October 13, 2025
Below you will find several key developments in the financial services industry, including related developments in information privacy and data security, from the past week. We add an "Amicus Brief(ly)1" comment to each item, where we briefly (see what we did there?) note for friends (and again?) of CounselorLibrary the important takeaways from the developments outlined in the email. Our legal reporters - CARLAW, HouseLaw, InstallmentLaw, PrivacyLaw, and BizFinLaw - provide more comprehensive, real-time updates of federal and state laws, regulations, litigation, and other industry items of interest. For a personal guided tour and free trial of any of these legal reporters, please contact Michael Willer at 614-855-0505 or mwiller@counselorlibrary.com.
On October 6, California Governor Gavin Newsom signed Senate Bill 766 - the California Combating Auto Retail Scams (CARS) Act - which purports to help make the car-buying process more transparent and strengthen consumer protection laws, including by preventing car retailers from tacking on add-on services and other features that do not benefit car buyers or lessees.
The Act applies to California licensed motor vehicle dealers and others that satisfy the definition of a "dealer" under California's Vehicle Code. The Act prohibits a broad swath of dealer conduct, which includes making any misrepresentations regarding material information about the costs or terms of purchasing, financing, or leasing a vehicle, including any cost, limitation, benefit, or any other aspect of an add-on product or service. The Act also prohibits dealers from charging for an add-on product or service if the buyer or lessee would not benefit from the product or service and provides a list of examples, which include oil changes for electric vehicles and catalytic converter markings for a vehicle that does not have a catalytic converter.
The Act mandates a "clear and conspicuous" standard for certain disclosures such as advertisements related to the sale or financing of vehicles and written communications with a consumer regarding a specific vehicle prior to and during negotiations, including written comparisons between payment options during the negotiations, and mandates disclosure translation requirements with respect to transactions negotiated primarily in a foreign language.
The Act further provides buyers and lessees a new 3-day right to cancel their purchase or lease of a used vehicle having a retail price equal to or less than $50,000 and institutes new 2-year record retention requirements, including requiring dealers to create and retain all records necessary to demonstrate compliance with the Act.
The Act becomes operative on October 1, 2026.
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The Kansas Office of the State Bank Commissioner, Consumer and Mortgage Lending Division, recently published a final regulation amending Section 75-6-35 of the Kansas Administrative Regulations concerning net worth requirements for applicants for a supervised loan license and supervised loan licensees.
Prior to the amendments, Section 75-6-35 required a specified net worth for supervised loan license applicants that provide loans secured by real property or contracts for deed. Loans secured by real property moved from the Kansas Uniform Consumer Credit Code to the Kansas Mortgage Business Act on January 1, 2025. According to the OSBC's summary of the amended regulation, "[i]n lieu of repealing this no-longer-applicable regulation, we have decided to modify it to apply to UCCC supervised lenders that remain regulated by the UCCC. Over the past couple of years, all lenders have faced financial stress due to the higher interest rates resulting in less loan origination. Amending this regulation will help our agency identify struggling supervised lenders and allow us to take actions sooner to ensure Kansas residents are not harmed by a lender that is facing financial difficulties. [Section] 16a-2-302 [of the UCCC] already requires any applicant to provide evidence that they will maintain satisfactory minimum net worth as determined by the administrator, but the statute does not state what the minimum net worth should be or specify when they shall provide the proof of continuing compliance. The amendments to K.A.R. 75-6-35 will fix both issues."
K.A.R. 75-6-35 now requires each supervised loan license applicant and licensee to maintain a "positive net worth," showing that "the aggregate assets, excluding all intangible assets and receivables from related entities, exceed[] liabilities, as determined in accordance with United States generally accepted accounting principles. The administrator may issue an exception to this positive net worth requirement." The amendments remove the requirement that supervised loan licensees that make loans secured by an interest in real property or contracts for deed maintain a minimum net worth of $250,000.
The final regulation is effective on October 17, 2025.
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On October 6, California Governor Gavin Newsom signed Senate Bill 825, which allows the California Department of Financial Protection and Innovation to bring unfair, deceptive, or abusive acts or practices enforcement actions under the California Consumer Financial Protection Law against providers of consumer financial products or services that are currently exempt from certain provisions of the CCFPL when they are acting within the scope of their license issued by the DFPI under another one of the state's financial services laws.
The CCFPL requires the DFPI to regulate consumer financial products or services under California consumer financial laws. The CCFPL makes it unlawful for a covered person or service provider to engage in certain UDAAPs with respect to consumer financial products or services. Section 90002 of the CCFPL exempts from its provisions a person or employee of that person to the extent that person or employee is acting under the authority of certain licenses, certificates, or charters issued by the DFPI, including licensed escrow agents, finance lenders and brokers, and mortgage lenders, servicers, and originators. S.B. 825 amends Section 90002 to provide that nothing in the CCFPL exemption will be deemed to prevent the DFPI from using the authority provided by the CCFPL to enforce prohibitions on UDAAPs.
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On October 6, California Governor Gavin Newsom signed a new law aimed at curbing the use of so-called "infinite arbitration clauses." Senate Bill 82 adds language to the California Civil Code prohibiting dispute resolution terms and conditions in a consumer use agreement from applying beyond the use, payment, or provision of the good, service, money, or credit provided by that consumer use agreement. "Consumer use agreement" includes any contract that allows a consumer to use, receive, or otherwise enjoy a good, service, money, or credit. Under the new law, dispute resolution terms are not allowed to affect a consumer's rights that are unrelated to the contract containing those terms. Any waiver of the protections outlined in S.B. 82 is considered contrary to public policy and void.
S.B. 82 will be effective on January 1, 2026.
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On October 7, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation issued a joint notice of proposed rulemaking that would define the term "unsafe or unsound practice" for purposes of Section 8 of the Federal Deposit Insurance Act, which authorizes the agencies to take enforcement actions against supervised institutions that have engaged in an "unsafe or unsound practice." The agencies propose implementing a definition of "unsafe and unsound practice" that "would focus on material risks to the financial condition of an institution and would generally require that an imprudent practice, act, or failure to act, if continued, would be likely to materially harm the institution's financial condition."
The proposed rule would also revise the supervisory framework by, among other things, establishing uniform standards for when and how the agencies may communicate matters requiring attention ("MRA") as part of the supervision and examination process. The proposal also clarifies that the agencies may communicate other nonbinding suggestions to institutions orally or in writing to enhance an institution's policies, practices, condition, or operations as long as the communication is not, and is not treated by the agency in a manner similar to, an MRA.
The agencies are taking this action because they "believe it is important to promote greater clarity and certainty regarding certain enforcement and supervision standards by defining them by regulation. Moreover, the agencies believe it is critical that examiners and institutions prioritize material financial risks over concerns related to policies, process, documentation, and other nonfinancial risks and that their enforcement and supervision standards further that prioritization."
Comments are due within 60 days after the proposed rule is published in the Federal Register, which is expected shortly.
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The U.S. Court of Appeals for the Eleventh Circuit recently affirmed the dismissal of a consumer's federal Fair Debt Collection Practices Act claims against a debt collector, where the consumer's allegations of wasted time and psychological injuries resulting from his efforts to resolve a billing error were not sufficiently concrete for purposes of Article III standing.
According to the facts of the case, a consumer was billed by an urgent care center for services he did not receive. The urgent care center hired a debt collector to collect the purported debt, and the debt collector sent the consumer several collection letters. The consumer ultimately resolved the billing error with the urgent care center, and the charge was removed from his account. However, a couple months later, the consumer sued the debt collector and the urgent care center for violating the FDCPA and the Florida Consumer Collection Practices Act by attempting to collect the purported debt. The trial court dismissed the consumer's complaint without prejudice for lack of Article III standing.
On appeal, the Eleventh Circuit noted that, in order to establish Article III standing, a plaintiff must sufficiently allege that he suffered an injury in fact that is concrete, particularized, and actual or imminent, rather than conjectural or hypothetical. Intangible harms can be concrete if they are injuries with a close relationship to harms traditionally recognized as providing a basis for lawsuits in American courts. The consumer alleged that his attempts to resolve the billing error resulted in "wasted time," including the time he spent consulting with an attorney about his legal rights, as well as "frustration, stress, anxiety, surprise, shock, and embarrassment." He also alleged that he suffered from the threat that the purported debt would show up on his credit report.
The Eleventh Circuit agreed with the trial court that these alleged injuries were not sufficient to establish Article III standing. First, the appellate court concluded that the consumer's allegation of "wasted time" dealing with the billing error was not a sufficiently concrete injury because the mere existence of inaccurate information, absent dissemination, is not closely related to an injury that our legal tradition recognizes as providing a basis for a lawsuit. The consumer did not allege that he spent any money disputing the debt, that he responded to the collection letters by making a payment or promising to do so, or that any reporting of the purported debt harmed his credit score or financial prospects. Next, the Eleventh Circuit concluded that the consumer's allegations of "frustration, stress, anxiety, surprise, shock, and embarrassment" as a result of his time spent disputing the purported debt were insufficient to establish a concrete injury, finding that the alleged psychological injuries were no more than conjectural or hypothetical because the consumer had not identified any actual harm that resulted from the collection attempts. Finally, the Eleventh Circuit concluded that the threat that the purported debt would end up on the consumer's credit report was not a sufficiently concrete harm because allegations of possible future injury are inadequate for standing purposes and there was no indication that the reporting of the purported debt to third parties was imminent or definite.
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