Last Week, This Morning

June 8, 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.

On May 28, the Maine Supreme Judicial Court issued an opinion in Wilmington Savings Fund Society, FSB, as Trustee for Brougham Fund I Trust v. Cortellino, a mortgage foreclosure case demonstrating that a mortgagee must strictly comply with the notice of right to cure requirements under 14 M.R.S. § 6111 in order to obtain a foreclosure judgment in Maine. The notice that the mortgagee sent to the mortgagors provided an itemization of monthly payments due, late charges, and other fees (bankruptcy fees and litigation costs). Not only did the total of the monthly payments due as set forth in the notice exceed, by over $58,000, the sum of the itemized monthly payments due, but the total amount due to cure the default as set forth in the notice exceeded the sum of the itemized monthly payments, late charges, and other fees by over $120,000. Therefore, the state high court vacated the trial court's judgment of foreclosure.

The high court wrote: "Because the notice is replete with numerical inconsistences and internal mathematical errors, it was materially insufficient to put the Cortellinos on notice of what was required to cure the default. Consequently, the court erred in concluding that the notice met the requirements of section 6111."

Amicus Brief(ly): What a powerful reminder of the importance of accuracy in customer communications. The statutory right to cure notice is typically a simple notice that state law requires of a creditor (or its servicer) before accelerating a consumer's debt or taking other collection measures like foreclosure. Although a right to cure notice is a straightforward notice, it includes numbers that let the consumer know how much she or he needs to pay to cure the default. The programming required to populate numbers in a right to cure notice on an account-by-account basis needs to be tested and audited to ensure that the system prepares the notice correctly. In this case, the notice had some pretty glaring math mistakes in it, and that ended up costing the mortgagee its foreclosure. The court found that sending that notice with the errors in it was tantamount to not giving the notice at all. The risk of ending up on the wrong side of a decision like this warrants some extra attention to the testing and audit function of a servicing program, giving a company a chance to catch mistakes like the one in this case before they happen.

On May 27, Connecticut Governor Ned Lamont signed House Bill 5208, which includes a revision to the state's requirements for disclosures by mortgage loan creditors of noncoverage for flood loss, which were set to become effective on July 1.

The new law alters the time within which each creditor must notify the applicant for a residential mortgage loan of less than $1 million, in writing, that: (1) standard homeowners insurance policies do not cover flood damage and related losses; (2) flood damage to property may occur regardless of whether the real property is located in a designated flood zone; and (3) the applicant may wish to consult a licensed insurance producer or surplus lines broker concerning the availability and benefits of obtaining flood insurance. The new law provides that the creditor must provide the notice to the applicant not later than: (A) the date of closing if the mortgage loan is an open-end line of credit or home equity loan, or (B) 10 days prior to the date of closing if the mortgage loan is not an open-end line of credit or home equity loan. The creditor must maintain a copy of the notice, which must be written in plain language and signed and dated by the applicant to acknowledge receipt, with the applicant's mortgage records.

Amicus Brief(ly): If you remember the severe flooding in Connecticut in 2024, you'll understand why the state passed this law requiring notice to consumers about the potential for losses related to floods and recommending that consumers consider buying flood insurance. This bill passed both houses of the Connecticut legislature on a bipartisan basis with just four "no" votes, indicating that the legislators appreciated the importance of the new disclosure. While it means that lenders and their closing agents will need a new notice in the closing package, we hope it also means that Connecticut homeowners will get insurance against what appears to be an increasing flood risk.

In a recent opinion, the U.S. Court of Appeals for the Third Circuit concluded that a technology company that provides voice authentication services for financial institution customers is exempt from the Illinois Biometric Information Privacy Act as a financial institution regulated by the Gramm-Leach-Bliley Act. Several Illinois residents sued Amazon Web Services, Inc., after their calls to John Hancock to discuss their retirement accounts were routed for processing through AWS, which in turn employed technology from Pindrop Security, Inc., to authenticate the callers using their voiceprints. The plaintiffs claimed that their biometric information was collected without proper notice and consent, in violation of the BIPA.

The BIPA exempts "a financial institution or an affiliate of a financial institution that is subject to Title V of the federal Gramm-Leach-Bliley Act of 1999 and the rules promulgated thereunder." The BIPA incorporates the GLBA definition of "financial institution" as "any institution the business of which is engaging in financial activities as described in section 1843(k) of title 12." Section 1843(k), in turn, includes any activity the Federal Reserve Board has determined to be "so closely related to banking ... as to be a proper incident thereto," and the FRB has determined by regulation that "authenticating the identity of persons conducting financial and nonfinancial transactions" is such an activity. Because the plaintiffs conceded that Pindrop provides authentication services for John Hancock's customers conducting financial transactions, the court held that Pindrop fell within the BIPA's incorporated definition of "financial institution" and was therefore exempt from the BIPA.

Amicus Brief(ly): The court's analysis implies that the BIPA includes a wholesale, entity-level exemption for authentication service providers like Pindrop that serve some, but not exclusively, financial institution clients. Identity verification providers should not, however, read this decision as conferring categorical BIPA immunity on them if they work with financial institutions. The court derived "financial institution" status for providers from an FRB regulation defining activities permissible for bank holding companies rather than considering the threshold question of which entities qualify as financial institutions in the first instance, and the court never addressed whether such vendors serving non-financial institution clients could fall within the BIPA exemption. Providers should review the opinion carefully and check the BIPA definitions and licensing triggers to decide whether it applies to them or not.

On June 3, New York Attorney General Letitia James announced that her office obtained a settlement with a captive finance company, resolving allegations that the company learned of and profited from unlawful and unauthorized fees that dealerships charged consumers who opted to purchase their leased vehicles at the end of the lease term. Fifteen New York dealerships had already settled the lease overcharge claims with the AG in 2024 and 2025.

As we reported in connection with one of these settlements on May 12, 2025, the AG claimed that these allegedly unlawful fees were not disclosed in consumers' lease agreements. The AG also alleged that the dealerships inflated the vehicles' prices on the invoices given to consumers at the time they purchased their leased vehicles. The AG claimed that the dealerships violated Regulation M and the New York State Motor Vehicle Retail Leasing Act by charging lease-purchase consumers more than the price stated in their lease agreements. The AG also claimed that the dealerships engaged in false advertising and deceptive practices in violation of the state's General Business Law, as well as fraud in violation of the state's Executive Law, by misrepresenting the price at which consumers could purchase their leased vehicles at the end of the lease term, failing to honor the purchase price stated in the lease, and concealing fees and the accurate price information for the vehicles.

According to the AG's press release announcing the recent settlement with the finance company, the 15 dealerships that had previously settled the AG's claims against them have already paid $1 million in penalties for overcharging on end-of-lease buyouts and refunded more than $4.5 million to over 3,100 consumers who paid more to buy their leased vehicles than they were promised. Under the terms of the recent settlement, the finance company is required to deliver restitution to any New Yorkers who were overcharged at 30 additional dealerships in New York. In addition, consumers who obtained financing from the finance company to buy their leased vehicles at wrongfully inflated prices will be refunded the additional interest they paid on those higher prices. The settlement also requires the finance company to make changes to its lease terms and business processes to prevent these overcharges from occurring in the future.

Amicus Brief(ly): The New York AG is tenacious. But most regulators with enforcement powers (and certainly plaintiffs' attorneys) are, especially when they identify what looks like a pattern of noncompliance that involves multiple companies. Here, the AG is focused on compliance with the state leasing laws that limit the charges lessors can impose on lessees at the end of a lease term in connection with the exercise of a purchase option in the lease. The AG, like most state AGs and the Federal Trade Commission, is also focused on vehicle price advertisements in this settlement - and that ground has been well-tread over the past few years based on the number of public settlements between regulators and vehicle dealers. The latter is a clear concern for vehicle dealers who should ensure that their price advertisements comply with specific regulatory requirements and that they are not susceptible to claims that those advertisements are misleading in any way.

On June 4, U.S. Senators Richard Blumenthal (D-CT) and Elizabeth Warren (D-MA) and U.S. Representative Hank Johnson (D-GA) sent a letter to the chief executive officer of Bank of America, calling on the bank to immediately remove an arbitration provision that it recently added to its Online Services Agreement. The letter noted that this arbitration provision addition stands in contrast to the bank's decision in 2009 to remove an arbitration provision from its credit card agreements. According to the letter, customers have 60 days to opt out of the arbitration provision, which applies to all disputes as of May 18, 2026.

Amicus Brief(ly): The senators' and representative's letter lays it on a little thick, denigrating arbitration generally as a system "rigged" against consumers while simultaneously making class actions sound like a useful tool for consumer dispute resolution (it is not). We are willing to bet that there are some arbitrators out there who disagree with the legislators' assessment of the nature of arbitration. Letters like these serve pretty limited, largely political, purposes - they do not have the force of law, and they do not necessarily indicate that legislation is coming. Leaving that aside, a lot has happened since 2009, and we doubt that the bank arrived at its decision to include arbitration as an alternative dispute resolution mechanism in connection with online banking services lightly. Banks do not typically do that, so we anticipate that the bank will respond to the letter explaining its decision and declining to change its mind. We will see.

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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.