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.

January 2020

California Court Finds Business Could Not Verify Consumer's Electronic Signature Despite DocuSign Markers

By Chris Capurso

"It's just like in algebra class!" Admittedly, this isn't the type of statement that should draw readers towards any type of non-math writing. However, it's the first thought that came to mind when I read a recent case out of California concerning the validity of an electronic signature. The agreement included several pieces of information meant to show that the signature was DocuSign-verified. And yet, it wasn't enough to sufficiently prove that the consumer had signed the agreement. After reading the court's reasoning, I immediately thought back to high school algebra class, where you could have the correct answer but still not receive credit if you didn't show your work. In Fabian v. Renovate America, Inc., Renovate had the right answer: an electronic signature seemingly verified by DocuSign. However, Renovate did not show how they got to that "right answer." As a result, the court gave Renovate a failing grade. article continued

California Data Broker List Comes Online

By Webb McArthur

As 2019 has become 2020, many businesses-including financial institutions-are rightly focused on setting up their CCPA compliance structures. But those businesses also should consider a separate yet related law passed by the California Legislature last year, one requiring that all data brokers register with the state. Cal. Civ. Code ยง 1798.99.80 et seq., requires all data brokers to, "on or before January 31 following each year in which a business meets the definition of 'data broker'" register with the California Attorney General, paying a registration fee of $360 and providing specified information about the business and its data collection practices. The California Attorney General has taken the position that businesses who qualified as data brokers as of the effective date of the California Consumer Privacy Act ("CCPA") - January 1, 2020 - must register by January 31, 2020. The law provides that business failing to register as required may face a civil penalty of $100 per day. article continued

Bankruptcy Court Grants Relief from Stay When Debtors Fail to Redeem Pledged Collateral in Title Pawn Transactions

By Charles F. Dodge

Secured creditors must be ever mindful of their rights in consumer bankruptcy cases. Details that might seem technical or insignificant can mean the difference between a creditor's obligation being secured and being unsecured, having a claim denied or having collateral released from the bankruptcy estate into the hands of the creditor, allowing the creditor to mitigate its financial loss. In a recent case from the U.S. Bankruptcy Court for the Middle District of Alabama, a secured creditor was able to protect its interest in collateral in two bankruptcy cases where its title pawn transaction customers failed to redeem their pledged vehicles during the required time period. As a result, the secured creditor was able to obtain relief from the automatic stay and exercise rights against the collateral, resulting in a better financial result for the creditor. article continued

Agreeing to Arbitration

By Nicole F. Munro

Of the state law defenses, unconscionability is the most often used and most effective legal justification for invalidating arbitration agreements. As a creature of state common law and state versions of the Uniform Commercial Code, its specific application may vary from state to state. However, the basic elements of unconscionability are common to all states and can effectively be discussed in general. The doctrine consists of two elements - procedural and substantive unconscionability. For a court to find a contract term unconscionable and thus unenforceable, a party must show that both elements are present in the transaction. The procedural element addresses how the contract was negotiated and focuses on "oppression" and "surprise" in the negotiating process with regard to the suspect provision. The substantive element focuses on the actual terms of the agreement, emphasizing terms that are overly harsh or one-sided. article continued

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