Today's Trends in Credit Regulation

Welcome to Hudson Cook Insights - a collection of articles written each month by the attorneys of Hudson Cook, LLP, in an effort to keep their clients and other compliance professionals informed about current trends and developments in consumer credit finance that will affect the way they do business.

November 2018

Periodic Rate Re-Evaluations for Credit Card Accounts: Making a List, Checking It Twice (Every Year)

By Eric D. Mulligan

In September, the Bureau of Consumer Financial Protection released a report of its supervisory highlights from the summer. The report summarizes the Bureau's observations from its examinations of auto loan servicers, credit card companies, debt collectors, mortgage servicers, payday lenders, and small business lenders. While the report does not add or change legal requirements, it does signal where the Bureau is focusing its attention. As a result, a company subject to Bureau supervision would be wise to review its compliance procedures for any matter that appears in the report. For credit card companies, the Bureau's latest report highlighted one area for improvement: periodic re-evaluation of rate increases. article continued

Attacks on Payday Lending: Ballot Initiatives, Legislation, and Attorney General Enforcement

By Catharine Andricos and Dailey Wilson

On October 26, 2018, the Bureau of Consumer Financial Protection issued a public statement announcing that it intends to issue proposed rules in January 2019 reconsidering its Payday, Vehicle Title, and Certain High-Cost Installment Loans rulemaking. This reconsideration suggests a shift in the Bureau's attitude towards short-term lending, and lenders may be more hopeful about the future of the industry. But caution is still prudent, as recent state activity demonstrates that the fight against payday lending is far from over, with states taking aim at the industry through ballot initiatives, legislation, and attorney general actions. article continued

Voluntary Protection Product Refunds: The Buck Stops Where?

By Catharine S. Andricos and L. Jean Noonan

Here's a common situation: A consumer has financed a GAP policy and pays off the financing ahead of schedule. Is the consumer entitled to a refund? If so, how much? Who must make the refund? Is it the consumer's responsibility to ask for a refund, or must the refund be made automatically? As consumer financial services compliance attorneys, we regularly receive questions from our dealer and automobile finance company clients regarding their obligations to provide refunds of unearned fees for GAP, vehicle service contracts, and other voluntary protection products. Think the answer is simple? Guess again. article continued

Implications of New York Starter Interrupt Device Law Remain Unclear

By Thomas P. Quinn, Jr., and Nicole F. Munro

With little fanfare but big consequences, New York recently passed Senate Bill 2484 to address the use of starter interrupt devices in New York. The bill, now codified as Chapter 312 of the Laws of 2018, amends the state's debt collection laws and imposes a single substantive requirement: a "principal creditor" (defined to be the party to whom a repayment obligation is owed) must send a notice to a consumer to inform the consumer that his/her vehicle may be remotely disabled. Because the new law focuses on the act of remotely disabling the vehicle, it does not appear to touch GPS tracking systems without this ability. article continued

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