In this article, we share the timeline of 2022 monthly ‘bytes’ as they apply to the fintech industry.
So what happened in 2022?
1. CFPB Deputy General Counsel Says Some EWA Products May Be Loans
On January 18, CFPB Deputy General Counsel Seth Frotman responded to advocacy groups calling for the CFPB to withdraw its guidance on Earned Wage Access Products (EWAs). Frotman notes that some of his EWA products may be considered “credit” under state and federal law, and that those who charge a fee (or receive a voluntary gratuity) are subject to the truth of lending laws. said it could be considered a “loan” under He further said he would seek clarification from Secretary Rohit Chopra about his CFPB stance on EWA products.
2. CFPB introduced the Office of Competition and Innovation
On May 24, 2022, the CFPB opened the “Competition and Innovation Office” to foster innovation and competition. The Office of Competition and Innovation replaced the former “Office of Innovation” which opened in 2018 (and then replaced the “Project Catalyst” launched in 2014). The Office of Competition and Innovation analyzes barriers to market opening, better understands how large firms “squeeze out” smaller firms, hosts incubation events and trains consumers on how to switch between accounts and providers. promote competition by As part of the change, the CFPB encouraged organizations and the public to submit rulemaking petitions seeking greater clarity on certain rules.
3. CFPB raises concerns about credit reporting of Buy Now, Pay Later companies
On June 15, 2022, the CFPB raised concerns about how the National Consumer Research Company (NCRC) plans to deal with Buy Now Pay Later (BNPL) businesses. The CFPB has shown that the amount of variability in each NCRC’s plans for BNPL consumer data can lead to inconsistent processing that limits the potential benefits of his BNPL data provided. CFPB encouraged BNPL companies to provide both positive and negative data. CFPB also encouraged the NCRC to adopt standardized BNPL furniture codes and formats suitable for the unique characteristics of the products. The CFPB will monitor progress in this area and encourage consumers to file complaints about both consumer reports and his BNPL products as appropriate.
4. CFPB withdraws special regulatory treatment for paid wage access companies
On June 21, 2022, the CFPB canceled a sandbox approval order related to a company’s paid wage access product. A previous sandbox approval order issued in December 2020 indicated that the transactions covered by the order did not give rise to liability under the truth of the lending law. On June 3, 2022, the CFPB notified the company that it was considering terminating the approval order in light of the company’s public statement suggesting that the CFPB had approved its product. The company then notified the CFPB that it was changing its business model and requested termination of the order. We plan to issue further guidance to provide greater clarity regarding the application of the definition of “credit” in truth to lending laws and regulations. Z. CFPB has not yet issued this guidance.
5. CFPB published a report on payments innovations involving BNPL
On August 4, 2022, the CFPB published a report addressing new payment systems and their ability to collect user data. This report covers the growing presence of BNPL, embedded commerce, and integrated ‘super apps’. According to the CFPB, while these technologies “have the potential to streamline payments, facilitate commerce and improve user experience,” they “have the potential to be used by businesses to aggregate and monetize consumer financial data, It can give consumers more opportunities to control their economic and commercial lives.” It may jeopardize the arbitrage trading above.” The CFPB proposed a rule on “financial data rights,” noting that he will assess BNPL to determine whether regulatory intervention is appropriate and how it will protect consumers in real-time payments. I concluded.
6. CFPB said individual consumer behavioral targeting could create liability
On August 10, 2022, the CFPB issued rules of interpretation, and Chopra made a related speech at the National Association of Attorneys General. Interpretation rules and speech corresponded to digital his marketing by big tech companies. According to the CFPB, digital marketers are not exempt from the Consumer Financial Protection Act and can be held liable for “unfair, deceptive, or abusive conduct.” The Interpretive Rules indicate that digital marketers are subject to consumer protection as they provide a vital service to financial firms. As service providers, they are responsible for violations of consumer protection laws.
7. CFPB demanded $27 million in payments to savings apps
On August 10, 2022, the CFPB issued a consent order against a financial technology company that allegedly used a flawed algorithm to cause overdrafts and consumer overdraft penalties. The company offered a mobile app touted as a way to save consumers money. According to the CFPB, the company falsely assured consumers that it would not incur overdraft charges, broke its promise to correct its mistakes, and pocketed funds owed to consumers. The order requires the company to pay damages to the consumer and pay the CFPB his $2.7 million civil fine.
8. CFPB Research on BNPL Trading
On September 15, 2022, the CFPB announced its commitment. report at BNPL. The report, “Buy Now, Pay Later: Market Trends and Consumer Implications,” warns that consumers “may be subject to uneven disclosure and protection.” Chopra said BNPL is “a fast-growing type of loan that serves as an alternative to credit cards,” and the CFPB “will allow borrowers, regardless of whether they use a credit card or not, to We will work to ensure that you receive similar protection.” Buy Now, Pay Later Loans. The CFPB also indicated it would use interpretive guidance or rules to require BNPL providers to comply with “many of the basic protections” Congress has established for credit cards. The CFPB indicated it would continue to work on “appropriate and accurate credit reporting practices” to mitigate the risk of “overextension.”
9. Consumer Groups and Banking Industry Groups Urge CFPB to Tighten Fintech Regulations
On September 15, 2022, the Consumer Bankers Association and the Responsible Lending Center jointly petitioned The CFPB is calling for a “larger participant rule” to allow the CFPB to “schedule reviews” of organizations offering installment loans and lines of credit. The CRL and CBA called for rulemaking targeting fintechs that offer personal loan originations and services. The CRL and CBA said fintech and non-bank lenders making personal loans are not subject to regular oversight by his CFPB, which “creates an unlevel playing field and significant risks to consumers.” said his opinion.
10. CFPB indicated it was investigating corporate revocation of user policies
On Oct. 12, 2022, Director Chopra spoke on CNBC about technology platforms. Chopra said the CFPB has ordered multiple technology platforms to provide information about people they remove or fine. Chopra’s comments come after a mobile payment app allegedly posted a policy update to fine users for “promoting false information.” The company indicated that they made the update incorrectly. The Consumer Review Fairness Act allows businesses to use form contract clauses that prohibit consumers from writing or posting negative reviews online, or to threaten legal action if they do. is prohibited.
11. CFPB moves to repeal previous administration’s innovation policy
On September 26, 2022, the CFPB issued a statement revoking the No-Action Letter and Compliance Assistance Sandbox Policy on September 30, 2022. CFPB has further indicated that it will not accept further applications under this policy. However, the CFPB said it will continue to accept applications submitted under its narrower-focused third innovation policy to test new disclosures.
12. CFPB sues company for charging membership fees
On October 18, 2022, the CFPB sued the organization for tricking people into signing up for a subscription discount club.. The CFPB alleged that the company automatically and illegally enrolled consumers in discount clubs when they thought they were enrolling in one event. The CFPB accused the company of violating the Consumer Financial Protection Act by registering for and charging a discount club membership without the consumer knowing, agreeing or fully understanding the material terms of the transaction. claims. The CFPB also noted that government agencies in Iowa and Vermont have separately sanctioned the company for violating state consumer financial protection laws.
13. CFPB Issues Bulletin on Virtual Currency Complaints
On November 10, 2022, the CFPB released a Complaint Bulletin highlighting complaints received by the CFPB related to crypto assets. According to the CFPB, consumers are the most commonly reported victims of fraud, theft, account hacking, and fraud. The CFPB also alleged that consumers had trouble conducting transactions and transferring assets. Many consumers had trouble accessing their funds due to platform failures, identity verification issues, security holds, and platform technical issues. The CFPB also indicated that poor customer service is a common theme in crypto-related complaints.
14. CFPB Asked for Public Comment on Big Tech Payment Platforms
On November 5, 2022, the CFPB requested comment on the use of leading technology payment platforms, their acceptable use policies, and fines, penalty provisions, and other penalties. This issue is related to a previous request for comment on the same issue.
15. CFPB Finalizes Rules for Supervision of Nonbanks
On November 10, 2022, the CFPB finalized changes to the Nonbank Supervisory Procedure Rules. In April 2022, the CFPB amended its procedures to allow the CFPB to publicly announce decisions indicating that company oversight is warranted. Under the amended procedure, nonbank entities will have an opportunity to provide information to the CFPB on whether a decision should be withheld or redacted. The CFPB’s changes and clarifications also indicate that the CFPB will not release information that falls under certain exemptions from the Freedom of Information Act. Likewise, the changes and clarifications extend the time for the respondent to provide information relevant to the decision to publish from his seven working days to his ten working days.
16. The CFPB has won a $19 million settlement in connection with a company that allegedly offers fake high-yield bank accounts.
On December 1, 2022, the CFPB settled a lawsuit against the company and its founders for providing fake high yield bank accounts. The CFPB alleged that the parties made several false, misleading, and inaccurate marketing statements in their medical savings CD account advertisements. Specifically, the CFPB claims to have received millions of dollars from at least 400 individuals who opened and deposited savings products promoted by the company. The CFPB states that the company and its founders have established that customer deposits originate loans for medical professionals, customer deposits are safe, the company is a commercial bank, and CD accounts have records of paying high interest rates. It claims to have made false statements such as Under the proposed settlement, the company and its founder would be required to refund her $19 million to approximately 400 depositors, cease deposit-taking activities, and pay $391,530 in civil penalties.
