June 2017 – Consumer Financial Services Watch

CFPB Director Informs Consumer Advisory Board That Bureau Will Not Shy Away from Issuing Debt Collection Proposed Rule

Jun 15 2017

By Brian M. Forbes, Gregory N. Blase, Andrew C. Glass and Roger L. Smerage

In prepared remarks delivered to the Consumer Advisory Board on Thursday, June 8, 2017, Consumer Financial Protection Bureau Director Richard Cordray explained that the CFPB is moving forward with its long-anticipated debt collection rules. K&L Gates previously chronicled the CFPB’s efforts to promulgate debt collection rules here, here, and here.

The Director emphasized his view that new debt collection rules are necessary because of the age of the Fair Debt Collection Practices Act—enacted in 1977—and the statute’s inability to fit modern methods of communication. According to the Director, the forthcoming rules would benefit consumers and industry participants by clarifying what constitutes unfair collection practices. Substantively, the Director focused on the portion of the CFPB’s July 2016 outline aimed at ensuring that debt collectors possess correct information about debts they are seeking to collect and consumers who owe those debts. In a notable shift, the Director indicated that the CFPB is prepared to issue a single set of debt collection rules relating to the gathering of information by and transfer of information between first-party creditors and third-party debt collectors. Acknowledging that the shift will require the CFPB to take some additional time to iron out “intertwined issues,” the Director suggested that the CFPB will try to fast-track other aspects of its proposed rulemaking, including the information third-party debt collectors must disclose to consumers and the manner in which third-party debt collectors interact with consumers.

K&L Gates will continue to monitor and report on further developments.

Regulation CC Amendments Reallocate Risks of Remote Deposit

Jun 14 2017

By: John ReVeal

More than three years after proposing amendments to Regulation CC to add new indemnities for remotely deposited checks, new warranties for electronic checks and electronic returned checks, and new indemnities for electronically created items, the Federal Reserve has at last issued final rules. These new rules also modify the expeditious return rules, including by making electronic returned checks subject to those requirements. The final rules were issued on May 31, 2017, and will take effect on July 1, 2018.

To read the full alert, click here.

No Class Conflict in Data Breach Settlement Involving Class Members With and Without Economic Injury

Jun 01 2017

By Andrew Glass, Matthew Lowe, and Brandon Dillman

On remand from the Eighth Circuit,[1] the United States District Court for the District of Minnesota recently recertified a data breach settlement class over an objector’s assertion of an intraclass conflict. Specifically, the objector asserted that a conflict existed between class members who purportedly had suffered loss and were guaranteed a payout under the proposed settlement, and those who had not suffered loss and were not guaranteed a payout. See In re Target Customer Data Security Breach Litig., No. 14-2522 (PAM), 2017 WL 2178306 (D. Minn. May 17, 2017). In rejecting the objector’s alleged conflict, the Court emphasized that “the question is not whether there is any potential or theoretical conflict among class members, it is whether class members’ different interests are antagonistic to each other.” Id. at *3.

Archive:June 2017