever-changing rules and regulations concerning evictions and
foreclosures. We closely track these updates and have assembled an
interactive tracker containing state orders and guidance documents
regarding residential foreclosure and eviction moratoriums. You may
access this interactive tool at

To help you keep abreast of relevant activities, below find a
breakdown of some of the biggest COVID-19 driven events at the
federal and state levels to impact the Consumer Finance Services
industry this past week:

Federal Activities

State Activities

Privacy and Cybersecurity Activities

Federal Activities:

  • On June 18, the Federal Housing Administration (FHA) announced
    updates to its student loan
    monthly payment calculations to help provide greater access to
    affordable single-family FHA-insured mortgage financing for
    creditworthy individuals with student loan debt, which has a
    disproportionate impact on people of color. According to the FHA
    release, the updated policy more closely aligns student loan debt
    calculation policies with other housing agencies, helping to
    streamline and simplify originations for borrowers with student
    loan debt obligations. For more information, click here.

  • On June 17, the Federal Financial Institutions Examination
    Council (FFIEC) announced the availability of
    data on 2020 mortgage lending transactions at 4,475 U.S. financial
    institutions reported under the Home Mortgage Disclosure Act
    (HMDA). Covered institutions include banks, savings associations,
    credit unions, and mortgage companies. The data
    released by the FFIEC provide comprehensive
    information on mortgage market activity used by industry, consumer
    groups, regulators, and others to assess potential fair lending
    risks and for other purposes. For more information, click here.

  • On June 16, the Consumer Financial Protection Bureau (CFPB)
    issued an interpretive rule, setting
    forth the basis for its authority to examine supervised financial
    institutions for risks to active duty servicemembers and their
    dependents from conduct that violates the Military Lending Act
    (MLA). For more information, click here.

  • On June 16, the U.S. Department of Education announced the
    approval of 18,000 borrower defense to repayment (borrower defense)
    claims for individuals who attended ITT Technical Institute. These
    borrowers will receive 100% loan discharges, resulting in
    approximately $500 million in relief. This brings total loan
    cancellation under the Biden-Harris administration borrower defense
    to $1.5 billion for approximately 90,000 borrowers. For more
    information, click here.

  • On June 16, the CFPB updated a report it first released last
    that detailed the delinquency rates on major types of
    credit to illustrate the financial effect of the COVID-19 pandemic
    on consumers. Now looking at data through the end of April 2021,
    the CFPB’s data indicates that delinquency rates on auto loans,
    student loans, credit cards, and mortgages are still below
    pre-pandemic levels, but “time will tell whether delinquencies
    begin to rise again through the summer and fall of 2021.” For
    more information, click here.

  • On June 15, the Federal Communications Commission (FCC) announced that its reassigned
    numbers database (RND) will undergo a beta test from July 1 through
    September 30, during which callers and caller agents may use the
    database without charge. The FCC has worked on the RND – which is
    intended to be used by callers to determine if a cell phone number
    has been reassigned to someone other than the individual seeking to
    be contacted – for over three years. Knowing that a phone number
    has been reassigned can tell a company not to contact that number.
    For more information on the RND and participating in the FCC’s
    beta testing, click here.

  • On June 14, the CFPB released a report analyzing the
    differences in lending patterns for lenders below and above the
    100-loan, closed-end threshold set by the 2020 Home Mortgage
    Disclosure Act (HDMA). While the CFPB’s analysis is
    preliminary, the report shows some differences in lending patterns
    for lenders above and below the threshold. For more information on
    the report and the background on HDMA data collection, reporting,
    and disclosure processes, click here.

  • On June 14, the CFPB issued consumer guidance on what to do
    ahead of the Centers for Disease Control’s (CDC) eviction
    moratorium June 31 expiration. According to a recent housing study published
    by Harvard University, more than two million homeowners are behind
    on their mortgages and risk being forced out of their homes. For
    more information, click here.

  • On June 11, the CFPB published the Spring 2021 Agenda as part of
    its 2021 Unified Agenda of Federal
    Regulatory and Deregulatory Actions
    , which is coordinated by
    the Office of Management and Budget under Executive Order 12866.
    The Spring 2021 Agenda lists the regulatory matters currently
    pursued by CFPB interim leadership, pending appointment and
    confirmation of a permanent director. The Fall 2021 Unified Agenda
    will reflect the permanent director’s changes to the CFPB
    regulatory agenda. For more information, click here.

  • On June 10, a Wisconsin federal judge ordered a temporary halt
    to a $4 billion federal loan relief program intended to address
    longstanding inequities for farmers of color after a legal
    challenge by white farmers, who argued the policy discriminates against them. The
    plaintiffs in the case – 12 farmers from nine states – filed suit
    against the U.S. Department of Agriculture (USDA) over the roughly
    $4 billion set aside for loan forgiveness for socially
    disadvantaged farmers and ranchers in the $1.9 trillion American
    Rescue Plan. For more information, click here.

State Activities:

  • On June 15, New York Attorney General Letitia James issued an
    alert to New Yorkers to remain vigilant against a surge in
    telephone scams seeking to take advantage of consumers. As part of
    the fraud, scammers put pressure on customers to pay immediately or
    else have their services cut off instantly. “As New Yorkers
    continue to suffer the economic impacts of the COVID-19 public
    health crisis, scammers have seen this as an opportunity to take
    advantage of the economic anxiety that many New Yorkers feel and
    the additional time some have needed to pay their bills,” said
    Attorney General James. For more information, click here.

  • On June 15, the Supreme Court of Virginia issued its
    twenty-third order, extending the declaration of judicial emergency
    for the COVID-19 pandemic through July 11. Under the terms of the
    order, courts continue to have authorization to accept
    electronically signed pleadings, orders, and other documents. For
    more information, click here.

  • On June 15, Vermont ended its state of emergency. As a result,
    Vermont’s eviction moratorium for nonpayment of rent or
    no-cause evictions can proceed on July 15 under S. 333 -
    Vermont’s eviction moratorium. For more information, click here.

  • On June 17, the Richmond Times Dispatch reported that
    Virginia Governor Ralph Northam will not exercise executive
    authority to extend eviction protections imposed during the
    COVID-19 pandemic. Absent any action by the governor and starting
    July 1, landlords will no longer be required to notify tenants
    about how to apply for rent relief through a state program or abate
    from proceeding from eviction for 45 days while waiting for a
    relief application approval. For more information, click here.

  • On June 14 Texas Governor Greg Abbott signed HB 3510. Effective
    September 1, the new law will allow employees of companies licensed
    by the Texas Finance Commission – which include vehicle finance
    companies, traditional installment lenders, and mortgage lenders -
    to work remotely from licensed locations, provided certain
    requirements are met. For more information, click here.

  • On June 11, Illinois Governor J.B. Pritzker issued an order to
    rescind Executive Order 2020-25 on June 25. Executive Order 2020-25
    suspended the “provisions of the Illinois Code of Civil
    Procedure that permit the service of a garnishment summons, wage
    deduction summons, and a citation to discover assets on a consumer
    debtor or consumer garnishee.” For more information, click here.

  • The Appellate Court of Illinois, First District recently ruled
    that the Illinois Rent Control Preemption Act (IRCPA) preempted the
    tenant’s claims against the lender under Chicago’s Keep
    Chicago Renting Ordinance (KCRO). Specifically, the court found
    that the KCRO requirement to “offer qualified tenants either a
    $10,600 relocation fee or extend the tenant’s lease with an
    annual rental rate that does not exceed 102% of their current
    rental rate” is preempted and this provision is not severable
    from the remainder of the ordinance. For more information, click here.

  • On June 14, the Eleventh Circuit Court of Appeals issued an
    order withholding issuance of a mandate in the Hunstein v.
    Preferred Collection and Management Services, Inc.
    For more
    information, click here.

  • On June 16, CNBC reported that eight states – Alabama,
    Idaho, Indiana, Nebraska, New Hampshire, North Dakota, West
    Virginia, and Wyoming – are opting out of federal unemployment
    benefit programs. This brings the total to 25 states turning down
    federal funds prior to the program’s official expiration on
    September 6. Further, Indiana residents are suing Governor Eric
    Holcomb in state court to maintain aid programs, arguing the
    decision to stop benefits violates the state’s unemployment
    statute. For more information, click here.

Privacy and Cybersecurity

  • On June 17, U.S. Senator Kirsten Gillibrand announced the
    revival of the Data Protection Act of 2021, which seeks to create a
    Data Protection Agency that would “protect Americans’
    data, safeguard their privacy, and ensure data practices are fair
    and transparent.” Due to the COVID-19 pandemic, more and more
    people are providing their personal information to companies and
    “companies are free to sell individuals’ data to the
    highest bidder without fear of real consequences, posing a severe
    threat to modern-day privacy and civil rights,” Senator
    Gillibrand said. This new legislation would include:

    • Supervision of Data Aggregators

    • Office of Civil Rights

    • Enforcement Powers

    • Penalties and Fines

    • Defines Key Terms for Transparency

To read more about this new legislation, click here.

  • On June 16, CyberScoop reported that “health
    passes, sometimes known as vaccine passports [may be used] as a
    means to securely reopen businesses and borders as COVID-19 cases
    drop and vaccination rates rise.” In addition, businesses or
    airports can utilize scannable codes to access patient health data
    instead of relying on physical records. Data protection experts
    anticipate that health passes and digital IDs are here to stay.
    Digital IDs offers a convenient way to authenticate and verify
    individuals. For example, IBM is working on a digital ID with New
    York state that would collect vaccine status, driver’s
    licenses, and other personal records. More on IBM’s move can be
    read here. However, privacy experts
    warn that tech companies embracing this new technology should
    consider assessing risks to data. Both the Biden administration and
    the Department of Homeland Security are beginning to provide
    guidelines on privacy best practices as they relate to digital IDs.
    To read CyberScoop’s report, click here. For those interested in
    learning more about vaccine certificates and the potential
    implications of using them, check out Troutman Pepper’s
    Law360 article by clicking here.

  • On June 15, the Federal Trade Commission (FTC) warned companies
    of the danger of various business-to-business (B2B) scams as
    employees begin to return to the workplace. “[C]on artists
    were already using the coronavirus as a hook for swindlers and
    scams . . Now that many companies are returning to an in-person
    workplace, some fraudsters will try to take advantage of the
    transition.” As a result, the FTC urges companies to keep
    their guard up against various forms of B2B deception by:

    • Spotting the signs of an imposter scam;

    • Sticking with suppliers they know or recommended by people they
      trust; and

    • Alerting their staff to unemployment benefits fraud.

To read the FTC’s complete list of tips to protect against
workplace B2B scams, click here.

  • On June 14, the FTC stressed to companies the importance of
    staying in control of sensitive information as many corporations
    shift back to an in-person workplace following over a year of
    remote work due to the COVID-19 pandemic. In an effort to ease the
    transition back to the office and “reduce the risk that
    COVID-19 scammers, data thieves, and financial fraudsters will
    follow [companies] there,” the FTC reminds companies they

    • Update their data inventory;

    • Double check security on new platforms and software;

    • Consider an in-house security refresher; and

    • Evaluate and adjust their practices in light of their COVID-19

To read the FTC’s full list of tips on maintaining
appropriate data security standards, click here.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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