Few industries were more affected by governmental reaction to the worldwide economic slowdown than consumer financial services. With the passage of the Dodd-Frank Act, regulation increased dramatically, focusing substantially more on protecting consumers and less on product innovation, safety and soundness. Financial institutions, as well as nonbank providers of consumer financial products and services, now face increased scrutiny, new regulations and laws, and the increased risk of punitive enforcement proceedings driven primarily by action of the Consumer Financial Protection Bureau (CFPB).
Helping you navigate a sea of change
We help you navigate this rapidly evolving regulatory environment. We assist you in developing, updating and implementing compliance programs, as well as in defending consumer litigation and regulatory enforcement actions. Among the areas in which we regularly advise clients:
As part of our CFPB practice, we monitor developments at the CFPB and work with its staff attorneys, providing advice regarding the laws that regulate the extension of credit to consumers. Much of our work concerns the increasing overlap between products and services offered by financial and nonfinancial institutions, and attempts by regulators and plaintiffs’ lawyers to bring them within the jurisdiction of consumer financial protection laws.
Our mortgage banking practice provides a comprehensive range of corporate, regulatory, compliance and litigation services to traditional and online mortgage lending, servicing and settlement service clients. Our mortgage banking teams perform reviews to ensure that companies are well-prepared for any CFPB examination and help clients enhance their compliance programs to avoid enforcement scrutiny.
We provide advice regarding “prepaid access” products, mobile payments, alternative payment mechanisms (such as internet, carrier billing and peer-to-peer payments) and other new developments in this space. Our global payments team negotiates contracts, including sponsorship and processing agreements among industry participants, and advises our clients on industry updates and trends.
Our lawyers have long represented the captive auto finance industry in a wide variety of matters, including the provision of compliance and regulatory advice, under both state and federal law, transition to electronic signatures, fair lending, debt collection, floor plan financing disputes, dealer sales out of trust (SOT), retail installment sales contract (RISC) litigation, and many other issues that auto finance companies face on a regular basis.
Advertising and marketing
Marketing and advertising for the financial industry's products and services are also facing closer scrutiny and tighter regulations. Our nationally recognized advertising lawyers regularly review the campaigns of some of the world's leading brands, including those of financial institutions. We keep track of what representations, omissions, acts or practices the CFPB or FTC may likely deem unfair, deceptive or abusive, including with respect to the marketing of products through social networking websites and mobile platforms.
Our relationships in the House of Representatives and the Senate enable us to advocate for legislative changes, work to block problematic bills and ask members of Congress to weigh in on matters affecting the industry. Our government and regulatory practice can assist you in drafting comments to proposed rules, guidance and other agency proposals published by the CFPB and other agencies.
We also have relationships with state legislators and regulators through our government relations practices based in Sacramento, Los Angeles, Albany and Chicago.
Preparing for Examinations
We help clients prepare for examinations by their prudential regulators (such as the OCC, DBO, FDIC and CFPB). Supplementing our already robust compliance practice, our due diligence teams perform reviews to ensure that companies are well prepared for any examination and assist clients in enhancing their compliance programs to avoid enforcement scrutiny. We also assist clients in responding to and implementing regulatory changes, and vetting new products and services.
Defending against enforcement actions and litigation
We regularly defend clients in investigations and enforcement actions pursued or brought by federal banking agencies, the CFPB, the FTC and state attorneys general. The CFPB is a core practice focus. The CFPB’s approach, often regulating through enforcement rather than formal regulation, presents great uncertainty to those entities providing consumer-facing financial products and services, including through the CFPB’s unusual power to declare otherwise legal practices unfair, deceptive or abusive (UDAAP). We respond to civil investigative demands (CIDs), notice and opportunity to respond and advise (NORA) letters, and Potential Action and Request for Response (PARR) letters.
Defense of consumer litigation
We defend class actions, leveraging the knowledge of our consumer compliance lawyers to develop an effective response and litigation strategy. Our lawyers have successfully defended individual and putative class actions arising under the Equal Credit Opportunity Act (ECOA), the Fair Credit Reporting Act (FCRA), the Fair Debt Collection Practices Act (FDCPA), the Fair Housing Act (FHA), the Truth in Lending Act (TILA), the Real Estate Settlement Procedures Act (RESPA), and the Telephone Consumer Protection Act (TCPA), state motor vehicle retail installment sales laws, and state unfair and deceptive practices (UDAP) statutes.
Who we work with
We represent banks, mortgage lenders, consumer finance companies (including short-term and auto lenders), insurance companies, hedge funds and other institutional lenders, as well as nonfinancial companies offering products and services that fall within the sphere of consumer financial protection laws, including brick-and-mortar and online retailers, publishers and subscription services, telecommunication and satellite television service providers, TV networks and affiliates, and production companies.
A rapidly expanding part of our practice is advising emerging companies in the fintech space, including online lenders and mobile payment companies, regarding the application of legacy laws to their disruptive technologies.
- Working with nationwide credit card issuers to revise their account agreements, periodic statements, and billing and other procedures to comply with the significant changes mandated by the Credit Card Accountability Responsibility and Disclosure Act of 2009 and revisions to Regulation Z.
- Assisting banks, payment processors and telecommunications companies in structuring programs that allow consumers to make purchases using their mobile devices, including via mobile wallets.
- Advising a leading entertainment company and a major electronics retailer in the structuring of layaway-type programs as an alternative to credit arrangements, including programs that permit consumers to set aside funds for vacations.
- Advising numerous publishing companies and other sellers regarding the structuring of marketing offers utilizing credit scores and other consumer reports that comply with FCRA requirements.
- Assisting several consumer reporting agencies in establishing databases that satisfy FCRA.
- Counseling numerous direct response marketers in establishing processes and procedures for obtaining customer consent to recurring billing arrangements that comply with Regulation E and state laws.
- Advising marketers regarding developments in federal and state laws restricting "data pass" arrangements that involve the sharing of payment card information.
Deposit Products and Operation
- Assisting several processors and merchants in responding to substantial data breaches, including preparing appropriate public disclosures and developing a media damage control plan.
- Assisted a large financial institution in creating and rolling out several state government electronic benefit payment programs and formulating a federal government debit card benefit payment program.
- Assisted banks in developing new products following the repeal of Regulation Q.
- Advised a large, interstate bank on bank power issues post-Dodd-Frank, including new federal preemption standards and state law compliance requirements.
- Representing several affinity groups and other companies in negotiating co-brand payment card relationships, including royalty terms.
- Representing payment card issuers negotiating the terms of their membership agreements with payment card networks.
- Advising numerous merchants regarding requirements under their respective payment card networks and NACHA rules governing authorized payments.
- Negotiating agreements with alternative payment card networks so that issuers could have at least two independent card networks enabled per card as of April 1, 2013.
- Assisting several merchants in developing a novel payment facilitator arrangement that takes advantage of new rules promulgated by the payment card networks allowing mechanisms for small-ticket transactions.
UDAAP/Advertising and Marketing
- Developing a UDAAP compliance training program for the advertising review unit of a multinational financial services corporation to ensure that all of its employees are familiar with all existing and developing federal and state rules.
- Researching state credit laws for a major provider of health club services and updating their membership agreements accordingly.
- Developing training materials on marketing and credit practice-related issues for a national provider of broadcast television services.
- Providing training and ongoing advice to the U.S.'s largest provider of affiliate marketing services on issues ranging from data pass to compliance with state and federal telemarketing requirements.
- Providing training and ongoing advice to a leading provider of gift card programs regarding compliance with applicable federal and state laws.
- Advising many of the leading publishing companies in the United States regarding compliance with consumer credit laws, including the FCRA.
- Advising leading consumer product companies on the establishment of installment payment programs that comply with applicable federal and state laws.
- Reviewing various companies' advertising and marketing materials involving the offering of consumer credit to ensure compliance with applicable federal and state disclosure laws.
- Represented a credit card issuer in connection with an action seeking $3 million in restitution for alleged TILA violations. We successfully argued for our client's position that no violations had occurred, and the regulators imposed no restitution liability.
- Negotiated an acceptable enforcement order and fines for a bank accused of BSA and OFAC violations.
- Represented a major consumer electronics marketer in an FTC enforcement action alleging violations of TILA and Regulation E.
- Represented numerous direct-response marketers in FTC enforcement actions alleging that their recurring billing charges violated Regulation E.
- Represented a multichannel video programming distributor in a 49-state settlement of a legal action alleging a multitude of violations of state and federal credit and debit card laws, including with respect to our client's automatic renewal practices.
- Represented several major publishers in state attorneys general actions on a number of issues, including compliance with laws regulating data privacy and auto renewal charges.
- Represented a major publisher in an FTC enforcement action alleging violations of FCRA which resulted in the FTC closing the matter.
- Represented an online travel merchant in numerous state attorneys general investigations into the transfer of financial information by third-party merchants in cases where, after completion of a purchase, the customer elects to accept an upsell offer.
- Represented a national fitness center chain in an investigation under Texas UDAP and health club laws relating to debt collection and membership renewal practices.
- Represented several membership services companies in individual and multistate actions relating to "negative option" marketing, telemarketing and preacquired account marketing.
- Represented a leading mortgage lender in a matter involving 49 state attorneys general and nearly 30 other state agencies. Critical to our ability to effectively represent and defend our client was our broad expertise in federal and state regulatory schemes governing consumer financial products and services, including with respect to advertising, marketing and disclosures.
- Represented a national bank in 23-state investigation related to consumer finance issues. Negotiated a unique settlement that recognized the bank for its level of cooperation.
- Defense of a major bank in a putative class action challenging automobile financing practices under California's UDAP law.
- Defense of a leading national finance company in a class action seeking to rescind loans based on alleged violations of theCalifornia Finance Lenders Law. Representation of a foreign financial institution after its U.S. representative was arrested by federal authorities on tax and money laundering charges following an undercover investigation.
- Defense of a national bank in a class action alleging that the fees charged on tax refund anticipation loans constituted precomputed interest that the bank was obligated to repay when borrowers paid off the loans early.
- Representation of a major telecommunications company in a putative class action alleging that our client violated the Telephone Consumer Protection Act by contacting subscribers on their cell phones in an attempt to collect overdue payments. Defense of a major payday lender in a class action alleging that our client's practice of monitoring customer calls violated California's eavesdropping statute.