The Roundup: AI in Banking and Finance, California’s Honest Pricing Laws, and Q3 Enforcement Actions
Welcome to the PerformLine Regulatory Compliance Roundup, home of the latest news, articles, and reports from our industry, curated for you. Let’s get into it.
In this edition: The CFPB takes action against wrongful auto repossessions and loan servicing breakdowns, The OCC solicits research on artificial intelligence in banking and finance, a variety of fees and surcharges implicated in early cases enforcing California’s honest pricing law, supervisory highlights: auto finance special edition, New York readies AI rules as California picks regulation panel, and marketing compliance and enforcement actions for Q3 2024.
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CFPB Takes Action Against Wrongful Auto Repossessions and Loan Servicing Breakdowns
The CFPB has taken action against auto finance companies for wrongful practices, including illegal repossessions and misapplied payments. The agency found that some companies repossessed vehicles despite borrowers making timely payments or receiving loan extensions, while others charged for add-on products without consent or failed to issue refunds. The companies have been directed to correct these issues, improve disclosures, and ensure accurate credit reporting.
OCC Solicits Research on Artificial Intelligence in Banking and Finance
The OCC is seeking academic research on artificial intelligence applications in banking and finance. Researchers can submit original, unpublished papers by December 15, 2024. Selected authors will be invited to present their work at an OCC-hosted event in June 2025, either in person or virtually. The initiative aims to explore AI’s potential impacts on financial services and regulatory oversight.
Significant Stat: $287 Million: The total number of monetary fines handed out by federal and state regulators for 23 separate enforcement actions in Q3 of 2024. Read more
A Variety of Fees and Surcharges Implicated in Early Cases Enforcing California’s Honest Pricing Law
Early enforcement cases under California’s new “Honest Pricing Law” are challenging various fees such as service, processing, and credit card surcharges that businesses add to transactions. Since the law’s implementation in July, over a dozen lawsuits have been filed, focusing on hidden or misleading fees that were disclosed late in the purchasing process. The law requires businesses to include all mandatory fees in the advertised prices. These cases highlight complexities in determining when fees must be disclosed upfront.
Supervisory Highlights: Auto Finance Special Edition
The latest CFPB Supervisory Highlights reports on widespread violations in the auto-finance market, including deceptive advertising, improper handling of add-on products, and payment errors leading to wrongful repossessions. The agency found that companies misled consumers about loan terms, mishandled payment records, and failed to ensure refunds for unusable add-on products. With $1.616 trillion in outstanding auto debt, the CFPB emphasizes the significant impact of these issues on American families, and signals continued monitoring of the market.
New York Readies AI Rules as California Picks Regulation Panel
New York and California are advancing AI regulation efforts, with New York lawmakers drafting new rules to balance innovation and consumer safety, including liability standards and content disclosures. Meanwhile, California has formed a panel of experts to propose AI safety measures after a recent bill veto, aiming for comprehensive regulation. These developments reflect growing government attention to AI governance amid rapid technological growth.
Marketing Compliance and Enforcement Actions Q3 2024
This report—crafted for professionals who need to stay on top of the latest regulatory developments—offers a focused look at the latest enforcement and compliance trends that impacted consumer finance companies in the third quarter of 2024.
