Last Week, This Morning

January 5, 2026

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.

New York Governor Kathy Hochul recently signed Senate Bill 8416, the "Fostering Affordability and Integrity Through Reasonable (FAIR) Business Practices Act," which declares unfair, deceptive, or abusive acts or practices in the conduct of any business, trade, or commerce or in the furnishing of any service in the state as unlawful and expands the state attorney general's authority to enforce the UDAAP statute. S.B. 8416 updates New York's primary consumer protection law - Section 349 of the General Business Law - for the first time in 45 years. Currently, the law prohibits only deceptive business acts and practices. The preamble to the new law states that the law "defines unfair and abusive acts and practices expansively to reach conduct that is unfair or abusive but arguably not deceptive."

The new law provides:

• "An act or practice is unfair when it causes or is likely to cause substantial injury which is not reasonably avoidable and is not outweighed by countervailing benefits to consumers or to competition. The term 'substantial injury' as used in this subdivision shall have the same meaning as the term 'substantial injury' in the federal trade commission act ... provided that the substantial injury of a person or persons other than consumers shall also be deemed a 'substantial injury' for purposes of this section."
• "An act or practice is abusive when: (i) it materially interferes with the ability of a person to understand a term or condition of a product or service; or (ii) it takes unreasonable advantage of: (A) a lack of understanding on the part of a person of the material risks, costs, or conditions of a product or service; (B) the inability of a person to protect such person's interests in selecting or using a product or service; or (C) the reasonable reliance by a person on a person engaging in the act or practice to act in the relying person's interests."

Currently, the law limits the AG's power to enforce the statute to acts or practices that are consumer-oriented or that have an impact on the public at large. The new law provides that the AG "may bring such an action or proceeding against any person conducting any business, trade, or commerce or furnishing a service in this state, whether or not the person is without the state. The attorney general may also bring such an action or proceeding against any person within the state conducting any business, trade, or commerce or furnishing a service, whether or not the business, trade, commerce, or service is conducted or furnished without the state. An act or practice made unlawful by this section is actionable by the attorney general regardless of whether or not that act or practice is consumer-oriented."

S.B. 8416 takes effect on February 17, 2026.

Amicus Brief(ly): Industry commentary on New York's FAIR Business Practices Act correctly identifies that the statute expands already-broad enforcement authority in the state AG. No compliant company is trying to get away with UDAAP-y type activity. They know what it looks like, and they try to avoid engaging in it. But this new law increases litigation risks for financial services companies by proscribing conduct that would qualify as a UDAAP under the Dodd-Frank Act's expansive (but detailed) UDAAP definition. The state's General Business Law now becomes an even more powerful consumer and business protection tool in New York, which we can fairly describe as a strong reaction to the ongoing attempts by the federal government to sideline the Consumer Financial Protection Bureau. With new state legislative sessions gearing up, we anticipate that other states will similarly expand their consumer protection laws, whether in scope, enforcement authority, or both.

On December 22, the Federal Trade Commission sent warning letters to 10 companies concerning potential violations of the agency's Trade Regulation Rule on the Use of Consumer Reviews and Testimonials ("Consumer Review Rule"), which was effective on October 21, 2024.

The Consumer Review Rule prohibits certain unfair or deceptive acts or practices involving consumer reviews or testimonials, including, among other things:

• selling or purchasing fake or false consumer reviews or testimonials and celebrity testimonials;
• providing compensation or other incentives conditioned on the writing of consumer reviews expressing a particular sentiment, either positive or negative;
• company insiders, including officers or managers, from writing reviews or testimonials without clearly disclosing their relationships to the company;
• creating a company-controlled review website that falsely purports to provide independent reviews;
• certain review suppression practices; and
• selling or purchasing fake indicators of social media influence, such as followers or views generated by a bot.

The FTC's letters notify the companies of their specific non-compliant conduct and require them to immediately stop such practices and take remedial action. The letters do not reflect a formal determination that the companies have violated the Consumer Review Rule but state that, "[s]hould the FTC receive additional reports of non-compliance following [the letter], it could result in further legal action, including the filing of a federal lawsuit, in which a court could impose civil penalties of up to $53,088 per violation."

Amicus Brief(ly): Speaking of UDAAPs, this update would have been appropriate for the consumer finance version of ESPN's short-lived but entertaining "C'mon Man" segment, not because the FTC committed some stupid yet amusing mistake but because the UDAAPs the FTC is concerned about are pretty obvious no-nos. If a compliance professional hears a pitch for one of these deceptive practices, the professional's natural response could be "C'mon man!" When we read about practices like this in a consent order, we tend to have the same reaction. But it appears that the FTC needed to say all of this again, so it did. There really is nothing new here, but compliance professionals may want to print one of the warning letters and put it on a bulletin board or in a desk drawer as support for the required "No" response when someone in the business wants to engage in the practices described. For added effect, those compliance professionals may want to underline that civil penalties provision. Mistakes on these issues will be expensive.

On December 23, the Consumer Financial Protection Bureau published an advisory opinion in the Federal Register related to the application of the Truth in Lending Act and Regulation Z to earned wage access products. According to the CFPB, the purpose of the opinion, which was effective upon publication, is to resolve uncertainty regarding: (1) the applicability of Reg. Z's definition of "credit" to EWA products that conform to the definition of "Covered EWA," as set forth in the opinion; and (2) the applicability of Reg. Z's definition of "finance charge" to expedited delivery fees and tips to the extent that any EWA products are not Covered EWA and meet the definition of "credit."

The opinion defines "Covered EWA" as including all of the following characteristics:

• the transaction does not exceed the accrued cash value of the wages the worker has earned up to the date and time of the transaction, based upon payroll data and not on worker representations, estimates, or predictions of accrued wages;
• the provider uses a payroll process deduction, which enables the EWA provider to receive accessed amounts without debiting the consumer's regular transaction account after the consumer is paid;
• the provider clearly and conspicuously explains to the worker, in advance of the transaction, that it has no legal or contractual claim or remedy against the worker in the event the payroll process deduction is insufficient to cover the full amount of a transaction and will not, in connection with the transaction, engage in any debt collection activities, place a transaction amount as a debt with or sell it to a third party, or report to a consumer reporting agency; and
• the provider does not directly or indirectly assess the credit risk of individual workers, including by obtaining and reviewing credit reports or credit scores.

The opinion states that Covered EWA is not credit because there is no deferral of debt. To the extent that an EWA product is not Covered EWA and is deemed to be credit, however, associated fees can be finance charges. The opinion provides that, in general, expedited delivery fees are not finance charges imposed directly or indirectly by the creditor if they are triggered by the consumer's opting in for expedited delivery. If, however, the EWA provider makes it too difficult for consumers to select the un-expedited delivery of EWA funds, the expedited delivery fees may be finance charges. The opinion further provides that bona fide tips provided by a consumer for EWA services are not generally finance charges because they are voluntary. However, if the provider makes it too difficult for a consumer to avoid tipping, the tips may be considered finance charges. The opinion states that providers that want clarification about whether their expedited delivery fee and/or tip practices amount to the imposition of a finance charge may request clarification by applying for an Approval under the CFPB's Policy on the Compliance Assistance Sandbox.

Amicus Brief(ly): The CFPB appears to be on a multi-year teeter-totter ride with EWA products. A year ago, the CFPB came out with guidance rescinding its own 2020 guidance that had said that EWA products are generally not credit under TILA. In that 2024 guidance, the CFPB said that the uncertainty it created four years earlier left the industry to speculate about how the Bureau might treat products that do not fit squarely within the narrowly-defined non-credit EWA products described in the initial 2020 guidance. Now, the CFPB is again clarifying that, in its view, EWA products are typically not credit and is also clarifying whether fees or tips are finance charges, which turns on whether the EWA product is credit. The CFPB makes clear that its newest EWA opinion is not stating that EWA products that are not Covered EWA are necessarily credit. That is an open question, so this ride is not over. Don't forget that the states have weighed in on the question about whether EWA products are credit under state laws as well. More states may do so in their 2026 legislative sessions.

On December 23, the Office of the Comptroller of the Currency issued a news release announcing two complementary proposals on national banks' and federal savings associations' real estate lending powers related to escrow accounts.

In the Real Estate Lending Escrow Accounts notice of proposed rulemaking, the OCC proposes to codify longstanding powers of national banks and federal savings associations to establish real estate lending escrow accounts and to exercise flexibility in maintaining those accounts. The proposed rule would:

• amend the OCC's real estate lending and appraisals regulations applicable to national banks and its lending and investment regulations applicable to federal savings associations to add a definition of "escrow account";
• expressly codify national banks' and federal savings associations' power to establish and maintain escrow accounts; and
• clarify that the terms and conditions of escrow accounts, including the investment of escrowed funds, fees assessed for the provision of such accounts, and whether and to what extent interest or other compensation is calculated and paid to customers whose funds are placed in the escrow account, are business decisions to be made by each national bank or federal savings association in its discretion.

In the Preemption Determination: State Interest-on-Escrow Laws notice of proposed rulemaking, the OCC proposes to issue a preemption determination concluding that federal law preempts state laws that eliminate national banks' and federal savings associations' flexibility to decide whether and to what extent to pay interest or other compensation on funds placed in real estate escrow accounts and/or assess fees in connection with those accounts. Specifically, the proposed rule would amend the OCC's real estate lending and appraisals regulations to provide that federal law preempts:

• New York's interest-on-escrow law, which dictates a minimum interest that national banks must pay on funds held in escrow accounts and generally prohibits them from assessing related service charges;
• similar laws in California, Connecticut, Maine, Maryland, Massachusetts, Minnesota, Oregon, Rhode Island, Utah, Vermont, and Wisconsin; and
• laws in other states that have substantively equivalent terms.

Comments on both proposals are due on January 29, 2026.

Amicus Brief(ly): Well, it looks like the OCC is back to asserting sensible preemption positions by regulation, for what that is worth. Readers will recall that, in the aftermath of the Loper-Bright decision from the U.S. Supreme Court, the agency's final rule, which is almost certain to land where industry hopes it will land, is not entitled to court deference. The Supreme Court also gave us the Cantero decision in 2024, where it held that the Second Circuit had not considered whether New York's interest-on-escrow law (the same law cited in the rulemaking description above) "significantly interfered" with a national bank's power to create and fund escrow accounts and returned the case to the Second Circuit to apply the Barnett Bank preemption standard that is codified in the Dodd-Frank Act. While that case is pending, the OCC is making its preemption position clear, as it has done in prior rulemakings. And while we would welcome a reliable outcome saying that national banks can ignore state laws requiring interest on escrow accounts, it remains true (and is inconvenient) that the statutory standard has not changed - the National Bank Act remains unamended, so there is no guarantee that this rulemaking will have the desired impact. We will see how it shakes out, but we recommend caution for banks seeking to set state escrow laws aside based on the current wording of the NBA.

The Illinois Department of Financial and Professional Regulation recently added two new sections to its rules implementing the state's Consumer Legal Funding Act.

The first new section, Section 170.210, imposes requirements relating to refinancing consumer legal funding. The CLFA provides that consumer legal funding may be refinanced as authorized by rule. Section 170.210 provides, among other things, that:

• no funding may be refinanced more than 24 months after an original funding;
• the refinancing contract must include certain disclosures required by the CLFA and include new disclosures comparing the maximum amount the consumer could owe if the consumer does not refinance versus the maximum amount the consumer could owe if the consumer does refinance;
• a refinance funding may only be provided by a consumer legal funding company that does not have any interest in the original funding;
• any refinance funding must comply with all the requirements in the CLFA applicable to original fundings; and
• a consumer may not owe an aggregate principal amount in excess of $100,000 at any time for consumer legal fundings.

The second adopted section, Section 170.220, sets forth the calculation of the pro rata fee assessment. The CLFA provides that each licensee shall pay its pro rata share of the cost for administration of the Act and that the calculation method must be established by rule. Section 170.220 provides that "[e]ach licensee's pro rata share shall be the percentage that the total dollar amount of consumer legal fundings originated in Illinois during the preceding calendar year by the licensee bears to the total dollar amount of consumer legal fundings originated in Illinois during the preceding calendar year by all licensees."

The final rules were effective December 3, 2025.

Amicus Brief(ly): We always appreciate a regulatory clarification, which the Illinois DFPR gives us in this rulemaking. Now, legal funding providers in Illinois know the circumstances under which they may, and may not, refinance existing legal funding. Those clarifications are helpful to providers. The potentially unwelcome news is that licensees owe an annual assessment that requires them to support administration of the statute as a function of how they performed in the Illinois marketplace the year before. California took a similar approach in the administration of its debt buyer law last year. While the state focused on the fact that about 60% of licensees would only pay $250 or less in the first annual assessment, the industry focused on the several licensees whose fees would exceed $500,000 (California needs the fees to cover the full $10 million it costs to administer the statute). While it is not clear that fees in Illinois will reach California levels, it does appear that success will now come at a price in Illinois.

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¹ For the unfamiliar, an “Amicus Brief” is a legal brief submitted by an amicus curiae (friend of the court) in a case where the person or organization (the “friend”) submitting the brief is not a party to the case, but is allowed by the court to file the brief to share information or expertise that bears on the issues in the case.