Category Archives: Court Decisions

Virginia Bureau of Financial Institutions Reports to General Assembly on Internet Lending Study and Plans for Legislation in the 2018 Session

The Virginia Bureau of Financial Institutions (the “Bureau”) recently sent members of the House and Senate Commerce and Labor Committees a letter reporting on the work of the legislative working group that met this year at the request of the legislature to examine issues related to consumer finance companies, internet lending, and open-end credit lenders. The letter states that the Bureau plans to develop proposed legislation for the 2018 session convening in January based on the study group meetings. The key takeaways from the Bureau’s letter are as follows: The Bureau states that a “vast majority” of the study group …

[ CONTINUE READING ]

Posted in Court Decisions, FinTech \ Comments Off on Virginia Bureau of Financial Institutions Reports to General Assembly on Internet Lending Study and Plans for Legislation in the 2018 Session

Virginia Bureau of Financial Institutions to Study Internet Lending Issues for Legislative Recommendations

The 2017 Virginia General Assembly tabled a number of bills (HB 1443, HB 1817, HB 2310, HB 2310, HB 2445, and SB 1126) dealing with consumer finance companies, Internet lenders, and open-end credit with the understanding that the issues raised in such bills would be studied by a working group of the Virginia Bureau of Financial Institutions this year. The Bureau study group is tasked with making legislative recommendations for consideration by the Virginia General Assembly in its 2018 session, which convenes in January. The Bureau study will give particular attention to the licensing and supervision of Internet lenders making …

[ CONTINUE READING ]

Posted in Court Decisions, FinTech, Online Lending \ Comments Off on Virginia Bureau of Financial Institutions to Study Internet Lending Issues for Legislative Recommendations

DC Court of Appeals Rules CFPB’s Structure is Unconstitutional

On October 11, 2016, the United States Court of Appeals for the District of Columbia Circuit ruled that the Consumer Financial Protection Bureau’s (CFPB) structure is unconstitutional. PHH Corporation v. Consumer Financial Protection Bureau, No. 15-1177, 2016 WL 5898801 (D.C. Cir. Oct. 11, 2016). Unlike most independent agencies, which contain multi-member structures to check against arbitrary decision-making and abuse of power, the CFPB is an independent agency lead by a single Director subject only to for-cause removal by the President of the United States under the Dodd-Frank Act. The Court of Appeals observed that this structure “represents a gross departure …

[ CONTINUE READING ]

Posted in Court Decisions \ Comments Off on DC Court of Appeals Rules CFPB’s Structure is Unconstitutional

Kicking the Can Down the Road: SCOTUS Denies Petition to Madden v. Midland Funding

On June 27, 2016, the Supreme Court denied certiorari in Madden v. Midland Funding. The decision is unsettling for the banking and marketplace lending industries, which had hoped the Supreme Court would seize the opportunity to reverse the Second Circuit’s controversial holding. As a result of the denial, secondary (non-bank) debt purchasers operating within the Second Circuit are ostensibly prohibited from collecting interest charges in excess of state usury caps – a practice that traditionally had not been an issue as long as the interest charges were permissible under the original loan agreements. The Solicitor General and the OCC had …

[ CONTINUE READING ]

Posted in Court Decisions \ Comments Off on Kicking the Can Down the Road: SCOTUS Denies Petition to Madden v. Midland Funding

SCOTUS’ Spokeo Decision Limits Consumer Credit Class Actions

Last week, the U.S. Supreme Court handed a temporary victory to a “people search” website, when it remanded a closely watched case to the Ninth Circuit for further proceedings. The case, Spokeo, Inc. v. Robins, is a consumer credit protection class action brought under the federal Fair Credit Reporting Act (FCRA). The case is of interest to the marketplace lending industry, which is subject to the multitude of federal consumer credit protection laws, such as the FCRA. Spokeo is a people search engine that organizes people’s online information into data profiles for various users, including “employers who want to evaluate …

[ CONTINUE READING ]

Posted in Court Decisions \ Comments Off on SCOTUS’ Spokeo Decision Limits Consumer Credit Class Actions

Online Lender Fined for Requiring Repayment by AutoPay

In a March 16th decision, a federal magistrate judge in California ordered a lender to pay $500,000 in statutory damages under the Electronic Funds Transfer Act (“EFTA”) for conditioning online loans on borrowers’ agreements to repay such loans through automatic electronic funds transfers. Under the EFTA (15 U.S.C. §1693k), a lender may not condition an extension of credit on a consumer’s repayment by means of preauthorized electronic fund transfers (“EFTs”). The opinion in the case, Kempley v. Cashcall, Inc., notes that this is apparently the first court since the EFTA’s enactment to apply the EFTA’s civil damages provision in connection …

[ CONTINUE READING ]

Posted in Court Decisions, Online Lending \ Comments Off on Online Lender Fined for Requiring Repayment by AutoPay

SCOTUS Raises the Stakes in Madden v. Midland Funding

The Supreme Court recently “raised the stakes” concerning its potential review of a significant ruling of the Second Circuit by asking the Obama Administration whether the Supreme Court should review the case. The Obama Administration’s recommendation could potentially nudge the Court into reviewing the significant case that could permanently alter the national marketplace lending industry moving forward by jeopardizing a prevalent funding model used in the industry. The matter, Madden v. Midland Funding, concerns the current bank-partnership model that many marketplace or alternative lenders use to avoid compliance with individual states’ usury laws and interest-rate caps. The Second Circuit, in …

[ CONTINUE READING ]

Posted in Court Decisions, Online Lending \ Comments Off on SCOTUS Raises the Stakes in Madden v. Midland Funding