September 2016 – Consumer Financial Services Watch

House Energy and Commerce Committee Calls for Modernizing the TCPA

Sep 28 2016

By Pamela Garvie, Andrew Glass, Greg Blase, Peter Nelson and Elana Reman

On September 22, 2016 the House Energy and Commerce Committee’s Subcommittee on Communications and Technology held a hearing on modernizing the TCPA. The hearing is significant because it marks the first time that lawmakers on both sides of the aisle have said the TCPA needs to be updated to reflect changing technology and business practices, and to draw a distinction between “harassing, malicious” calls from “bad actors” and “legitimate, informational calls that consumers want.” Republican members of the Subcommittee have raised concerns about the TCPA during past FCC oversight hearings, but this hearing actually was held at the request of full Committee Ranking Democrat Member Frank Pallone Jr. (D-NJ), Subcommittee Ranking Democrat Anna Eshoo (D-CA), and Congresswoman Jan Schakowsky (D-IL).

The Eighth Circuit Charts a Course for Data Privacy Cases in the Wake of Spokeo for Technical Violations of a Statute That Result in no Harm

Sep 19 2016

By Ryan M. Tosi and Lindsay Sampson Bishop

The Eighth Circuit recently became the one of the first federal Courts of Appeals to apply the U.S. Supreme Court’s Article III standing decision in Spokeo Inc. v. Robins to a data privacy case. The Eighth Circuit affirmed the dismissal of a putative class action complaint on the basis that the plaintiff failed to allege a concrete injury that “actually exist[s],” is “real,” and is not “abstract.” The lawsuit alleged that Charter Communications, Inc. (“Charter”), a company providing cable services, retained the personally identifiable information (“PII”) of its former customers well after the customers’ cancellation of their services. Because the plaintiff asserted only a technical violation of the statute, without alleging how that violation had actually injured him, the Eighth Circuit found that, under Spokeo, the plaintiff failed to plead a concrete and particularized injury sufficient to establish standing to file suit in federal court.

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Inclusive Communities Excluded from Court—Plaintiff Can’t Meet Supreme Court Standard for Disparate-Impact Claims under the Fair Housing Act

Sep 12 2016

By Paul F. Hancock, Andrew C. Glass, Olivia Kelman, and Joshua Butera

K&L Gates LLP previously observed that the U.S. Supreme Court’s recognition of disparate-impact claims under the Fair Housing Act in Texas Department of Housing & Community Affairs v. The Inclusive Communities Project, Inc. had a “silver lining.” In particular, the Supreme Court identified that a plaintiff must meet a rigorous standard to establish a prima facie case of disparate-impact discrimination under the Fair Housing Act. On remand, the U.S. District Court for the Northern District of Texas applied that standard, holding that the plaintiff fell far short of meeting the Supreme Court’s “proof regimen” necessary to sustain a disparate-impact claim. The district court’s decision reaffirms that, in interpreting the Supreme Court’s decision properly, a Fair Housing Act plaintiff proceeding under a disparate-impact theory faces a significant burden.

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Who Bears the Risk? Federal Court Holds That a Purchaser of Unsecured Consumer Loans Is the “True Lender,” Voiding Enforceability of the Loans

Sep 07 2016

By Irene C. Freidel and David D. Christensen

A California federal court has held that the purchaser of small-dollar consumer loans is the “true lender” and thus subject to state usury laws, even though a separate tribal entity funded and closed the loans in its own name. See Consumer Financial Protection Bureau v. CashCall, Inc*. The court’s holding, which adopts the arguments of the Consumer Financial Protection Bureau (“CFPB”) and renders the loans serviced by CashCall unenforceable, challenges the business model that many marketplace lending platforms use to offer alternative, unsecured loans to consumers. Generally speaking, partnerships between marketplace platforms and tribal entities, state-chartered (and federally insured) banks, or national banks are intended to protect the platforms from the substantial licensing and compliance burden of state lending and licensing laws, and also to permit loans that might otherwise exceed the borrower’s home state usury limit. The recent CashCall decision, however, is another reminder that state and federal regulators, as well as plaintiffs’ attorneys, may be able to pierce these partnerships where a court finds that the financial institution funding and closing the loan does not bear substantial risk on those loans.

Archive:September 2016