Like most industries today, consumer credit services businesses are significantly impacted by the novel coronavirus (COVID-19). Troutman Pepper has developed a COVID-19 Resource Center to guide customers through this unprecedented global health challenge. We regularly update this site with COVID-19 news and developments, recommendations from leading health organizations, and tools businesses can use for free.
To help keep you up to date on relevant activities, below is a breakdown of some of the biggest COVID-19 related events at the federal and state levels that have impacted the consumer financial services industry. last week :
Privacy and cybersecurity activities
- On April 14, the Consumer Financial Protection Bureau (CFPB or Bureau) released a report titled “Student loan borrowers potentially at risk when payment suspension ends.” The publication uses data from the CFPB’s Consumer Credit Panel to identify the types of borrowers who may struggle to make their scheduled loan payments based on five potential risk factors:
- Pre-pandemic defaults on student loans.
- Pre-pandemic payment assistance on student loans.
- Several student loan managers.
- Defaults on other credit products since the start of the pandemic.
- New third-party collections during the pandemic.
The CFPB finds that about 15 million borrowers have at least one of the potential risk factors considered in this report, and more than five million have at least two. For more information, click here.
- On April 12, the Consumer Financial Protection Bureau (CFPB) published a blog post titled “Busting Myths About Bankruptcy and Private Student Loans.” In the message, the CFPB argues that some private education loans can be canceled in the event of bankruptcy. The CFPB then draws on its own previous research to argue that consumers rely on servicers to provide information about private student loans, citing specific consumer complaints as evidence that student loan owners, lenders, servicers and collectors illegally collect private student loans that should have been discharged. For more information, click here.
- On April 11, the White House published a fact sheet, outlining the Biden administration’s actions to reduce medical debt burdens and increase consumer protections. The plan focuses on four areas: (1) empowering providers and collectors; (2) eliminate medical debt as an underwriting factor in credit programs; (3) support veterans in financial difficulty; and (4) help consumers better understand their rights. For more information, click here.
- On April 7, in front of American University’s Kogod School of Business Center for Innovation, Treasury Secretary Janet Yellen address the Biden administration’s upcoming legislative approach to digital assets, as we discussed here, as well as the digitalization of the US economy, which Yellen assessed through the lens of five lessons she suggests are often implied by emerging technologies in general: (1) responsible innovation; (2) appropriate guardrails; (3) monetary sovereignty; (4) technological neutrality; and (5) interagency and international collaboration. For more information, click here.
- On April 6, Senator Pat Toomey (R-PA) released a draft of his Stablecoin Reserve Transparency and Uniform Secured Transactions Law, or Stablecoin TRUST Act. The bill envisions a “payment stablecoin,” which is convertible directly into fiat currency by the issuer. Only an Insured Depository Institution, Money Transmitter (licensed by their respective state authority) or a new “National Limited Payout Stable Coin Issuer” would be eligible to issue Payout Stable Coins. Additionally, payout stablecoins would be exempt from federal securities requirements, including the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Company Act of 1940. For more information, click here.
- On April 11, Virginia Governor Glen Youngkin vetoed Virginia House Bill 573, which would reduce the statute of limitations for collecting medical debts from five years to three. The bill would also provide that the date for accrual of shares is 30 days after the later of (1) the issuance of the initial invoice or the due date indicated in this invoice to the patient or the person legally responsible for payment or (2) if the patient voluntarily enters into a payment plan with the provider, 30 days after the date of default contained in such payment plan. The Virginia General Assembly can override any veto by a two-thirds vote. For more information, click here.
- On April 11, Virginia enacted a new law (HB 263) which comes into effect July 1, allowing “banks” to provide customers with “virtual currency custodial services as long as the bank has adequate protocols in place to effectively manage risk and comply with applicable laws.” The law, in a first for Virginia, defines “virtual currency” as “an electronic representation of value intended for use as a medium of exchange, unit of value, or store of value,” which “does not exist in a fitness ; it is intangible and only exists on the blockchain or distributed ledger associated with a particular virtual currency. For more information, click here.
- On April 9, New York Governor Kathy Hochul signed legislation requiring the New York Department of Financial Services (NYDFS) to charge a new “assessment” to all licensed virtual currency businesses in New York to “fund operating expenses”. Section 206 of the New York Financial Services Act will be amended to add a new paragraph (d-1) to read: “The expenses of each examination of the affairs of any person regulated under this chapter who engages to a virtual currency trading activity shall be borne and paid by the regulated person so examined, but the Superintendent, with the approval of the Monitor, may, at the discretion of the Superintendent, for cause, remit such costs.” For more information, click here.
- On April 11, Massachusetts Governor Charlie Baker testified before the Joint Committee on Health Care Financing about comprehensive health care legislation, “An Act Investing in the Future of Our Health” (Act ), which he presented last month. The law follows a previous health care reform law passed in 2021, which increased insurance coverage for telehealth services; expanded the scope of practice for nurse practitioners, other specialist nurses and optometrists; and discussed measures to protect consumers from surprise medical bills. The law demonstrates the state government’s tensions in addressing traditional health care issues, while simultaneously addressing the lasting effects of the pandemic. For more information, click here.
- On April 7, Colorado Governor Jared Polis sign Senate Bill 86 takes effect as Chapter 74 of the Statutes of 2022. Effective the day it is signed, the law establishes a $2,500 exemption for garnishments on bank accounts and increases the homestead exemption of $75,000 to $250,000 for the general public and $105,000 to $350,000 for the elderly and disabled. For more information, click here.
Privacy and cybersecurity activities:
- On April 11, Connecticut’s Senate Judiciary Committee voted 25 to 14 in favor of passing SB 6, a comprehensive privacy bill that most closely resembles the Colorado Privacy Act (CPA). This legislation includes a lower scope threshold (set at 75,000 residents for companies that are not engaged in selling data) than all other recently enacted privacy laws; however, the practical impact of this lower threshold is offset in part by the relatively small size of Connecticut’s total population. Notably, SB 6 includes specific provisions related to “dark patterns” and a 60-day right to heal that expires in 2024. The full state Senate could consider this legislation as early as this week, Connecticut’s legislative session of 2022 due to adjourn in May. 4. For more information, click here.
- On April 12, the Colorado Attorney General released a document titled “Preliminary Considerations in Developing Rules for Colorado Privacy Law.” In it, the Attorney General states that the following five principles guide the development of the rules of this law: (1) promotion of consumer rights, (2) clarification of ambiguities, (3) efficiency, (4 ) harmony and (5) innovation. . The Colorado Attorney General has also issued an invitation for public comment on numerous topics, including but not limited to data protection ratings, dark patterns, and offline data collection. Official development of notice and comment rules for the CPA will begin this fall, and the CPA is expected to go into effect July 1, 2023. For more information, click here.