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The Roundup: The CFPB’s Funding System Upheld, $8 Credit Card Late Fee Rule Blocked, and Top UDAAP Compliance Issues

May 22, 2024
The Regulatory Compliance Roundup May 22, 2024

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: A federal judge blocks the CFPB’s rule limiting credit card late fees, the FTC releases its fiscal year 2023 annual report, the Supreme Court upholds the CFPB’s funding system, top UDAAP compliance issues across marketing content, a report highlighting consumer frustrations with credit card rewards programs, and responding to regulatory updates fast.

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CFPB’s Funding System Upheld by Supreme Court

The U.S. Supreme Court has upheld the CFPB funding structure, overturning a lower court ruling that had deemed the CFPB’s funding mechanism unconstitutional. Financial services attorneys are bracing for a potential wave of action and an uptick in activity. The ruling ensures that the CFPB can continue operating without disruption, maintaining its ability to enforce regulations and protect consumers.

Federal Judge Blocks CFPB Rule Limiting Credit Card Late Fees

A federal judge in Texas has blocked the CFPB’s rule capping credit card late fees at $8, citing a 2022 ruling that deemed the CFPB’s funding structure unconstitutional. The banking industry and other business interests requested the injunction, arguing the rule was politically motivated. The CFPB plans to continue defending the rule, highlighting the financial burden on consumers due to delayed implementation. With its funding structure recently deemed constitutional, updates should be coming soon.

Significant Stat: $384 Million: Total financial relief distributed to 191,000 victims of an online lender’s illegal lending practices. Read more

FTC Releases Fiscal Year 2023 Annual Report

The FTC’s Fiscal Year 2023 Annual Report highlights its efforts to protect consumers and promote competition. The report details actions against deceptive practices and against companies for violating children’s online privacy laws. The FTC also targeted anticompetitive mergers and unfair business practices, ensuring a level playing field for small businesses and protecting consumer privacy. The agency emphasized its commitment to staying ahead of technological developments and maintaining robust enforcement policies.

Top UDAAP Compliance Issues Across Marketing Content

This report offers a comprehensive analysis of the top Unfair and Deceptive Acts and Practices (UDAAP) compliance issues across various consumer finance industries. It offers unique insights into the most common UDAAP categories across marketing content, specific terms and phrases, and examples of marketing materials that have been found to be non-compliant for additional context

Report Highlights Consumer Frustrations with Credit Card Rewards Programs

The CFPB released a report highlighting widespread consumer frustrations with credit card rewards programs. Issues include devaluation of rewards, hidden terms, and limited redemption opportunities. Consumers reported problems such as reduced or denied rewards, complex fine print conditions, and customer service issues that hinder redemption. The CFPB aims to address these concerns and protect consumers from deceptive reward program practices.

Respond to Regulatory Updates Fast with PerformLine

When a new regulatory update is issued—whether it’s the Federal Reserve changing interest rates or a new rule requiring updates to disclosures under TILA—banks and consumer finance companies have to move fast to make updates across marketing channels and assets.

PerformLine’s automated technology helps banks quickly identify outdated rates, terms, fees, and other information across the web. It covers both known promotions and discovers unknown any unknown placements with inaccurate information, all within 48 hours.

By leveraging PerformLine, banks can ensure regulatory compliance in a fraction of the time, protect consumers by providing accurate and up-to-date information, and save time and resources that would otherwise be spent on manual updates.

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