Episode 52: The Supreme Court’s Chevron Doctrine and Statute of Limitations Ruling
This COMPLY Podcast episode is part 2 of a conversation between Eric Goldberg, Partner at Akerman LLP, Catherine Brennan, Partner at Hudson Cook LLP, and Rhonda McGill, PerformLine’s Senior Director of Customer Marketing as they discuss the impact of recent regulatory activities on marketing compliance.
They discuss:
- The implications of the Supreme Court’s decision to overturn the Chevron Doctrine
- Changes to the statute of limitations for regulatory challenges, which could result in a wave of new challenges to long-established regulations
- Best practices for navigating these regulatory changes and more
Show Notes:
- Episode 51: Expert Insights on Regulatory Shifts in EWA and BNPL: https://performline.com/blog-post/episode-51-expert-insights-on-regulatory-shifts-in-ewa-and-bnpl/
- Impact of Recent Regulatory Updates: EWA, BNPL, Chevron Doctrine: https://performline.com/blog-post/impact-of-recent-regulatory-updates-ewa-bnpl-chevron-doctrine/
- Access PerformLine’s free Marketing Compliance Resource Library: https://performline.com/resources/
- Connect with Rhonda: https://www.linkedin.com/in/rhonda-mcgill/
- Connect with Eric: https://www.linkedin.com/in/ericigoldberg/
- Connect with Cathy: https://www.linkedin.com/in/cathybrennan/
- Connect with Gianna: https://www.linkedin.com/in/gianna-kennedy/
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The state of marketing compliance and regulation is evolving faster than ever, especially for those in the consumer finance space. On the COMPLY Podcast, we sit down with the biggest names in marketing, compliance, regulations, and innovation as they share their playbooks to help you take your compliance practice to the next level.
Episode Transcript:
Gianna:
Hey there COMPLY Podcast listeners, and welcome to this week’s episode. This week’s episode is part two of a conversation between Eric Goldberg, Partner at Akerman, Catherine Brennan, Partner at Hudson Cook, and Rhonda McGill, PerformLine’s Senior Director of Customer Marketing, as they discuss the impact of recent regulatory activities on marketing compliance.
Rhonda:
So let’s jump in and talk a little bit about the Chevron Doctrine. We’ve heard a lot about it on the news. The last few months have been kind of a history lesson on this, and a few rulings that the Supreme Court has recently handed down have made some significant impacts on how marketing regulation is being done in our space with marketing compliance. The first decision was overturning the long-standing Chevron Doctrine, which now means the judges no longer have to defer to agencies in cases where statutes don’t clearly state the official’s authority. Could you explain the Chevron Doctrine in your legal terms in a way a sixth grader could understand? Because I think there’s a lot of complexity to it, and still a lot of confusion around it.
Eric:
Sure. Congress typically passes statutes and delegates the implementation of those statutes to agencies. The Chevron Doctrine, established in the early 1980s, said that if a statute was ambiguous, courts should defer to the agency’s interpretation. This was the law for over 40 years. However, the Supreme Court has now overturned Chevron, stating that it is the courts, not agencies, that decide what statutes mean when they are ambiguous. This will likely lead to a lot of litigation, as agencies will no longer get the benefit of the doubt in interpreting ambiguous statutes.
Rhonda:
Do you think this will take years to fully understand the impact of this ruling?
Cathy:
It will likely take time to see the full impact, but it opens the door for more challenges to agency decisions. For example, in the earned wage access interpretive rule, the CFPB used a definition of “debt” that isn’t consistent with how debt is generally understood. In a world without Chevron, such an interpretation might not stand up in court, which could lead to more lawsuits.
Eric:
I agree. While agencies won’t always lose, the lack of deference means more scrutiny of agency interpretations, which could lead to more legal challenges.
Rhonda:
Finally, let’s discuss the statute of limitations ruling. The Supreme Court decided that the statute of limitations for a person or a company to challenge a government agency’s action starts only when the action has directly harmed that specific person or company. So now the clock for filing a legal challenge, as I understand it, doesn’t start ticking when the agency makes its decision but instead when someone is actually affected by it. Did I say that right? Okay, so how does this ruling alter the legal landscape for regulatory challenges?
Eric:
Sure. So, I think this is very much going to be viewed together with the other decision we were just talking about. Traditionally, in interpreting regulations, many things have been settled. For instance, Regulation Z, which was first adopted in the late 1960s and early 1970s, has been seen as settled because the time to challenge those regulations has passed. However, the Supreme Court has now said that if you’re a company that didn’t exist in 1968 and you’re new, and you think a rule is improper, you have standing to challenge that regulation in a lawsuit or as a defense in an enforcement action. You can say, “Look, we think this regulation is improper.” It really opens up the entire universe of regulations to being challenged.
You could even envision a world where a company is created entirely just to have standing to challenge a new regulation. So, if there’s something you don’t like, you create a new LLC that does a particular business, and then you can file a lawsuit to challenge what has otherwise been a regulation that’s been around for 40, 50, or even 100 years, depending on the topic. I think it’s going to be open season for a lot of people to challenge regulations. Every call we’ve had with clients since these decisions has involved discussing whether there’s a legal challenge that someone can bring, whether it’s our client or someone else who would have standing to cause agencies to revisit some of these rules. When you look at some of the older rules that go way back, they aren’t substantiated the way rules are now, and I think some of the agencies are going to have trouble really substantiating these very old regulations.
Rhonda:
That’s probably time for some refresh.
Eric:
It’s going to be a refresh forced by the courts, which is going to be interesting. And yes, a lot of regulations could use a refresh. We talk about some regulations that refer to things like digital tapes that were used to record things—stuff that we just don’t use anymore. So, it will be interesting to see how that shakes out.
Rhonda:
For sure, for sure. So, I want to thank you both for being here. This has been such a great conversation. I know we could probably go on and on, but I didn’t want to take up more time asking you all questions. I do want to at least give you both an opportunity to talk a little to our audience and share some of your thoughts as far as what you’ve seen or heard over the legal landscape in the last year or so that they should take into consideration when thinking about things from a compliance mindset. Could you share some of your best practices, as if they were sitting in your office for a consult? Cathy, would you like to start and leave our folks with some final thoughts?
Cathy:
Sure. My practice is focused mainly on advising investors in the consumer financial services space, and the best advice I like to give is don’t panic. So, things that the CFPB comes out with that seem potentially product-ending or product-limiting are probably not the case. With regard to earned wage access, people are concerned about the rule, but the industry is not going away. A handful of states have already enacted legislation indicating that the product is not a loan product, and require providers to be registered and provide other disclosures. This type of friction isn’t a bad thing; it gives the industry the opportunity to sharpen its pitch at the state level as to why CFPB action is something they should reconsider, particularly because this product is similar to a payday lending type of product.
So, don’t panic is my best advice. The second piece of advice is that the CFPB, for all the criticism I might level at it, has a wealth of information on how you can structure your business. It’s all right there. So, if you’re a company serious about compliance, download that information, take it to heart, and adopt the policies that the CFPB is proposing to the extent you are able and to the extent it’s consistent with your business.
Rhonda:
That makes the most sense. I always tell people, you know, create the policies, follow the policies, test them, and train your people. Those are the winning combinations for making sure that you’re in compliance, for sure. And, Eric, your parting thoughts?
Eric:
Great. Thank you. First, I agree with everything that Cathy said. I’m probably going to repeat some of it. The CFPB has a wealth of material. If we’re talking about the Bureau, it’s not just in the regulations. There’s commentary, enforcement actions, and nuggets buried in press releases. One of the things to keep in mind is you want to make sure you have the full panoply of information when you’re considering some of this. Specifically, for these regulations, it is not necessarily the death knell. You should look at what it would look like if we did have to give this disclosure—how would our consumers receive it? And are there minor tweaks we can make to our product that minimize the impact? Earned wage access is a great example. There’s been a lot of concern lately about having to disclose an annual percentage rate, which the CFPB notes can be well over 100%. But if your finance charge is less than $7.50, Reg Z doesn’t require you to disclose an APR. So, there could be ways to limit your charges in a way that you don’t have to disclose an APR.
The other thing I would say is, we’ve been focused on this call on BNPL (Buy Now, Pay Later) and EWA (Earned Wage Access), but if you offer a product that is adjacent to any of those—like another form of non-recourse product, or another form of credit that might not be subject to Reg Z—I would think very carefully about whether the CFPB’s regulation or guidance is broad enough to cover what you’re doing or whether they’re, quote-unquote, coming for you next. I wouldn’t say, “Well, I don’t do EWA, I do this thing that’s over here, so I don’t need to worry.” There are a lot of hints in what they’ve given that their guidance could be applied much more broadly.
And the last thing I’ll say is, where we’ve seen the most difficulty and trouble that companies have had complying with the regulations is definitely on the servicing side. Cathy noted that disclosures are not typically where people get tripped up; it’s on products and around consumer disputes, and ignoring your consumer complaints. People who work in this space have been saying these things since the beginning, but it’s worth repeating because that’s still where we see most of the companies we work with continue to have problems. Those are my final thoughts, and thanks again.
Rhonda:
I appreciate your final thoughts. Again, this is where I always say to folks, PerformLine is always here to try to help provide that oversight on all of your marketing channels, disclosures, and just staying on top of those things is so critical now—knowing what you’re saying to your client, and making sure that what you promise is what you’re delivering. I thank you both again for joining us today and having this discussion. This has been a great webinar, and I’m sure that all of our listeners are going to get so many nuggets from this discussion. I hope to have you both back with us again someday soon.
Eric:
Thank you.
Cathy:
Thank you.
Gianna:
Thanks for listening to this week’s episode of the COMPLY Podcast. If you missed part one of this discussion, I’ll link that in the show notes below. As always for the latest content and all things marketing compliance, you can head to performline.com/resources. And for the most up-to-date pieces of industry news, events, and content be sure to follow PerformLine on LinkedIn. Thanks again for listening, and we’ll see you next time.
Rhonda McGill 