Consumer Finance Monitor

The Consumer Financial Services industry is changing quickly. This weekly podcast from national law firm Ballard Spahr focuses on the consumer finance issues that matter most, from new product development and emerging technologies to regulatory compliance and enforcement and the ramifications of private litigation. Our legal team—recognized as one of the industry's finest— will help you make sense of breaking developments, avoid risk, and make the most of opportunity.

The Impact of the Newly Established Priorities and Massive Proposed Reduction in Force (RIF) on CFPB Supervision 06/05/2025

The Impact of the Newly Established Priorities and Massive Proposed Reduction in Force (RIF) on CFPB Supervision Our podcast show being released today features two former CFPB senior officers who were key employees in the Supervision Division under prior directors: Peggy Twohig and Paul Sanford. Peggywas a founding executive of the CFPB when the agency was created in 2010 and led the development of the first federal supervision program over nonbank consumer financial companies. Beginning in 2012, as head of CFPB’s Office of Supervision Policy, Peggy led the office responsible for developing supervision strategy for bank and nonbank markets and ensuring that federal consumer financial laws were applied consistently in supervisory matters across markets and regions. Paul served as head of the Office of Supervision Examinations for the CFPB from 2012-2020 with responsibility for ensuring the credible conduct of consumer protection examinations. The purpose of this podcast show was primarily to obtain the opinions of Peggy and Paul about the legal and practical impact of (i) a Memo to CFPB Staff from Mark Paoletta, Chief Legal Officer, dated April 16, 2025, entitled “2025 Supervision and Enforcement Priorities” which rescinded prior priority documents and established a whole new set of priorities which in most instances are vastly different than the Supervision Priority documents which guided former directors and (ii) drastic steps taken by CFPB Acting Director Russell Vought to minimize the functions and staffing at the agency. That included, among other things, an order calling a halt to all work at the agency, the cancellation of all supervisory exams and the creation of plans by Vought to reduce the agency’s staff (“RIF”) from about 1,750 employees to about 250 employees (including a reduction of Supervision’s staff to 50 employees) We also described the status of a lawsuit brought by the union representing CFPB employees and other parties against Vought seeking to enjoin him from implementing the RIF. The Court has granted a preliminary injunction which so far has largely prevented Vought from following through on the RIF. The matter is now on appeal before the DC Circuit Court of Appeals and a ruling is expected soon. Peggy and Paul describe in detail the CFPB Supervision priorities under Director Chopra and compare and contrast those priorities with the new priorities established by Paoletta which are: 1. “Shift back” CFPB Supervision to the proportions focused on depository institutions to nonbanks to where it was in 2012 -- to a 70% depository and 30% nonbank, compared to the more recent 60% on nonbanks to 40% depositories. 2. Focus CFPB Supervision on “conciliation, correction, and remediation of harms subject to consumer complaints” and “collaborative efforts with the supervised entities to resolve problems so that there are measurable benefits to consumers.” 3. Focus CFPB Supervision on “actual fraud” where there are “identifiable victims with material and measurable consumer damages as opposed to matters where the consumers made “wrong” choices. 4. Focus CFPB Supervision on the following priorities: · Mortgages as the highest priority · FCRA/Reg V data furnishing violations · FDCPA/Reg F relating to consumer contracts/debts · Fraudulent overcharges, fees, etc. · Inadequate controls to protect consumer information resulting in actual loss to consumers. 5. Focus CFPB Supervision on providing redress to service members and their families and veterans. 6. The areas that will be deprioritized by CFPB Supervision will be loans for “justice involved” individuals, medical debt, peer-to-peer platforms and lending, student loans, remittances, consumer data and digital payments. 7. Respect Federalism” and not prioritize supervision where States “have and exercise” ample regulatory and supervisory authority and participating in multi-state exams (unless required by statute). 8. Eliminate duplicative supervision where other federal agencies have supervisory jurisdiction 9. Not pursue supervision under “novel legal theories.” 10. For fair lending, ignore redlining or “bias assessment” based solely on statistical evidence, and only pursue matters with “proven actual intentional racial discrimination and actual identified victims.” Peggy and Paul also discussed their skepticism as to whether CFPB Supervision will be able to comply with its statutory duties if the RIF is carried out and Supervision’s staff is reduced to 50 employees. Alan Kaplinsky, former longtime Chair of the Consumer Financial Group and now Senior Counsel hosted the podcast. /episode/index/show/consumerfinancemonitor/id/36861455

What Is Happening at the Federal Agencies (Other Than the CFPB) That is Relevant to the Consumer Financial Services Industry 05/29/2025

What Is Happening at the Federal Agencies (Other Than the CFPB) That is Relevant to the Consumer Financial Services Industry We are releasing today on our podcast show a repurposed webinar which we produced on May 13, 2025 entitled “What is happening at the federal agencies (other than the CFPB) that is relevant to the consumer financial services industry.” During this podcast, we will inform you about recent developments at those other agencies, including the FTC, OCC, FDIC, FRB and DOJ (collectively, the “Agencies”) and the White House (through the issuance of Executive Orders). Some of the issues we consider are: • What are the strategic priorities of the Agencies, including cryptocurrency (OCC, FRB and DOJ); reducing regulatory burden, promoting financial inclusion, embracing bank-fintech partnerships and expanding responsible bank activities involving digital assets (OCC); adopt a more open-minded approach to innovation and technology adoption (FDIC); public inquiry into anti-competitive regulations (FTC and DOJ); and regulation of AI technology, boosting protections for children and teens online and strengthening enforcement against companies that sell, transfer, or disclose Americans’ geolocation information and other sensitive data to foreign adversaries, more emphasis on antitrust enforcement and less on consumer protection (FTC). • What is the status of proposed or final regulations of the Agencies? (e.g., FTC CARS Rule, Click-to-Cancel Rule, Junk Fees Rule, and Rule banning Noncompetes; FDIC advertisement and brokered-deposit rules, OCC rule on bank mergers; and the Community Reinvestment Act final rule)? • What is the status of enforcement investigations and litigation of the Agencies? • What impact will staff cuts have on supervisory examinations? • What is the impact of President Trump’s executive order requiring the Agencies to obtain approval from the White House of all proposed and final regulations? • Will the Supreme Court approve of President Donald Trump’s firing of the Democratic members of the FTC and NCUA and other federal agencies (who have subsequently sued Trump to challenge the firings) and, if so, what are its implications? • What is the significance of the FDIC and OCC agreeing to eliminate “reputation risk” as a basis for evaluating risks to banks? • Will the OCC adopt a regulation or other guidance, or will Congress enact legislation pertaining to debanking/fair access? • Will the OCC and/or FDIC issue any guidance or regulations pertaining to federal preemption of state law in light of the Supreme Court’s opinion last term in Cantero and the impending Courts of Appeal decisions in Cantero, Kivett and Conti? • What is the significance of the FDIC withdrawing its amicus brief in support of the Colorado Attorney General in the 10th Circuit in the lawsuit brought by industry against him challenging a Colorado statute which purported to opt out of Section 521 of DIDMCA? • Will there continue to be fair lending and disparate impact enforcement at any of the Agencies? Alan Kaplinsky, former chair and now senior counsel of Ballard Spahr’s Consumer Financial Services Group, moderated the presentations of the following other members of the Consumer Financial Services Group: Scott Coleman, Ronald Vaske and Kristen Larson. /episode/index/show/consumerfinancemonitor/id/36769585

Everything You Should Know About the Stablecoin Bill 05/22/2025

Everything You Should Know About the Stablecoin Bill Our podcast show being released today will focus on S. 919, the Guiding and Establishing National Innovation for U. S. Stablecoins Act of 2025 or GENIUS Act which was reported out of the Senate Banking, Housing, and Urban Affairs Committee by a bipartisan vote of 18-6. The bill would establish a regime to regulate stablecoins. Our guest today, Professor Art Wilmarth of George Washington University School of Law, published an op-ed on March 6 in the American Banker in which he wrote that the “..bill would allow stablecoins, which are volatile deposit-like instruments, to be offered to the public without the essential protections provided by federal deposit insurance and other regulatory safeguards regarding banks that are insured by the Federal Deposit Insurance Corp. By placing the federal government's imprimatur on poorly regulated and unstable stablecoins, the …bill would greatly increase the probability that future runs on stablecoins would trigger systemic crises requiring costly federal bailouts to avoid devastating injuries to our financial system and economy.” Our podcast show was designed to be of interest to both crypto neophytes and experts. During this podcast, we explore the following issues: 1. What are stablecoins, and what are their present and potential use cases? 2. How do stablecoins differ from other types of crypto like bitcoin? 3. How many companies issue stablecoins today? 4. What is the total volume in dollars of outstanding stablecoins? Has it been growing? Do all stablecoin issuers also issue other types of crypto? 5. Do any banks issue stablecoins? If not, why not? 6. Are there any federal or state regulations that apply to stablecoins today? What about state money transmitter laws? 7. Do stablecoins provide a better way to improve the speed and reliability of payments compared to other ways of making payments? Do they offer any benefits that are NOT currently offered by tokenized bank deposits and the instant payment and settlement services offered by FedNow and the Clearing House's Real Time Payment Network? How do stablecoins on public blockchains compare to tokenized deposits held on private electronic bank ledgers, in terms of safety, reliability, and efficiency. 8. Professor Wilmarth describes a typical stablecoin transaction and the fact that stablecoin issuers often pay interest on stablecoins that are the equivalent of money market mutual funds and way more than banks pay on passbook or statement savings accounts or checking accounts. 9. How do stablecoin issuers generate revenue? 10. What are the potential risks of stablecoins, especially if they can be offered by nonbanks and are not covered by federal deposit insurance? Would they present the same risks as money market funds, which the Fed and Treasury bailed out in 2008 and again in 2020? Have there been any examples of these risks being realized? Have there been any failures? What happens if a stablecoin issuer fails? Does bankruptcy law (as amended by the GENIUS Act), provide a feasible process for dealing with failures of stablecoin issuers? If nonbank stablecoin issuers become large financial institutions and get into serious trouble, would the federal government be able to finance another series of massive bailouts similar to those of 2007-09 and 2020-21 without risking a crisis in the Treasury bond market and/or another surge of inflation? 11. Will Big Tech firms issuing stablecoins be able to dominate our banking system and economy and would that necessarily be a bad thing? 12. Which firms are likely to be the most significant issuers of stablecoins if nonbanks are allowed to conduct that activity? If Big Tech firms are allowed to offer stablecoins, could they use stablecoins to offer banking services and eventually dominate the banking industry? What should we learn from China's experience with Ant Financial Group (Alipay) and Tencent (WeChat Pay), China's two largest Big Tech firms, which became dominant providers of financial services to Chinese consumers and households? 13. We then discussed the so-called GENIUS ACT which the Senate Banking Committee passed by an 18-6 bipartisan vote on March 13. What are the major features of the Act? 14. What are your major concerns about the bill? 15. What would the stablecoin market look like if Congress passed the GENIUS Act in the form that it was approved by the Senate Banking Committee? 16. Should we require all issuers and distributors of stablecoins to be FDIC-insured banks? Why do you believe that federal banking laws governing FDIC-insured banks provide a far better approach for regulating issuers of stablecoins? [After the recording of this podcast, the bill ran into rough sledding on the floor for a couple of weeks with some Senators, like Senator Elizabeth Warren, raising consumer protection issues similar to those raised by Professor Wilmarth and other Senators raising concerns about President Trump’s family substantially benefiting from enactment of the bill. However, on May 19, after negotiations among Senate Democrats and Republicans to amend the Bill to add consumer protections, limits on tech companies issuing stablecoins and ethics standards for special government employees, like Elon Musk, the Bill advanced on a bipartisan procedural vote to prevent filibustering in the Senate, 66-32, making it likely that the Bill will pass the Senate by a super-majority vote. The fate of the Bill in the House is less certain.] Alan Kaplinsky, Senior Counsel and formerly the Chair for 25 years of the Consumer Financial Services, hosted the podcast show. /episode/index/show/consumerfinancemonitor/id/36669540

Navigating State AG Investigations: A Playbook For Financial Services Companies 05/15/2025

The Impact of the Election on the FTC 05/08/2025

The Impact of the Election on the FTC Today’s podcast features Stephen Calkins, a law professor at Wayne State University in Detroit and former General Counsel of the Federal Trade Commission (the “FTC”). President Trump recently fired, without good cause, the two Democratic members of the FTC, leaving only two Republican members as commissioners. He did this even though the FTC Act provides that a commissioner may be fired by the President only for good cause and that the commission is to be governed by a bi-partisan 5-member commission This is the third time in the past few weeks that Trump has fired without good cause democratic members of other federal agencies; the other two being the National Labor Relations Board (The “NLRB”) and the Merit Selection Protection Board (The “MSPB”). The statutes governing those two agencies, like the FTC Act, allow the President to fire a member of the governing board for good cause only. The fired members of all three agencies initiated lawsuits in federal district court for the District of Columbia, seeking mandatory preliminary injunctions requiring those agencies to reinstate them with back pay. We discuss the status of the two lawsuits and how the outcome will turn on whether the Supreme Court will apply or overrule a 1935 Supreme Court opinion in Humphrey’s Executor, which held that the provision in the Constitution allowing the President to fire an FTC commissioner for good cause only did not run afoul of the separation of powers clause in the Constitution. Conversely, the Supreme Court will need to determine whether the Supreme Court opinion in Seila Law, LLC V. Consumer Financial Protection Bureau should apply to these two new cases. In Seila Law, the Supreme Court held on Constitutional grounds, that the President could fire without good cause the sole director of the CFPB even though the Dodd-Frank Act allowed the President to fire the sole director of the CFPB for good cause only. Until this gets resolved, the FTC will be governed only by two Republican commissioners who will constitute a quorum for purposes of conducting official business. Professor Calkins explains how a Supreme Court ruling in these two new cases upholding Trump’s firing of the Democratic members of the agencies could enable the President to fire without good cause members of other multiple-member agencies, like the Federal Reserve Board. We then discuss the status of the following four final controversial FTC rule, some of which were challenged in court: the CARS Rule, the Click-to-Cancel Rule, the Junk Fee Rule, and the Non-Compete Rule. We also discuss the impact of President Trump’s Executive Order requiring that all federal agencies, including so-called “independent” agencies, must obtain approval from the White House before taking any significant actions, like proposing or finalizing rules. Then, we discuss the status of enforcement investigations and litigation and whether any of them have been voluntarily dismissed with prejudice by the FTC under Trump 2.0, whether any new enforcement lawsuits been filed, and what they involve. We discuss our expectation that the FTC will be a lot less active in the consumer protection enforcement area during Trump 2.0. We then discuss the impact on staffing because of DOGE-imposed reductions-in-force. Finally, we touch upon the status of pending antitrust enforcement lawsuits. Alan Kaplinsky, former practice group leader for 25 years of the Consumer Financial Services Group and now Senior Counsel, hosts the discussion. /episode/index/show/consumerfinancemonitor/id/36486155

Private Civil Consumer Financial Services Litigation to Partially Fill CFPB Void - Part 2 05/01/2025

Private Civil Consumer Financial Services Litigation to Partially Fill CFPB Void - Part 2 The podcast we are releasing today is part 2 of a re-purposed webinar we produced on March 25 titled “The Impact of the Election on the CFPB - Part 4.” As a result of the diminishing impact of the CFPB on enforcing the consumer financial services laws, we expect that void to be filled by state government enforcement agencies and private civil litigation, including class and mass actions. Our webinar focused on private civil litigation. Our featured guest for this webinar was Ira Rheingold, Executive Director of the National Association of Consumer Advocates. He was joined on the panel by Thomas Burke, Dan McKenna, Jenny Perkins, Joseph Schuster, and Melanie Vartabedian, litigators in our firm’s Consumer Financial Services Group. We discussed the following areas where the panelists are predicting an increase in private civil litigation during 2025 and beyond: 1. Solar Litigation Trends (Ira, Melanie). 2. Increased volume of arbitrations and mass arbitrations (Ira, Dan). 3. A general emphasis on “unfair” practices, including a close look at alleged unlawful fees (Ira). 4. Crypto industry practices -fees, deception and third-party responsibility (Ira). 5. National Bank Act preemption and DIDMCA opt-out litigation (Joseph). If you missed listening to part 1 of this re-purposed webinar, you can access the podcast in the link to the following blog which appears here. The blog describes the topics we covered. Alan Kaplinsky, the former chair for 25 years and now the Senior Counsel of the Consumer Financial Services Group, hosted the podcast show. For our podcasts repurposed from webinars that we produced as part of our series entitled “The Impact of the Election on the CFPB” Part 1 (regulations and other written guidance), click and ; Part 2 (supervision and enforcement), click and ; Part 3 (state AGs and departments of banking), click and . /episode/index/show/consumerfinancemonitor/id/36387010

Private Civil Consumer Financial Services Litigation to Partially Fill CFPB Void - Part 1 04/24/2025

Private Civil Consumer Financial Services Litigation to Partially Fill CFPB Void - Part 1 The podcast we are releasing today is part 1 of a re-purposed webinar we produced on March 25 titled “The Impact of the Election on the CFPB - Part 4.” As a result of the diminishing impact of the CFPB on enforcing the consumer financial services laws, we expect that void to be filled by state government enforcement agencies and private civil litigation, including class and mass actions. Our webinar will focus on private civil litigation. Our featured guest for this webinar was Ira Rheingold, Executive Director of the National Association of Consumer Advocates. He was joined on the panel by Thomas Burke, Dan McKenna, Jenny Perkins, Joseph Schuster, and Melanie Vartabedian, litigators in our firm’s Consumer Financial Services Group. The podcast began with Ira observing that state enforcement agencies and plaintiffs’ class action lawyers will be taking a careful look at enforcement actions voluntarily dismissed by the CFPB to ascertain whether the complaints should be re-filed by them in federal or state court. We then proceeded to discuss the following areas where the panelists are predicting an increase in private civil litigation during 2025 and beyond: Increased FCRA litigation, especially in ID Theft (Jenny, Ira). The use of AI and corporate responsibility for ensuring that it does not create unfair or discriminatory practices (Ira). Increased retail bank litigation, including EFTA claims (Ira, Tom). Part 2 of this re-purposed webinar will be released next Thursday, May 1. Alan Kaplinsky, the former chair for 25 years and now Senior Counsel of the Consumer Financial Services Group, hosted the podcast show. For our podcasts repurposed from webinars that we produced as part of our series entitled “The Impact of the Election on the CFPB” Part 1 (regulations and other written guidance), click and ; Part 2 (supervision and enforcement), click and ; Part 3 (state AGs and departments of banking), click and . /episode/index/show/consumerfinancemonitor/id/36293970

Everything You Want to Know About the CFPB as Things Stand Today, and Lots More - Part 2 04/17/2025

Everything You Want to Know About the CFPB as Things Stand Today, and Lots More - Part 2 Our podcast show being released today is part 2 of a repurposed interactive webinar that we presented on March 24 featuring two of the leading journalists who cover the CFPB - Jon Hill from Law360 and Evan Weinberger from Bloomberg. Our show begins with Tom Burke, a Ballard Spahr consumer financial services litigator, describing in general terms the status of the 38 CFPB enforcement lawsuits that were pending when Rohit Chopra was terminated. The cases fall into four categories: (a) those which have already been voluntarily dismissed with prejudice by the CFPB; (b) those which the CFPB has notified the courts that it intends to continue to prosecute; (c) those in which the CFPB has sought a stay for a period of time in order for it to evaluate whether or not to continue to prosecute them where the stay has been granted by the courts; and (d) those in which the CFPB’s motion for a stay has been denied by the courts or not yet acted upon. Alan Kaplinsky then gave a short report describing a number of bills introduced this term related to the CFPB. Alan remarked that the only legislative effort which might bear fruit for the Republicans is to attempt to add to the budget reconciliation bill a provision subjecting the CFPB to funding through Congressional appropriations. Such an effort would need to be approved by the Senate Parliamentarian. Finally, Alan expressed surprise that the Republicans, in seeking to shut down the CFPB, have not relied on the argument that the CFPB has been unlawfully funded by the Federal Reserve Board since September 2022 because there has been no “combined earnings of the Federal Reserve Banks” beginning then through the present. (Dodd-Frank stipulates that the CFPB may be funded only out of such “combined earnings”). For more information about that funding issue, listen to who has written prolifically about it. On Monday of this week, Professor Scott published his third op-ed in the , in which he concluded: “Since the bureau is operating illegally, the president can halt its work immediately by executive order. The order should declare that all work at the CFPB will stop, that all rules enacted since funding became illegal in September 2022 are void, and that no new rules will be enforced.” Joseph Schuster then briefly described what has been happening at other federal agencies with respect to consumer financial services matters. Joseph and Alan reported on the fact that President Trump recently fired without cause the two Democratic members of the Federal Trade Commission leaving only two Republican members on the Commission. He took that action despite an old Supreme Court case holding that the language in the FTC Act stating that the President may remove an FTC member only for cause does not run afoul of the separation of powers clause in the Constitution. The two Democratic commissioners have sued the Administration for violating the FTC Act provision, stating that the President may only remove an FTC commissioner for cause. The President had previously fired Democratic members at the Merit Systems Selection Board and National Labor Relations Board. President Trump based his firings on the belief that the Supreme Court will overrule the old Supreme Court case on the basis that the “termination for cause” language in the relevant statutes is unconstitutional. After the recording of this webinar, the DC Circuit Court of Appeals stayed, by a 2-1 vote, a District Court order holding that Trump’s firing of the Democratic members of the NLRB and Merit Systems Selection Board was unlawful. That order was subsequently overturned by the court of appeals acting en banc. Subsequently, Chief Justice Roberts stayed that order. In light of these developments, it seems unlikely that the two FTC commissioners will be reinstated, if at all, until the Supreme Court decides the case. Also, after the recording of this webinar, the Senate confirmed a third Republican to be an FTC commissioner. For those of you who want a deeper dive into post-election developments at federal agencies other than the CFPB, please register for our webinar titled which will occur on May 13, 2025. Joseph then discussed developments at the FDIC where the FDIC withdrew the very controversial brokered deposits proposal, the 2023 corporate governance proposal, the Change-in-Bank- Control Act proposal and the incentive-based compensation proposal. He also reported that the FDIC rescinded its 2024 Statement of Policy on Bank Merger Transactions and delayed the compliance date for certain provisions in the sign and advertising rule. Joseph then discussed developments at the OCC where it (and the FDIC) announced that it would no longer use “reputation risk” as a basis for evaluating the safety and soundness of state-chartered banks that it supervises. The OCC, also, conditionally approved a charter for a Fintech business model to be a national bank and withdrew statements relating to crypto currency risk. Finally, Joseph discussed how state AGs and departments of banking have significantly ramped up their enforcement activities in response to what is happening at the CFPB. The podcast ended with each participant expressing his view on what the CFPB will look like when the dust settles. The broad consensus is that the CFPB will continue to operate with a greatly reduced staff and will only perform duties that are statutorily required. It is anticipated that there will be very little rulemaking except for rules that the CFPB is required to issue - namely, the small business data collection rule under 1071 of Dodd-Frank and the open banking rule under 1033 of Dodd-Frank. The panel also felt that the number of enforcement lawsuits and investigations will measurably decline with the focus being on companies engaged in blatant fraud or violations of the Military Lending Act. This podcast show was hosted by Alan Kaplinsky, the former practice group leader for 25 years and now senior counsel of the Consumer Financial Services Group. If you missed part 1 of our repurposed webinar produced on March 24, for a blog describing its content and a itself. In short, part 1 featured Jon Hill from Law360 and Evan Weinberger from Bloomberg, who chronicle the initiatives of CFPB Acting Directors Scott Bessent and Russell Vought and DOGE to dismantle the CFPB and the status of the two lawsuits brought to enjoin those initiatives. Ballard Spahr partners John Culhane and Rich Andreano give a status report on the effort of Acting Director Vought to nullify most of the final and proposed rules and other written guidance issued by Rohit Chopra. The podcast concludes with John and Rich describing the fact that supervision and examinations of banks and non-banks is non-existent. /episode/index/show/consumerfinancemonitor/id/36204950

Everything You Want to Know About the CFPB as Things Stand Today and Lots More - Part 1 04/10/2025

Everything You Want to Know About the CFPB as Things Stand Today and Lots More - Part 1 Our podcast show being released today is Part 1 of a repurposed interactive webinar that we presented on March 24, featuring two of the leading journalists who cover the CFPB - Jon Hill from Law360 and Evan Weinberger from Bloomberg. Our show began with Jon and Evan chronicling the initiatives beginning on February 3 by CFPB Acting Directors Scott Bessent, Russell Vought and DOGE to shut down or at least minimize the CFPB. These initiatives were met with two federal district court lawsuits (one in DC brought by the labor unions who represents CFPB employees who were terminated and the other brought in Baltimore, MD by the CFPB and others) challenging one or more of these initiatives. Jon and Evan described the lawsuits in detail. While the Baltimore lawsuit was dismissed on the basis of lack of ripeness under the Administrative Procedure Act, Judge Amy Berman Jackson issued a TRO freezing the CFPB from terminating more CFPB employees through the end of March while she decides whether to enter a further injunction with respect to the CFPB’s initiatives. Ballard Spahr partners, Rich Andreano and John Culhane, then gave an up-to-date status report on CFPB (a) final rules being challenged in litigation and/or eligible to be challenged under the Congressional Review Act; (b) final rules not being challenged in litigation which may be repealed or amended or whose effective or compliance dates may be extended under the Administrative Procedure Act; (c) proposed rules; and (d) non-rule written guidance. Rich and John paid particular attention to the following final rules: 1. The Small Business Loan Data Collection and Reporting Rule under Section 1071 of Dodd-Frank 2. The Non-bank enforcement order Registry Rule 3. The Fair Credit Reporting Act “Data Broker” Rule 4. The Residential Property Assessed Clean Energy (PACE) Financing Rule 5. The Residential Mortgage Servicing Proposed Rule 6. Credit Card Penalty fees under Reg Z (Late Fee Rule) 7. Personal Financial Data Rights (Open Banking) Rule under Section 1033 of Dodd-Frank 8. Overdraft Lending Rule Applicable to very large financial institutions 9. Prohibition on creditors and consumer reporting agencies reporting medical debt under Reg V Part 1 of our podcast concludes with Rich and John describing the fact that supervision and examination of banks and non-banks is apparently on hold. This podcast show was hosted by Alan Kaplinsky, the former practice group leader for 25 years of the Consumer Financial Services Group and now Senior Counsel. /episode/index/show/consumerfinancemonitor/id/36082560

A Deep Dive Into Judge Jackson’s Preliminary Injunction Order Against CFPB Acting Director Vought 04/04/2025

A Deep Dive Into Judge Jackson’s Preliminary Injunction Order Against CFPB Acting Director Vought Our special podcast show today deals primarily with a 112-page opinion and 3-page order issued on March 28 by Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia in a lawsuit brought, among others, by two labor unions representing CFPB employees against Acting Director Russell Vought. The complaint alleged that Acting Director Vought and others were in the process of dismantling the CFPB through various actions taken since Rohit Chopra was fired and replaced by Acting Director Scott Bessent and then Acting Director Russell Vought. This process included, among other things, the termination of probationary and term employees and possibly another 1,300 or so employees through a reduction-in-force , the issuance of a stop work order, the closure of the CFPB’s main office in DC and branch offices throughout the country, the termination of most third-party contracts, the decision not to request any additional funding from the Federal Reserve Board for the balance of the fiscal year and the voluntary dismissal of several enforcement lawsuits. Alan Kaplinsky, Senior Counsel and former chair of Ballard Spahr’s Consumer Financial Services Group, and Joseph Schuster, a Partner in the Consumer Financial Services Group, discuss each part of the preliminary injunction issued by Judge Jackson which, among other things, required the CFPB to re-hire all probationary and term employees who had been terminated, prohibited the CFPB from terminating any CFPB employee except for just cause (which apparently does not include lack of work because of the change in focus and direction of the CFPB), required the CFPB not to enforce a previous “stop work” order or reduction-in-force. We observed that Judge Jackson’s order has required the CFPB to maintain for now a work force that is not needed for the “new” CFPB. We also discuss that the preliminary injunction order does not require the CFPB to maintain any of the regulations promulgated or proposed by Rohit Chopra or to continue to prosecute any of the enforcement lawsuits brought by Director Chopra. DOJ filed a notice of appeal on March 29 and on March 31 filed a motion in the DC Court of Appeals to stay Judge Jackson’s order. (After the recording of this podcast, the DOJ filed in the Court of Appeals a motion seeking a stay of Judge Jackson’s order. Pending a hearing on April 9th, the Court issued an administrative stay of Judge Jackson’s order. The 3-Judge panel is composed of two Trump appointees and one Obama appointee.) A copy of the blog co-authored by Alan and Joseph is linked . We also discuss another lawsuit initiated by the City of Baltimore and one other plaintiff against Acting Director Vought in Federal District Court for the District of Maryland seeking to enjoin him from returning to the Federal Reserve Board or the Treasury funds held by the CFPB. The Court denied the motion for preliminary injunction on the basis that it was not ripe for adjudication under the Administrative Procedure Act because the CFPB never actually returned any funds. Finally, Alan expresses surprise that the Acting Director has not relied on the argument that all funds received by the CFPB after September, 2022 were unlawfully obtained because the Dodd-Frank Act stipulates that the CFPB can be funded only out of “combined earnings of the Federal Reserve Banks” and the fact that there have only been huge combined losses of the Federal Reserve Banks since Sept 2022 which continue through today and are likely to continue through the foreseeable future. /episode/index/show/consumerfinancemonitor/id/36004720

Prominent Journalist, David Dayen, Describes his Reporting on the Efforts of Trump 2.0 to Curb CFPB 04/03/2025

Prominent Journalist, David Dayen, Describes his Reporting on the Efforts of Trump 2.0 to Curb CFPB Today’s podcast show features a discussion with David Dayen, executive editor of the American Prospect, which is an online magazine about ideas, politics, and power. He's the author of “Chain of Title: How Three Ordinary Americans Uncovered Wall Street's Great Foreclosure Fraud,” which was published in 2016. David has written and published about 10 or so articles in which he chronicles in great detail the apparent effort by the Trump Administration, acting through Scott Bessent and Russell Vought, to dismantle the CFPB by abruptly ordering a cessation of all activities and layoffs of probationary and term employees and a plan to layoff 1,300 or so additional employees. Because this plan would have crippled the CFPB, two lawsuits were initiated in rapid fashion against Acting Director Vought seeking to enjoin him from pursuing this strategy. One lawsuit was brought by the two labor unions representing CFPB employees and others in the U.S. District Court for the District of Columbia and got assigned to Judge Amy Berman Jackson. The second lawsuit was brought by the City of Baltimore and others in the U.S. District Court for the District of Maryland. David describes in detail the case pending before Judge Jackson, including the hearings at which several CFPB employees testified. Those employees painted a very grim picture of the effort to shut down the agency. The DOJ lawyer stated that there was never an intent to shut down the CFPB and that the steps taken by the Acting Directors to “freeze” the CFPB were similar to steps taken by any new Administration in order to provide time to evaluate the situation and decide what changes should be made to reflect the new Administration’s policy objectives. Shortly after the recording of this podcast, Judge Jackson issued on March 28 a 112-page opinion and 3-page order in which she required the reinstatement with back pay of all CFPB employees that had been terminated, enjoined the CFPB from terminating any employees except for good cause related to the individual employee, fully maintain the consumer complaint portal, ordered the defendants to reinstate all third-party contracts which had been earlier terminated, ordered the defendants to not enforce a February 10 stop-work order and required that the CFPB not destroy any records. The defendants have filed a notice of appeal to the D.C. Circuit Court of Appeals. On March 29. On March 31, the defendants filed a motion in the Court of Appeals to stay Judge Jackson’s order. See for more detail about Judge Jackson’s opinion. Because of the importance of Judge Jackson’s opinion, Alan Kaplinsky and Joseph Schuster have recorded a special (additional) podcast show, where we dissected Judge Jackson’s opinion and order and the other lawsuit brought by the City of Baltimore against Acting Director, Russell Vought, challenging his consideration of returning operating finds to the Federal Reserve Board or Treasury. That podcast will be released tomorrow, Friday, April 4. The Judge in the City of Baltimore case, in which the plaintiffs had not established nearly as complete a record as the case before Judge Jackson, denied the motion for a preliminary injunction based on the Court’s belief that there was no final order which could be challenged under the Administrative Procedure Act. We also discussed the possibility that Congress could subject the CFPB to funding through Congressional appropriations by putting such language in the Budget Reconciliation bill which can be enacted by a simple majority and not 60 votes in the Senate. Alan Kaplinsky, former Chair for 25 years and now Senior Counsel of the Consumer Financial Services Group, hosts the discussion. /episode/index/show/consumerfinancemonitor/id/35990160

A Debate About The Need, If Any, For a Federal Charter for Non-Banks Engaged in the Payments Business 03/27/2025

A Debate About The Need, If Any, For a Federal Charter for Non-Banks Engaged in the Payments Business Our podcast show today features Professor Dan Awrey of Cornell Law School, and Matt Lambert, Deputy General Counsel of the Conference of State Bank Supervisors (“CSBS”) who discuss the pros and cons of Congress enacting a statute which would require federal charter for non-banks engaged in the payments business. At present, such non-banks are generally required to be licensed by state departments of banking under money transmitter laws. On November 14 of last year, , Professor Awrey discussed his working paper “Money and Federalism” in which he advocates for the enactment of Federal legislation creating a Federal charter for non-banks engaged in the payments business, like PayPal and Venmo. The article may be accessed online at and will likely be published in a law review at some time in the future. The abstract of Professor Awrey’s article states, in relevant part: The dual banking system is now under stress. The source of the stress is a new breed of technology-driven financial institutions licensed and regulated almost entirely at the state level that provide money and payments outside the perimeter of both conventional bank regulation and the financial safety net. This article examines the rise of these new monetary institutions, the state-level regulatory frameworks that govern them and the nature of the threats they may one day pose to monetary stability. It also examines the legal and policy cases for federal supremacy over the regulation of these new institutions and advances two potential models, one based on complete federal preemption, the other more tailored to reflect the narrow yet critical objective of promoting public confidence and trust in our monetary system. The CSBS on Nov. 12 of last year published an article on its website entitled “” in which it purported to dispel several myths about state money transmitter and money services statutes. CSBS stated: Recent statements about money transmission in the United States have perpetuated myths about consumer protections and the safety and soundness of this vibrant, secure, and trusted part of our country’s payments ecosystem. It is time that we dispel some of these myths by explaining the realities of the state-developed, nationwide framework for regulation, licensing, and supervision of money transmission. While targeted reforms made through cooperation between the states and federal government may be appropriate, a complete overhaul of an established, secure, convenient, and stable money transmission ecosystem is an unwarranted federal overreach. Because of these sharp differences of opinion between Professor Awrey and CSBS, we decided to invite Professor Awrey and Matt Lambert to be our guests on this show and to discuss the following issues: The historical background to and rationale for state money transmitter laws How the National Multistate Licensing System (“NMLS”) and state supervision work today The emergence of new business models: e.g. PayPal, Stripe, Crypto A brief history of recent federal proposals: from the OCC fintech charter to the current stablecoin bills How state legislatures and regulators have responded to the emergence of new business models (e.g. model act amendments and adoption, new chartering frameworks) Where the federal government can meaningfully improve on these state level responses (standardization, bankruptcy protection, payment network access, systemic risk regulation, international coordination) Where state regulators have a comparative advantage (novel chartering, supervision) Where we think the nonbank payment industry and regulation are heading in 2025 and beyond Alan Kaplinsky, Senior Counsel and former practice group leader of the Consumer Financial Services Group, hosts the podcast show. /episode/index/show/consumerfinancemonitor/id/35886235

How to use the Restatement of Consumer Contracts: A Guide for Judges 03/20/2025

How to use the Restatement of Consumer Contracts: A Guide for Judges Today’s podcast show features a discussion with Professor Gregory Klass of Georgetown University Law School about an article he co-authored with Professor Ian Ayres, entitled “How to Use the Restatement of Consumer Contracts: A Guide for Judges.” The article will be published this year in the Harvard Business Law Review (vol 15), and is available The abstract of the article states: “In the absence of major legislation or regulatory action, U.S. consumers will continue to look to courts and the common law for protection when businesses engage in unfair and deceptive contracting practices. In May 2022, the American Law Institute approved the Restatement of the Law, Consumer Contracts. This new Restatement provides a valuable resource for courts tasked with deciding the legal effects of standard terms that businesses draft and consumers do not read. This essay identifies six pieces of the new Restatement we believe courts should pay special attention to and discusses the importance of each. It also charts several ways courts might go beyond the new Restatement to protect consumers against abusive contracting practices. Unless and until legislators and regulators step in, U.S. courts should continue to reshape the common law to address risks that new technologies of contracting create.” We discuss the following questions related to this Restatement: The history and scope of the Restatement of Consumer Contracts project Why was there perceived to be a need for a separate restatement for consumer contract law when there has been a Restatement of Contracts for many decades? Was it wise to publish a Restatement of Consumer Contracts as opposed to a Statement of Principles since the document to a large extent focuses on what the law should be, rather than on what the law is? The identification of several parts of the Restatement to which Professor Klass believes the courts should pay special attention: a. The “reasonable expectations” rule in Section 4; b. The unconscionability defense in Section 6; c. The deception defense in Section 7; and, d. The Parol Evidence rule Alan Kaplinsky, Senior Counsel and former chair for 25 years of the Consumer Financial Services Group, hosts the discussion. /episode/index/show/consumerfinancemonitor/id/35789350

Prof. Hal Scott Doubles Down on His Argument That CFPB is Unlawfully Funded Because of Combined Losses at Federal Reserve Banks 03/13/2025

Prof. Hal Scott Doubles Down on His Argument That CFPB is Unlawfully Funded Because of Combined Losses at Federal Reserve Banks On June 6 of last year, Prof. Hal Scott of Harvard Law School was our podcast guest. On that occasion he delved into the thought-provoking question of whether the Supreme Court’s decision on May 16 in the landmark case of CFSA v. CFPB really hands the CFPB a winning outcome, or does the Court’s validation of the agency’s statutory funding structure simply open up another question - namely, whether the CFPB is legally permitted under Dodd-Frank to receive funds from the Federal Reserve even though the Federal Reserve Banks have lost money on a combined basis since September 2022. Dodd-Frank provides that the CFPB is to receive its funding out of the Federal Reserve Banks “combined earnings.” The Wall Street Journal published an op-ed by Prof Scott on May 20 titled “The CFPB’s Pyrrhic Victory in the Supreme Court” in which he explains that even though the CFPB’s funding mechanism as written was upheld in CFSA v. CFPB, this will not help the agency now or at any time in the future when the Federal Reserve operates at a deficit. A lot has happened since Prof. Scott’s last appearance on our podcast show. Several enforcement lawsuits filed by the CFPB were faced with motions to dismiss filed by the defendants alleging that the lawsuits could not be financed by the CFPB with funds that were unlawfully procured The CFPB gave short shrift to this argument but never could adequately explain how “earnings” as used in Dodd-Frank really means “revenues” and not profits. While 3 courts rejected the motions to dismiss, those courts decided to do so without dealing with the core issue of whether “earnings” means profits or revenues. President Trump became President on January 20 and, shortly thereafter, Rohit Chopra was terminated. The new Acting Director, Russell Vought, proceeded to shutter the CFPB by, among other things, terminating or putting on administrative leave with instructions to do no work most of its employees and refusing to seek a quarterly funding from the Federal Reserve. Mr. Vought did not base this refusal on the premise that the receipt of such funding would be illegal. Two lawsuits have been filed against the Acting Director challenging the legality of the apparent dismantling of the CFPB. While the CFPB is defending these cases on the basis that the President and the Acting Director have the Constitutional right to downsize and alter the policies of the CFPB, they have surprisingly not made the argument that the CFPB’s funding is unlawful. Prof. Scott on Feb, 1 published another op-Ed in the Wall Street Journal entitled “Rohit Chopra is out. Now Shutter the CFPB” and two articles on the website of the Committee on Capital Markets Regulation (of which Prof. Scott is the President and Director) entitled “Understanding the CFPB’s Funding Problem” and “The Fed’s Accounting Methodology Cannot Expand its Statutory Authority to Fund the CFOB.” Our podcast show released today takes a very deep dive into those articles and explains Prof. Scott’s position that the Fed’s accounting for the massive losses of the Federal Reserve Banks (which creates a deferred asset account composed of anticipated future earnings of the Federal Reserve Banks which the Federal Reserve Banks will not need to remit to the treasury because the banks may recoup its accumulated losses since September 2022) has no bearing on whether the Fed has been lawfully funding the CFPB out of “combined earnings” of the Federal Reserve Banks. Prof Scott also rebuts several counterarguments made by those who claim that the CFPB has been lawfully funded throughout. Prof. Scott also discusses why he believes that congress may use a budget appropriations bill whose passage requires only a majority, not 60, vote in the Senate in order to subject the CFPB to funding through the congressional appropriations process. Our blogs about the Supreme Court decision in CFSA v. CFPB can be found and . To read our blog about Professor Scott’s op-ed in the Wall Street Journal, which includes a link to the op-ed, click . To read his more recent op-ed in the Wall Street Journal, click to read his two articles published on the website of the Committee on Capital Markets Regulation entitled, click and A transcript of the recording will be available soon. /episode/index/show/consumerfinancemonitor/id/35670305

“Accidental Arbitration” -- A New Theory that Would Rein in Consumer Arbitration Clauses and the Scope of the FAA 03/06/2025

“Accidental Arbitration” -- A New Theory that Would Rein in Consumer Arbitration Clauses and the Scope of the FAA Our special guest is David Horton, Professor of Law at the University of California, Davis, who has written a creative and thought-provoking article analyzing how courts should interpret certain key provisions that are frequently used in consumer arbitration agreements. and will be published in the Washington University Law Review later this year. Prof. Horton first contends that courts have misinterpreted the Federal Arbitration Act (FAA) as requiring arbitration clauses to be construed broadly, which in many cases forces consumers to arbitrate disputes they never agreed to because the dispute is not causally related to the consumer’s original transaction with the company. Instead, he argues, courts should be guided by the literal text of the FAA, which limits the statute’s application to disputes that “arise out of” the contract containing the clause. Such an approach would narrow the scope of the arbitration clause to disputes that were contemplated by both parties at the time of contracting. Second, Prof. Horton addresses the issue of third parties who are not signatories to the consumer arbitration agreement but are nevertheless defined as “parties” in the agreement. According to Prof. Horton, such “artificial privity” unduly broadens the scope of the arbitration clause because many courts automatically permit the third parties to enforce the agreement without satisfying more rigorous state law requirements for establishing third-party beneficiary status. Third, Prof. Horton argues that arbitrability questions concerning whether a dispute “arises under” the contract and whether a third party properly has enforcement rights should be decided by a court even if the arbitration clause purports to delegate such issues to the arbitrator. Mark Levin, Senior Counsel in the Consumer Financial Services Group, who helped pioneer the use of arbitration agreements and class action waivers in bank, credit card and other consumer contracts, provides the industry response to each of the arguments asserted by Prof. Horton. Alan Kaplinsky, Senior Counsel and former chair for 25 years of the Consumer Financial Services Group, hosts the discussion. /episode/index/show/consumerfinancemonitor/id/35558885

The Patterns of Digital Deception 02/27/2025

The Patterns of Digital Deception Our podcast show today features Gregory M. Dickinson, Assistant Professor of Law at the University of Nebraska, who was previously a guest on our show on . Our 2023 episode was based on Professor Dickinson’s article titled “Privately Policing Dark Patterns”, 57 Ga. L. Rev. 1633 (2023). The show today focuses on Professor Dickinson’s more recent article, which builds on his 2023 article, titled “The Patterns of Digital Deception”, 65 B. C. L. Rev. 2457 (2024). The abstract to this article states: “Current consumer-protection debates focus on the powerful new data-analysis techniques that have disrupted the balance of power between companies and their customers. Online tracking enables sellers to amass troves of historical data, apply machine-learning tools to construct detailed customer profiles, and target those customers with tailored offers that best suit their interests. It is often a win-win. Sellers avoid pumping dud products and consumers see ads for things they actually want to buy. But the same tools are also used for ill—to target vulnerable members of the population with scams specially tailored to prey on their weaknesses. The result has been a dramatic rise in online fraud that disproportionately impacts those least able to bear the loss. The law’s response has been technology centric. Lawmakers race to identify those technologies that drive consumer deception and target them for regulatory restrictions. But that approach comes at a major cost. General-purpose data-analysis and communications tools have both desirable and undesirable uses, and uniform restrictions on their use impede the good along with the bad. A superior approach would focus not on the technological tools of deception but on what this Article identifies as the legal patterns of digital deception—those aspects of digital technology that have outflanked the law’s existing mechanisms for redressing consumer harm. This Article reorients the discussion from the power of new technologies to the shortcomings in existing regulatory structures that have allowed for their abuse. Focus on these patterns of deception will allow regulators to reallocate resources to offset those shortcomings and thereby enhance efforts to combat online fraud without impeding technological innovation.” During the show, we discuss the following questions: What is digital deception? What are some examples of digital deception? How is modern online deception any different from old-fashioned, in-person fraud? What have lawmakers been doing to address this issue? Have they succeeded? What sorts of restrictions are on the horizon? What are the challenges to lawmaking in this area? How do these challenges tie in with the “Patterns of Digital Deception”? Given these challenges, what sort of approach should state and federal lawmakers take? Alan Kaplinsky, Senior Counsel and former chair for 25 years of the Consumer Financial Services Group, hosts the discussion. /episode/index/show/consumerfinancemonitor/id/35456865

Banking as a Service 02/20/2025

Banking as a Service Our podcast show today features Jason Mikula, publisher of Fintech Business Weekly; a newsletter going beyond the headlines to analyze the technology, regulatory and business model trends, driving the rapidly evolving financial services ecosystem at the intersection of traditional banking, payments, FinTech and crypto. We discuss his recently released book, titled “Banking as a Service: Opportunities, Challenges, and Risks of New Banking Business Models” (Kogan Page 2024). The publisher describes the book as follows: “This book provides a comprehensive look at banking-as-a-service (BaaS), equipping readers with an understanding of the origins, evolution, future and applications of BaaS and the key differences across global markets.” BaaS is a game changer in the financial services sector, radically transforming both how consumers experience financial products and the business models delivering them. “Banking as a Service” cuts through the hype to provide a measured overview of BaaS, helping readers to demystify a complex evolving field, and understand its key opportunities, challenges, and risks. It provides a framework for understanding where BaaS came from, how BaaS changes the economics and business models of banking products and services, its impact on key stakeholders, and its key regulatory implications. “Banking as a Service” explains how business and operating models work, exploring different models such as interchange, deposit gathering, loan origination-to-distribute, legacy, API-first, own license, match-making and bank service providers, and offers a framework for thinking about whether or not they're sustainable. It explores how BaaS operating and business models compare in different global territories and is supported by real-world examples and cases profiling organizations such as Blue Ridge Bank, Unit, Synapse, Goldman Sachs, Railsr, Starling, Solaris, Cacao Paycard, QNB, OnePipe, Airwallex, Nium and Pomelo. It also explains the differences between BaaS, embedded finance and “open banking.” Alan and Jason discuss the answers to the following questions and topics: 1. What do we mean when we say "banking as a service"? 2. What are the different BaaS business models/operating models? 3. What led to the explosion in banking-as-a-service? 4. Why have bank/fintech partnerships had a rough go of it lately in the US and is that likely to change with a new administration? 5. What is (or what should be) regulators' role in supervising non-bank entities in the BaaS value chain (eg, middleware, customer-facing fintechs)? 6. What is an FBO and are FBOs the "original sin" of banking-as-a-service? 7. What advice would you give to banks considering getting into the BaaS space? How do you see the market evolving from here - for banks, for technology providers, and for customer-facing companies? 8. What advice would you give to fintechs that rely on a bank partner or are looking for one? Alan Kaplinsky, Senior Counsel and former chair for 25 years of the Consumer Financial Services Group, hosts the discussion. /episode/index/show/consumerfinancemonitor/id/35363615

The Fall of The CFPB, The Rise of The State AG 02/14/2025

Will the State Attorneys General and Other State Agencies Fill the Void Left by the CFPB? 02/12/2025

Will the State Attorneys General and Other State Agencies Fill the Void Left by the CFPB? Today’s podcast show is a repurposing of the second half of a webinar we produced on January 17, 2025. That webinar was Part 3 of our webinar series entitled “The Impact of the Election on the CFPB and Others.” In Part 3, we focus on the role of state attorneys general in a rapidly shifting CFPB environment. Our previous podcast show, released on Tuesday February 11th, was a repurposing of the first half of our January 17th webinar in which Alan Kaplinsky had a “fireside chat” with Matthew J. Platkin, the New Jersey Attorney General. See . The importance of Part 3 is underscored by the recent actions taken by President Trump to fire Rohit Chopra as Director of the CFPB and to appoint new Treasury Secretary, Scott Bessent, and then new Office of Management and Budget (OMB) Director, Russell Vought, as Acting Directors, Messrs. Bessent, and Vought have essentially stopped all activities of the CFPB for the time being. During today’s podcast show, Mike Kilgarriff, Joseph Schuster, Adrian King and Jenny Perkins of Ballard Spahr’s Consumer Financial Services Group discussed in detail the following issues, among others: • CFPB post-election messaging to state attorneys general providing a roadmap to them on powers they may exercise under federal law, including the use of the UDAAP provision of Dodd-Frank (particularly the “abusive” prong) • The probable decline in collaboration with the CFPB following the change in administration • More networking of state attorneys general • What can we expect from state legislatures in enacting new consumer financial services protection laws? • What can we expect from state attorneys general and other state agencies in promulgating new consumer financial services protection laws? • The continuing need for companies to maintain a robust compliance management system Parts 1, 2 and 3 of our webinar series appear , , and . Our podcast shows (repurposing Parts 1 and 2 of our webinar series) appear , , , and . The title of Part 1 is: “The Impact of the election on the CFPB: Regulations and other written guidance, which featured Alan Kaplinsky’s “fireside chat” with David Silberman who held senior positions at the CFPB for almost 10 years during the Directorships of Cordray, Mulvaney, and Kraninger. Part 2 is: “The Impact of the Election on the CFPB: Supervision and Enforcement, which featured Alan Kaplinsky’s “fireside chat” with former Director Kathy Kraninger during Trump‘s first term in office. Alan Kaplinsky, Senior Counsel and former chair for 25 years of the Consumer Financial Services Group, hosts the discussion. /episode/index/show/consumerfinancemonitor/id/35257385

Alan Kaplinsky’s “Fireside Chat” with Matthew J. Platkin, New Jersey Attorney General 02/11/2025

Alan Kaplinsky’s “Fireside Chat” with Matthew J. Platkin, New Jersey Attorney General Today’s podcast show is a repurposing of Alan Kaplinsky’s “fireside chat” with Matthew J. Platkin, the New Jersey Attorney General, which was the first half of a webinar we produced on January 17, 2025. That webinar was Part 3 of our webinar series entitled “The Impact of the Election on the CFPB and Others.” In Part 3, we focus on the role of state attorneys general in a rapidly shifting CFPB environment. The importance of Part 3 is underscored by the recent actions taken by President Trump to fire Rohit Chopra as Director of the CFPB and to appoint new Treasury Secretary, Scott Bessent, and then new Office of Management and Budget (OMB) Director, Russell Vought, as Acting Directors. Messrs, Bessent, and Vought have essentially temporarily stopped all activities of the CFPB for the time being. During our “fireside chat” with General Platkin, we discussed the following topics, among others: 1. What is General Platkin’s background, including his stint as Chief Counsel to the New Jersey Governor? 2. Since General Platkin has been New Jersey Attorney General, what are some examples of the consent orders or lawsuits he has initiated related to consumer financial services? 3. Has the New Jersey Attorney General previously collaborated with the CFPB and/or FTC in investigating certain companies or segments of the consumer financial services industry, and is that likely to change? 4. What effect will there be on consumers in New Jersey if President Trump appoints (as he did) an Acting Director of the CFPB whose interpretation and enforcement of federal consumer protection laws differs markedly from Rohit Chopra? 5. What will the New Jersey Attorney General’s office do in response to this anticipated shifting CFPB environment? 6. Elon Musk has called for the deletion of the CFPB and Project 2025 has also called for the elimination of the CFPB. If that were to happen, what would the New Jersey Attorney General’s office do to fill this anticipated void? 7. We then looked beyond New Jersey to other state attorney general’s offices similarly situated to the New Jersey Attorney General office – who will have the need to initiate more cases when resources are limited. We discussed how state Attorney General’s (including the New Jersey Attorney General) have networked with each other to investigate and sue companies that are violating consumers’ rights in multiple states. We then discussed why it is anticipated that the networking process is likely to increase. 8. The areas of consumer financial protection law and segments of the consumer financial services industry that will be areas of focus for the New Jersey Attorney General during 2025? Our next episode will be the second half of our January 17 webinar in which several of our colleagues will explore in depth why we expect state Attorney General’s offices to significantly ramp up their investigations involving and lawsuits filed against banks and other consumer financial services providers. Parts 1, 2 and 3 of our webinar series appear , , and . Our podcast shows (repurposing Parts 1 and 2 of our webinar series) appear , , , and . The title of Part 1 is: “The Impact of the election on the CFPB: Regulations and other written guidance, which featured Alan Kaplinsky’s “fireside chat” with David Silberman who held senior positions at the CFPB for almost 10 years during the Directorships of Cordray, Mulvaney, and Kraninger. Part 2 is: “The Impact of the Election on the CFPB: Supervision and Enforcement, which featured Alan Kaplinsky’s “fireside chat” with former Director Kathy Kraninger during Trump‘s first term in office. /episode/index/show/consumerfinancemonitor/id/35244465

Regulating Bank Reputation Risk 02/06/2025

Regulating Bank Reputation Risk Today’s podcast show features a discussion with Julie Andersen Hill about her law review article titled “”, 54 GA. L. Rev. 523 (2023). Professor Hill is the Dean and Wyoming Excellence Chair of the University of Wyoming College of Law. The abstract to Professor Hill’s article does an excellent job of summarizing her thesis: This Article surveys reputation risk guidance and enforcement efforts. It shows that reputation risk regulation is usually an ancillary consideration to credit risk, operational risk, or other primary risk. In these instances, reputation risk adds little because regulators have strong tools to address the root problems. Sometimes, however, regulators justify guidance or enforcement primarily in terms of controlling reputation risk. Regulators use reputation risk to weigh in on hot-button political topics afield from safety and soundness like gun rights, payday lending and fossil fuels. Because regulators believe that reputation risk is present in every facet of banking, little prevents them from using it to address other controversies. This Article argues that expansive regulation of reputation risk is harmful. There is little evidence that can accurately predict and prevent bank reputational losses. Moreover, because reputation risk is largely subjective, regulators can use it to further political agendas apart from bank safety and soundness. Unnecessary politicization of banking regulation undermines faith in the regulatory system and correspondently erodes trust in banks. During our discussion, Professor Hill addressed the following issues: What is reputation risk? What legal authority do bank supervisors have to regulate reputation risk? Why do you believe that the regulation of reputation risk is unnecessary and harmful? What is Operation Choke Point all about and how did it turn out? What was the outcome in the U.S. Supreme Court in NRA v. Vullo of the New York State bank regulator urging state banks to manage the reputation risk posed by doing business with the National Rifle Association? Has concern over the regulation of reputation risk subsided in light of the termination of Operation Chokepoint and the unanimous Supreme Court opinion in NRA v. Vullo? Why does there appear to be renewed worry that regulators are using reputation risk and other justifications to force banks to cut services to people, businesses or industries that they don’t like? Is there any credence to the claims of Elon Musk and others that crypto and tech startups are being debanked or denied fair access to banking services? In light of the fact that President Trump himself and many members of Congress are troubled by debanking claims, what sort of policy changes are likely to be considered? What is the likelihood of the OCC promulgating a regulation prohibiting debanking in Trump 2.0 similar to the one it almost finalized in Trump 1.0? The importance of this podcast is underscored by the fact that yesterday, the Senate Committee on Banking, Housing and Urban Affairs held a hearing entitled “Investigating the Real Impacts of Debanking in America.” Alan Kaplinsky, Senior Counsel and former chair for 25 years of the Consumer Financial Services Group, hosts the discussion. /episode/index/show/consumerfinancemonitor/id/35175395

The Impact of the Election on the CFPB: What to Expect with Supervision and Enforcement During Trump 2.0 01/30/2025

Alan Kaplinsky’s “Fireside Chat” with Kathy Kraninger, Former Director of the CFPB During Trump 1.0 01/23/2025

Alan Kaplinsky’s “Fireside Chat” with Kathy Kraninger, Former Director of the CFPB During Trump 1.0 Today’s podcast episode is a repurposing of Alan Kaplinsky’s “fireside chat” with Kathy Kraninger, the Director of the CFPB during the second half of President Trump’s presidency from December 2018 until January 2021. (This was originally the first half of a webinar we did on January 6, 2025 which was entitled “The Impact of the Election on the CFPB - Supervision and Enforcement.” The January 6 webinar is Part 2 of a 3-part series. Next Thursday, we will release the second half of that webinar which will feature Ballard Spahr partners, John Culhane and Mike Kilgariff, who will take a deep dive into the expected changes in CFPB supervision and enforcement during President Trump’s second term in office.) During her “fireside chat” with Alan, Kathy discussed the following things: (a) How she was nominated by Trump to be the Director and succeeded Mick Mulvaney, the acting Director appointed by Trump to succeed Richard Cordray as Acting Director; (b) Organizational and other changes made by Mulvaney and/or Kraninger, including a hiring freeze, appointments of new heads of departments, etc; (c) The practical impact on CFPB operations of the Supreme Court’s opinion in the Seila Law case in which the Court held that the President had the right to remove the CFPB director without cause; (d) Her priorities as Director, including her regulatory, supervisory and enforcement agendas; (e) Her policy statements on “abusiveness”, supervisory expectations and COVID-19; (g) Her thoughts on what she anticipates will change at the CFPB once a new acting director chosen by Trump succeeds Rohit Chopra; and (h) Her thoughts on whether Congress should re-structure the CFPB’s governance and funding. The “fireside chat” provides stakeholders in the CFPB insight into what may happen at the CFPB during Trump 2.0. There will, however, be some important differences between the circumstances that existed during the transition from Cordray to Mulvaney Kraninger during Traump 1.0 and the transition from Chopra to a new acting Director during Trump 2.0.. At the time when Mick Mulvaney became Acting Director, there were no pending lawsuits challenging CFPB final regs and other actions. During Mulvaney’s term in office, a trade association of payday lenders sued the CFPB challenging the CFPB’s payday lending rule and, in particular, its “ability to pay” requirement. The acting director appointed by Trump will inherit multiple pending lawsuits against the CFPB challenging many of the regs issued by the CFPB under Rohit Chopra’s last two years as Director. The Acting Director will need to develop legislative (Congressional Review Act), judicial and regulatory strategies for dealing with the slough of regs, proposed regs and other written guidance issued by Chopra. The Acting Director will also need to quickly decide what position the CFPB will take with respect to the defense raised in at least 13 enforcement lawsuits claiming that the CFPB has been disabled from conducting business since September 2022 when there was no longer any “combined earnings of the Federal Reserve Banks” - a prerequisite to the Federal Reserve Board funding the CFPB under the Dodd-Frank Act. Alan Kaplinsky, Senior Counsel and former chair for 25 years of the Consumer Financial Services Group, hosts the discussion. /episode/index/show/consumerfinancemonitor/id/34970620

The CFPB’s Proposed Data Broker Rule 01/16/2025

The CFPB’s Proposed Data Broker Rule In today’s episode, we discuss the CFPB’s recent proposed data broker rule—a proposal that would greatly expand the reach of the Fair Credit Reporting Act. On December 3, the CFPB issued a proposed rule promoted as one that would require companies that sell data about income or financial tier, credit history, credit score or debt payments to comply with the Fair Credit Reporting Act. The proposal would make it clear that when data brokers sell certain sensitive consumer information, they are “consumer reporting agencies” under the FCRA. That would require them to comply with accuracy requirements. It also would require them to provide consumers access to their information. However, the proposal is much broader than a data broker rule, and the podcast explores the significant breadth of the proposal. The rule might face an uncertain future, since it was issued by current CFPB Director Rohit Chopra and pushes beyond the boundaries of the FCRA. Chopra’s aggressive regulatory regime is opposed by the Trump Administration. Joining us today is Dan Smith, president and CEO of the Consumer Data Industry Association, which represents the consumer data reporting industry. The host of the discussion is Alan Kaplinsky, the former practice group leader for 25 years, and now senior counsel of the Consumer Financial Services Group at Ballard Spahr. Joining the discussion are two Ballard Spahr partners: Richard Andreano, the practice leader of our mortgage banking group at Ballard Spahr and John Culhane. In this episode, we will discuss the key aspects of the landmark proposed rule, such as: 1. The proposal being much broader than one addressing the sale of personal information to various parties, including stalkers, spies and scammers. 2. The fact that the proposal does not even define what is a data broker. 3. How the proposal would significantly change the concept of what constitutes a consumer report, including the proposal to treat credit header information as a consumer report. 4. How the proposal would change the concept of what constitutes a consumer reporting agency. 5. Requirements that the proposal would add to the written authorization permissible purpose to obtain a consumer report, including requirements regarding revocation of the authorization. 6. How the proposal would modify the requirements to rely on the legitimate business need permissible purpose to obtain a consumer report. 7. Whether the CFPB actually has legal authority to essentially rewrite the FCRA. /episode/index/show/consumerfinancemonitor/id/34880990

The Impact of the Election on the CFPB: What to Expect on Key Regulatory Issues During Trump 2.0 01/09/2025

Alan Kaplinsky’s “Fireside Chat” with Former CFPB Leader David Silberman: His Experience During the Prior Transition from the Obama Administration to Trump 1.0 01/02/2025

Alan Kaplinsky’s “Fireside Chat” with Former CFPB Leader David Silberman: His Experience During the Prior Transition from the Obama Administration to Trump 1.0 Today’s podcast episode is a repurposing of part one of our December 16 highly-attended and praised webinar consisting of Alan Kaplinsky’s exclusive interview of David Silberman, who held several senior positions at the CFPB for almost 10 years under both Democratic and Republican administrations. Part two of our December 16 webinar, featuring Ballard Spahr partners John Culhane and Joseph Schuster, is to be released on January 9. They focus their attention on the impact of the election on the CFPB’s regulations (final and proposed). Our December 16 webinar is the first part of our three-part intensive look at this transitional period for the CFPB. The goal of our three-part series is to help us predict what is in store for the CFPB during the next four years. As a former senior leader at the CFPB during the only other transition of the CFPB from a Democratic to a Republican administration led by former President Trump, Mr. Silberman has special insight about what is likely to happen to the CFPB during Trump 2.0. While nobody yet knows who Trump will nominate as the next CFPB director, Mr. Silberman makes the point that, of potentially greater importance, at least initially, is who Trump selects as the acting director. If what happened in Trump 1.0 is any indication, the acting director may end up serving for a lengthy period of time just like Mick Mulvaney served as acting director for a lengthy period of time before Kathy Kraninger was nominated by Trump, confirmed by the Senate and sworn-in as director. Under the Vacancy Reform Act, the acting director must be either a current senior officer of the CFPB or someone who has already been confirmed by the Senate for a different position. Among other things, Mr. Silberman addressed the following topics during his interview: 1. What were some of the first steps that Mr. Mulvaney took when he became acting director and will they be replicated by a new acting director? 2. How will a new acting director deal with the many lawsuits brought by trade groups challenging CFPB final rules issued by Director Chopra? Will there be a distinction made between final rules in which district courts have ruled on motions for preliminary injunction and those where courts have not so ruled. Will there be distinctions made between final rules where courts have granted or denied injunctive relief? Finally, will there be distinctions made between final rules mandated by Dodd-Frank and so-called discretionary rules? 3. Which final rules are still subject to being overridden by the Congressional Review Act and what are the odds of that happening with respect to any of such rules? 4. How will the new acting director deal with proposed rules as of January 20? 5. How will the new acting director deal with CFPB enforcement investigations and lawsuits initiated by Chopra, including those which arguably “push the envelope” with respect to the CFPB’s jurisdiction? 6. Will the new acting director agree with many industry pundits that the CFPB has been unlawfully funded by the Federal Reserve Board since September, 2022 in light of the language in the Dodd-Frank Act which permits funding of the CFPB only out of “combined earnings of the Federal Reserve Banks” and the fact that there have been no such combined earnings since September 2022 and the likelihood that no such combined earnings are anticipated in the near future. Does this impact actions taken by the CFPB since September 2022? 7. What role, if any, will the White House play in directing or influencing CFPB policy? What impact, if any, might the Department of Government Efficiency (DOGE) have on the CFPB? 8. Do you expect the new acting director to initiate any rulemakings other than those required by Dodd-Frank? 9. Will the new acting director be more supportive of innovation than Chopra and, if so, how will that be reflected? Alan Kaplinsky, Senior Counsel and former chair for 25 years of the Consumer Financial Services Group, hosts the discussion. /episode/index/show/consumerfinancemonitor/id/34696180

Navigating the New CFPB Open Banking Rule 12/26/2024

Banks Aren’t Over-Regulated, They Are Over-Supervised 12/19/2024

Banks Aren’t Over-Regulated, They Are Over-Supervised In today’s podcast episode, we are joined by Raj Date, who has served in a variety of roles at the Consumer Financial Protection Bureau, including as the acting head of the agency and as it’s first-ever Deputy Director. He recently wrote a thought-provoking article in a new online publication, Open Banker, entitled “Banks Aren’t Over-Regulated, They Are Over-Supervised.” Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, leads the discussion, and is joined by Joseph Schuster, a partner in the Group. By way of background, Mr. Date described how bankers have almost uniformly complained to him that banks are over-regulated. Mr. Date responds to these complaints in his article as follows: More than a decade later, I realize that those bank CEOs were not exactly wrong, they were imprecise: Banks are not over-regulated, but they are — quite dramatically — over-supervised. Mr. Date makes the following points in support of his thesis that the banking industry is over-supervised: 1. Bank examination tries to cover too many areas and, as a result, sometimes fails to see the forest through the trees. 2. Bank examination obsessively focuses on process rather than substance. That focus is evidenced by the supervisors’ requirements that the banks document everything. 3. It takes far too long for banks to receive examination reports after exams are completed, sometimes years later. The final exam reports are often anachronistic. 4. Bank examinations often stultify bank innovation because supervisors’ examinations are often critical of banks offering new products and services and this results in bank management being reluctant to innovate out of fear that they will be downgraded. 5. Examiners’ focus on process rather than risk itself has resulted in a bank management brain drain. Mr. Date then explains how the examination process should be changed. Mr. Date first calls for immediate changes even though the banking industry is largely thriving. Mr. Date suggests the following approach in his article and during the podcast: The only solution is strong top-down leadership that imposes ambitious goals. Without stretch goals that will feel strikingly out of reach at the outset, real change will not be possible. If it were me, I would set out, in a pilot with a handful of mid-sized banks, to structure a supervisory exam strategy that costs 75% less (in combined bank and agency costs) and is 75% faster from first-day letter to final report than today’s norms.[9] I would embrace pilot uses of new technology tools in pursuit of those goals. And then I would iterate on those initial (almost certainly unsuccessful) results. This will be difficult, and even painful. But I very much believe it will be worth it. While acknowledging the issues with over-supervision, Joseph directs significant attention to the problem of over-regulation. He argues that modern regulatory practices have become more complex, restrictive, and less clear, creating barriers to innovation and access to credit. Joseph highlights how over-regulation stifles the development and availability of consumer finance products. Joseph explains how products like "Buy Now, Pay Later" (BNPL) face regulatory hurdles despite addressing consumer needs effectively. Joseph also discusses the potential negative impact of proposed changes to late fee regulations, warning that such measures could limit access to credit and push consumers toward higher-cost alternatives. Joseph criticizes the heavy-handed approach taken by regulators, such as the CFPB’s issuance of circulars, which adds further uncertainty and complexity for institutions attempting to innovate in this space. Joseph advocates for a return to a more structured and transparent regulatory framework. He suggests that agencies recommit to the principles of the Administrative Procedures Act (APA), emphasizing the importance of notice-and-comment rulemaking. Drawing parallels to the Federal Reserve Board’s process during the implementation of the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act, Joseph argues that meaningful engagement with the industry could lead to clearer regulations that balance consumer protection with innovation and operational feasibility. Joseph endorses Raj Date’s call for clear and focused priorities in the supervisory process, and emphasizes that both banks and examiners benefit from a more straightforward understanding of the rules. Joseph concludes by warning against the trend of "regulation through enforcement," which undermines transparency and predictability, ultimately harming consumers and financial institutions alike. /episode/index/show/consumerfinancemonitor/id/34530470

Consumer Federation of America (“CFA”) Speaks Out About CFPB’s and FTC’s Direction During the Trump Administration 12/12/2024

Consumer Federation of America (“CFA”) Speaks Out About CFPB’s and FTC’s Direction During the Trump Administration If you work for a bank or other consumer financial services provider, you will want to listen closely to how consumer advocates are reacting to Trump’s election insofar as the CFPB and FTC are concerned. In today’s podcast episode, we’re joined by Erin Witte and Adam Rust (the “CFA Reps”) from CFA. We focus first on CFPB and FTC regulations that might be finalized during the lame duck session of Congress. The CFA Reps express hope that the FTC would finalize its so-called “junk fee reg” which, as proposed, called for “all-in” pricing (I.e., disclosure of a dollar amount for goods and services that includes all fees that will be charged in connection with the transaction.) They also express hope that the CFPB will finalize its checking account overdraft fees reg, the larger participant rule pertaining to non-bank payment providers and the medical debt rule which, if finalized, would result in unpaid medical debt no longer appearing on credit bureau reports. Of course, there is a risk, with respect to each of these rules as well as any other CFPB and FTC rules finalized roughly after August 1 of this year, which they may be overruled by Congress under the Congressional Review Act. We then discuss final regs promulgated by the FTC and CFPB which have been challenged in the Circuit Courts of Appeal. For the FTC, this includes the so-called CARS Rule (which imposes restrictions on car dealers’ sales and financing of motor vehicles) and the recent “Click-to-Cancel” Rule which, among other things, requires sellers of goods and services on a subscription basis to be able to cancel subscriptions as easily as signing up for subscriptions. The latter rule has been challenged in four circuit courts of appeal. We also discuss the status of many CFPB final regs and what a new CFPB’s strategy may be with respect to them. They include: the $8 credit card late fee rule which is currently enjoined by a Federal District Court in Texas; the data collection reg pertaining to small business loans promulgated under Section 1071 of Dodd-Frank, which is currently on appeal before the Fifth Circuit Court of Appeals after a Federal District Court denied a motion by the bank trade associations to grant a preliminary injunction pertaining to the reg; the open-banking reg under Section 1033 of Dodd-Frank (which pertains to consumers having the ability to share information in certain bank accounts with third parties which has been challenged in court; the Buy-Now, Pay-Later interpretive rule which has been challenged in court; and the Earned Wage Access interpretive rule. There is great uncertainty as to whether the new CFPB’s Director will seek to repeal or amend any of these regs or whether he or she will elect to change the CFPB’s position in the litigation to side with the plaintiffs. In order to repeal or change any of the regs (other than the two interpretive rules), the CFPB will need to jump through all the hoops required by the Administrative Procedure Act before effecting a repeal or change and the repeal or change might be challenged in court as being arbitrary or capricious. It would seem that it might be much easier to repeal or change the interpretive rules which would not require publishing them in the Federal Register for notice and comment. The CFS Reps also express hope that the CFPB issues its final report with respect to the voluminous information it received from auto finance companies in response to market monitoring orders it issued to them. An initial report recently issued by the CFPB and dealt with the incidence of financing negative equity in cars being traded in. While the final report is unlikely to result in new proposed CFPB regulations during the next four years, the report might instigate enforcement actions by state AGs. As was the case during the first Trump presidency, the CFA Reps believe that whatever consumer protection void is created at the CFPB will largely be filled by state AGs, state departments of banking and consumer protection agencies. They also expect there to be an increase in private civil litigation, including class actions. Alan Kaplinsky, Senior Counsel and former chair for 25 years of the Consumer Financial Services Group, hosts the discussion. /episode/index/show/consumerfinancemonitor/id/34411640

A Look at the FTC’s Click-to-Cancel Rule, with James Kohm, Associate Director of Enforcement Division of the FTC’s Bureau of Consumer Protection 12/05/2024

A Look at the FTC’s Click-to-Cancel Rule, with James Kohm, Associate Director of Enforcement Division of the FTC’s Bureau of Consumer Protection Today’s podcast features James Kohm, the Associate Director for the Enforcement Division of the Federal Trade Commission’s Bureau of Consumer Protection. We discuss the FTC’s “Click-to-Cancel” Rule (consisting of significant amendments to the longstanding “Negative Option Rule”) which was promulgated by the FTC on October 16, 2024 by a vote of 3-2 along party lines. Before discussing the specifics of the new rule, Mr. Kohm describes the FTC’s Negative Option Rule adopted in 1973. It required sellers to clearly disclose the terms of any such negative option plan for the sale of goods before consumers subscribe. In such plans, consumers are notified of upcoming merchandise shipments and have a set period to decline the shipment. Sellers interpret a customer’s silence, or failure to take an affirmative action, as acceptance of an offer. The Negative Option Rule was initially adopted to deal with mail order plans like the “book-of-the-month” club. With the proliferation of sales of goods and services over the Internet, the FTC concluded that it was necessary to update the Negative Option Rule to remedy what it considered to be widespread unfair and deceptive practices related to subscription plans sold over the Internet, particularly the difficulty consumers were often having in canceling subscriptions. There are several parts of the “Click-to-Cancel Rule. The first part of the Rule prohibits material misrepresentations related not only to the negative option feature, but also any other material feature of the transaction for the goods or services. Another part of the Rule are the disclosure requirements which relate to the cost of the goods or services, the fact that the charges will be assessed periodically, how often the consumer will be charged and how to cancel the subscription. The Rule also requires that the seller obtain the consumer’s express consent to the transaction which the seller must maintain in its records for a prescribed period of time. The centerpiece of the Rule is that the seller must make it as easy to cancel the subscription as it is to enter into the subscription. Mr. Kohm explains that because the Rule was adopted under the Magnusson Moss Act, the FTC will be able to recover monetary relief and civil money penalties for violations - something which the Supreme Court ruled that the FTC may not recover for enforcement actions brought under section 13 of the FTC Act alleging unfair and deceptive acts or practices. Mr. Kohm also explains that sellers are covered by the Rule to the full extent of the FTC’s jurisdiction. Therefore, the Rule covers business-to-business transactions as well as business-to-consumer transactions. Banks and other depository institutions are not covered by the Rule. There is also no private right of action under the Rule. Mr. Kohm then describes several petitions to invalidate the Rule which have been filed in four federal circuits courts of appeal. There have not yet been any substantive rulings in any of the cases. We then ask Mr. Kohm for his opinion as to whether the composition of the Commission would change as a result of the outcome of the Presidential election and whether that might result in the Rule being repealed or amended to satisfy industry concerns. The President has the right to nominate the new Chair who will undoubtedly be a Republican. At that point, the Commission will be controlled 3-2 by Republicans. Since two Republican Commissioners have already dissented from the Rule, there is some possibility that the Rule might be repealed or amended before it goes effective. Mr. Kohm observes that since the rulemaking was launched at a time when Republican Commissioners held a majority of the five seats, it was not a foregone conclusion that the Commission would vote to repeal or amend the Rule. Since the Rule does not prohibit the use of negative options subscription contracts and just about everyone has had difficulty in canceling such contracts, it could very well be that the Rule remains largely intact. Alan Kaplinsky, Senior Counsel and former chair for 25 years of the Consumer Financial Services Group, hosts the discussion. /episode/index/show/consumerfinancemonitor/id/34301060

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