The Roundup: CFPB Exams Find Multiple Issues, Regulatory Obligations When Using AI, and Q2 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 exams find loan servicing failures, illegal debt collection practices, and issues with medical payment products, the New York BNPL bill is dead (for now), election season triggers additional FCC scrutiny on AI robocalls, supervisory highlights focus on servicing and collection of consumer debt, and FINRA reminds members of regulatory obligations when using generative AI and LLMs.
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CFPB Exams Find Loan Servicing Failures, Illegal Debt Collection Practices, and Issues with Medical Payment Products
The CFPB released a report highlighting multiple violations found during recent examinations of financial services companies. Key issues include mishandling of auto and student loan servicing, illegal debt collection practices, and deceptive promotion of medical payment products. The report also addresses unfair practices related to deposit and prepaid account freezes and lack of access to account information.
The New York BNPL Bill is Dead, For Now
The legislation aimed to establish a licensing requirement for BNPL providers, limit charges on BNPL products, and mandate ability-to-repay analyses. It also includes prohibitions against misleading advertisements and unfair or excessive fees, and requirements for clear disclosure of terms and costs. Although the bill will not be passed in 2024, there is speculation that it could go through next year.
Significant Stat: $7 Million: Total financial compensation a gig work company is being ordered to pay back for deceiving consumers about pay when marketing its business opportunity. Read more
AI Robocalls: Election Season Triggers Additional FCC Scrutiny
With the 2024 election season approaching, the FCC has increased its scrutiny of AI-driven robocalls and texts, particularly those using deepfake technology. Nine telecom companies have been asked to outline measures to prevent these fraudulent calls, ensure compliance with STIR/SHAKEN protocols, and verify customer identities. This initiative is part of the FCC’s broader efforts to combat AI-enabled impersonation scams and protect consumers from deceptive practices during the election period.
Supervisory Highlights: Servicing and Collection of Consumer Debt
The CFPB’s Summer 2024 Supervisory Highlights report uncovers various legal violations and consumer harms in auto and student loan servicing, debt collection, and credit card account management, focusing on medical credit cards. The report, covering examinations from April to December 2023, also identifies issues in deposit and prepaid accounts. It emphasizes ongoing supervisory efforts to ensure compliance and protect consumers from unlawful financial practices.
FINRA Reminds Members of Regulatory Obligations When Using Generative AI and LLMs
FINRA issued Regulatory Notice 24-09 reminding member firms that their regulatory obligations apply to generative AI and large language models, just as with any other technology. The notice highlights the need for firms to have supervisory systems, policies, and procedures to ensure compliance with FINRA rules. This includes addressing technology governance, data privacy, and model risk management when deploying AI tools in their operations.
Marketing Compliance and Enforcement Actions for Q2 2024
This report focuses on the latest enforcement and compliance trends that impacted consumer finance companies in the second quarter of 2024.
Powered by in-depth compliance monitoring and industry analysis, this review provides essential insights to help businesses effectively navigate the ever-evolving regulatory landscape.
