Last Week, This Morning

July 27, 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.

After an individual defaulted on his credit card debt, the credit card issuer sold his account to a debt buyer. After numerous assignments, the debt was eventually sold to a limited liability company. None of the debt buyers was licensed in New Jersey as a consumer lender or a sales finance company. The LLC sued the individual to collect the debt, and a default judgment was entered against him. The individual then filed a class action against the LLC and the other debt buyers, claiming that they were not properly licensed to take assignment of consumer debt, as required by the New Jersey Consumer Finance Licensing Act. The individual sought a declaratory judgment voiding the loan contract and an injunction against future attempts to collect any amounts owed. The trial court dismissed the complaint, finding that the CFLA does not confer an implied private right of action.

The appellate court affirmed, as did the Supreme Court of New Jersey in this opinion. The individual argued that the CFLA contains an implied private right of action because "Subsection 33(b) 'provides that a consumer account acquired by an entity who is not licensed under the Act "shall be void."'" The individual additionally argued that predecessors to the CFLA - the Small Loan Law, the Small Loan Act, and the Consumer Loan Act - allowed borrowers to void loan contracts and recover amounts paid in connection with the loan. The New Jersey high court disagreed with the individual, finding no evidence that the legislature intended to confer a private right of action under the CFLA. Section 33(b) provides that a violation is a crime in the fourth degree, and the high court noted that New Jersey courts generally do not allow a consumer to sue for an injunction to enforce a criminal law. Moreover, the high court found that the SLL, SLA, and CLA expressly permitted a borrower to "recover from the lender" in the event of a violation, language that the CFLA does not contain, and the ability to void a loan contract under those laws was based on a consumer's ability to recover from the lender.

Amicus Brief(ly): This New Jersey decision is a really big deal for debt buyers and other assignees of consumer loans. Leaving aside the question of whether New Jersey's CFLA requires a license to buy and hold certain consumer-purpose loans, the high court in New Jersey confirmed that the remedy for unlicensed debt buying does not lie in a private right of action where consumers can sue and void purchased loans. It is no great prize to find that the potential liability for unlicensed debt buying is criminal prosecution, but the debt buyer defendants in this case "emphatically" contest the idea that they need licenses. Without the looming threat of consumers suing to void their loans and destroying the value of the debt buyers' New Jersey inventories, those debt buyers can fight the licensing fight elsewhere.

The Intermediate Court of Appeals of Hawaii recently held that a home equity line of credit was not a negotiable instrument under Hawaii law because it did not contain an unconditional promise to pay a fixed amount of money. Because the HELOC was not a negotiable instrument, it was not transferable by endorsement, and, therefore, the bank that had been assigned the mortgage securing the HELOC did not have standing to foreclose merely by showing that it possessed the HELOC endorsed in blank.

The facts of the case reveal that a homeowner obtained a HELOC from a lender secured by a second mortgage on his real property. The HELOC was endorsed in blank after two prior endorsements. The mortgage was assigned to a bank without reference to the HELOC. The bank filed a foreclosure complaint against the homeowner. The trial court granted summary judgment in favor of the bank. The homeowner appealed, arguing that because the HELOC was not a negotiable instrument as defined by Hawaii Revised Statutes § 490:3-104 and, therefore, not transferable by endorsement, the bank did not have standing to foreclose.

The Hawaii appellate court vacated the judgment of foreclosure. According to the appellate court, "[w]here the debt obligation is a negotiable instrument, a person entitled to enforce it includes the 'holder,' defined in relevant part [under Section 490:1-201(b)] as '[t]he person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession[.]' To be 'negotiable' [under Section 490:3-104,] an instrument must, among other things, contain 'an unconditional promise or order to pay a fixed amount of money, with or without interest[.]'" The appellate court found that the HELOC was not a negotiable instrument under Section 490:3-104 because it did not contain an unconditional promise to pay "a fixed amount of money." According to the appellate court, "[b]ecause the HELOC was not a negotiable instrument, [the bank] could not enforce it under [Section 490:3-301] as a 'holder,' based on possession of the HELOC endorsed in blank. Enforcement rights in a nonnegotiable instrument such as the HELOC may be transferred by written assignment ...[, but the bank did not establish any written assignment of the HELOC itself as the mortgage assignment to the bank assigned only the mortgage without referencing the HELOC]. This means that the mere possession of the instrument endorsed in blank does not necessarily indicate that the possessor has authority to enforce it. Accordingly, [the bank] did not establish its standing to enforce the HELOC merely by showing it possessed the HELOC, endorsed in blank, at the time it filed the foreclosure complaint."

Amicus Brief(ly): While this decision will be disappointing to HELOC holders, it appears that the Hawaii court got it right. First, the Uniform Commercial Code definition of "negotiable instrument" is substantively the same as it has been for decades - a document is not a "negotiable instrument" if it does not include an unconditional promise to pay a fixed amount of money. Given the nature of a HELOC that (1) does not compel the borrower to take an advance and (2) allows the borrower to pay down the HELOC's principal balance and borrow it again (during the draw period), a HELOC does not involve an unconditional promise to pay a "fixed amount of money" and cannot be a negotiable instrument. The second, related issue is the assignment itself. This case underscores the importance of a clear chain of title, not just to the security instrument but to the credit agreement, so that it is clear at foreclosure that the holder has standing to enforce the credit agreement and the security interest.

Effective July 27, 2026, the Oklahoma New Motor Vehicle Commission amended motor vehicle advertising rules to address false and misleading ways of advertising.

In addition to definitional changes, the amendments require all advertising to "be in plain language, with disclosures or material facts that are non-deceptive. By way of example and not limitation, the following are in violation of this rule: (1) [s]tatements that mislead the consumer either by directly communicating a misleading message or that cause [a] reasonable inference which is misleading; (2) [d]isclaimers and disclosures that contradict, confuse, or unreasonably limit a principal message of an advertisement. Disclaimers and disclosures cannot include qualifications, limitations[,] or conditions upon the accurate representation of the full and total selling price available to any retail buyer; (3) [s]tatements susceptible to both a misleading and a truthful interpretation; (4) [d]eceptive statements, even though the true facts are subsequently made known to the consumer; or (5) [u]sing footnotes, asterisks, or various subscripted symbols which confuse, contradict, materially modify, or unreasonably limit the material terms of an advertisement."

The amendments also require that the Manufacturer's Suggested Retail Price be clearly identified on a vehicle's Monroney Label, not altered by the dealer, and not referred to by any other term.

The amendments concerning dealer price advertising require the dealer to include in the advertised selling price of a new vehicle any "dealer add-ons featured in the dealership addendum." "Dealer discounts and rebates, available to every buyer, cannot be combined as one" in the advertised price of a vehicle, and, with respect to rebates only available to select consumers, "[c]onditional or selective rebates cannot be included in the most conspicuous selling price." Finally, with respect to dealer price advertising, "[o]nly the most conspicuous price or payment of a new motor vehicle, the full and total selling price for which the dealer will sell the vehicle, [must] be displayed on third-party listing websites."

The amendments concerning vehicle lease advertising require the term "lease" to appear with the advertised payment. The amendments also provide that if a vehicle lease advertisement contains: (1) the amount of any payment; or (2) a statement of any capitalized cost reduction or other payment required prior to or at the consummation or delivery, then the following disclosures must be made: "(A) "[t]hat the advertised transaction is a lease; (B) [t]he total amount due prior to or at consummation or delivery; (C) [t]he number, amounts[,] and due dates or periods of scheduled payments; (D) [a] statement of whether or not a security deposit is required; and (E) [a] statement that an extra charge may be imposed at the end of the lease term where the lessee's liability, if any, is based on the difference between the residual value of the leased property and its realized value at the end of the lease term."

The amendments concerning "closed ended credit term" advertising require those advertisements to be in compliance with Regulation Z. The amendments also provide that if an advertisement promoting a closed ended credit sale for a vehicle purchase contains: "(A) [t]he amount of the down payment expressed either as a percentage or dollar amount; (B) [t]he amount of any payment expressed as a percentage or dollar amount; (C) [t]he number of payments; (D) [t]he period of repayment; or (E) [t]he amount of any finance charge," then the following disclosures must be made: "(A) [a]mount or percentage of down payment; (B) [t]erms of repayment; and (C) [a]nnual percentage rate, using the term or the abbreviation 'APR.'"

In addition to the rule amendments, the Commission adopted a new rule requiring dealers to disclose the basis for making certain claims in their advertisements, including claims such as "number 1," "biggest," "number 1 in sales," "largest inventory," or other similar claims.

Amicus Brief(ly): If readers are noticing a regulatory trend with respect to vehicle price advertising, that's good. We are, too. The states are increasingly paying attention to dealer advertising, especially vehicle price advertising, both through direct regulation like this Oklahoma rule and through enforcement actions. Oklahoma is not breaking new ground with its rule prohibiting misleading advertising, but as it and other states have been adopting rules focused on the specific content of vehicle price advertisements, it is clear that dealers across the U.S. need to be focused on accurate, complete price advertisements that do not omit required fees, important price conditions, or other factors that will be material to a consumer's decision about whether to buy the advertised vehicle.

The Court of Appeals of Ohio recently held that a mobile home seller was liable for breaching a retail installment sale contract that it entered into with the buyer of the mobile home and also liable for conversion and unjust enrichment when it sold the mobile home and the buyer's personal property after his death without giving notice of default to his estate.

The facts of the case show that an individual, through his attorney-in-fact, entered into a RISC with a mobile home seller for the purchase of a mobile home for $21,900. The buyer also rented a lot on the seller's property. Seven months later, the buyer died. His attorney-in-fact notified the seller's property manager of the buyer's death and requested the mobile home's serial number and payoff information to open an estate. The buyer's estate also requested payoff information. The seller never provided the requested information and instead changed the locks on the mobile home, disposed of the buyer's personal property located in the home, and sold the home to a third party for $20,900. The administrator of the buyer's estate sued the seller, and the trial court entered judgment for the estate for breach of the RISC, conversion, and unjust enrichment and awarded the estate damages and attorneys' fees. The seller appealed.

The Ohio appellate court affirmed. The seller argued that it did not breach the contract or convert the buyer's property because it was allowed, under the terms of the RISC, to take possession of the mobile home upon default, and the buyer's death constituted an event of default. Although the appellate court agreed that the buyer's death constituted a default under the RISC, it determined that, despite the wording of the RISC, the seller was required, under Ohio law, to give the buyer's estate notice of the default and a right to cure. Because the seller did not do so, it breached the RISC and converted the mobile home and the buyer's personal property.

The seller also argued that it was not liable for unjust enrichment and should not have to pay attorneys' fees. Although the appellate court agreed that Ohio law does not permit an unjust enrichment claim if the parties have a written contract covering the subject matter of the unjust enrichment, it noted that an exception exists if there is a showing of fraud, bad faith, or illegality. Similarly, the appellate court recognized that attorneys' fees are permitted to be awarded in the case of bad faith. The appellate court found evidence of bad faith in light of the fact that the seller received notice of the buyer's death and at least two requests for payoff information and the mobile home was substantially paid for with a down payment and seven of 12 monthly payments having been made.

Amicus Brief(ly): Because the Ohio Retail Installment Sales law specifically requires a post-default and repossession notice to the buyer identifying the default and the buyer's rights notwithstanding any agreement to the contrary, the credit seller in this case should have expected this decision from the Ohio appellate court. The death of the buyer was simply an event of default, according to the court, not an excuse to avoid compliance with the statutory notice requirements. The estate of a deceased consumer obligor stands in the shoes of the deceased consumer, so the court appears to have decided this case correctly. For compliance professionals, the outcome underscores the importance of ensuring that credit agreements reflect the requirements and limitations of state law, including and especially limitations on the waiver of statutory rights.

An individual bought a vehicle with financing from a credit union. When the buyer fell behind on her payments, the credit union sent her a notice of her right to cure the default. The credit union agreed to defer two missed payments. When the buyer continued to miss subsequent payments, the credit union arranged for repossession of the vehicle. The buyer sued the credit union, alleging various claims under the Wisconsin Consumer Act, including that the credit union failed to provide her with a proper notice of her right to cure before repossessing her vehicle, breached the peace by repossessing her vehicle over her verbal objection, and engaged in unlawful debt collection practices. The credit union answered the complaint and filed numerous affirmative defenses, including that the buyer overstated her monthly income in her credit application. Both parties moved for summary judgment, and the trial court denied the buyer's motion and granted the credit union's motion on the right to cure notice claim and the breach of the peace claim. A jury trial was commenced on the remaining claims. The trial court granted the credit union's motion for directed verdict on the claim that it engaged in unlawful collection practices. The jury ruled for the credit union on the remaining claim regarding force-placed insurance. The buyer appealed the right to cure, breach of the peace, and unlawful debt collection practices claims.

The Court of Appeals of Wisconsin affirmed. The appellate court first addressed the right to cure notice. Under Wisconsin law, a creditor cannot take possession of collateral without giving a notice of default and right to cure. However, the appellate court noted that Wisconsin law does not require the notice if the consumer made a materially false statement in his or her credit application to purchase a vehicle. In this case, the credit union alleged that the buyer overstated her income. Although the buyer agreed that her income was overstated on the application she signed, she claimed that the error was the dealership's, not hers, because the dealership filled out the paperwork. The appellate court concluded that the buyer was bound by the document that she signed, which contained material, false information about her income. Therefore, the appellate court found that a notice of default and right to cure was not required.

Next, the appellate court turned to the buyer's breach of the peace claim. The buyer asserted that she made three statements that constituted an unequivocal objection to the repossession. The appellate court found that each of these statements reflected her disappointment, her preference that her car not be taken, and her resignation to the fact that the agents were going to take it, "[b]ut none of her statements amounts to an unambiguous request or demand that the agents not take or stop taking the vehicle." Therefore, the appellate court concluded that there was no breach of the peace.

The appellate court then discussed the buyer's debt collection practices claims, including that the credit union intended to threaten and harass her by charging $125 for taking possession of collateral several months before her car was repossessed and by sending a notice of her right to redeem to an incorrect address. With regard to the repossession fee, the appellate court accepted a credit union employee's deposition testimony that the credit union switched from a general process of finding the vehicle, which was unsuccessful, to a more thorough "direct skip" process for which it paid $125. The appellate court, therefore, determined that the credit union had the right to charge the buyer the $125 fee when it incurred that fee, even though it was before the repossession had taken place. As for the redemption notice, the appellate court found it almost inconceivable that the buyer could be threatened or harassed by a notice that was sent to an address that she had not used for over 20 years. Therefore, the appellate court determined that the buyer did not state a claim for unlawful debt collection practices.

Amicus Brief(ly): This was an easy one for the court, and, on the industry's behalf, we are grateful for the good law that comes out of the decision. Specifically, there is a clear carveout from the Wisconsin right to cure notice requirement for circumstances where the consumer has made a "material false statement in the customer's credit application." While consumers can dispute the facts about whether they made material false statements, the court in this case found that there was no genuine dispute about whether the consumer's credit application included materially false information. Good for the credit union for understanding its obligation to send (or not send) a cure notice and for continuing to argue its position through the consumer's appeal.

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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.