Weekly Fintech Focus
FDIC issues an updated brokered deposit rule, creating new exceptions relevant to fintechs working with bank partners.
FDIC issues a final rule clarifying its expectations for ILC charter applications.
CFPB issues an advisory opinion on Special Purpose Credit Programs to clarify how creditors can offer these programs to disadvantaged groups.
CFPB grants access to its compliance assistance sandbox to an earned wage access company, which meets the CFPB’s recent guidance on such programs.
PayPal wins the first round in its efforts to throw out aspects of the CFPB’s prepaid rule, resulting in a court throwing out certain mandatory disclosures and the 30-day waiting period for digital wallets.
On December 30, 2020, the CFPB announced a
consent order with Omni Financial of Nevada, Inc. based on alleged violations of the Military Lending Act (MLA) and Electronic Funds Transfer Act (EFTA). This is the second consent order announced as part of a sweep of investigations for potential MLA violations.
According to the CFPB, Omni as an installment lender making tens of thousands of loans annually, generally in smaller amounts, ranging from $500 to $10,000. Over 90% of Omni’s loans are extended to servicemembers or their dependents who are protected by the MLA. Less than 10% of Omni’s loans are extended to borrowers who are not protected by the MLA, such as civilians and military retirees.
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On December 30, 2020, the Consumer Financial Protection Bureau (CFPB) announced that it had entered into a consent order with a lender that provided installment loans to consumers affiliated with the military over the lender’s alleged violations of the Military Lending Act (MLA), Electronic Fund Transfer Act (EFTA), and Consumer Financial Protection Act of 2010 (CFPA).
According to the CFPB, the company originates tens of thousands of loans annually, with individual loans normally ranging from $500 to $10,000. The CFPB alleged that since October 2016, for loans to those affiliated with the military, the company violated the MLA’s prohibition on requiring loans to be repaid by “allotment.” The allotment system, run by the Department of Defense, allows servicemembers to allocate a share of their pay to designated recipients. With respect to consumers not covered by the MLA, the CFPB also alleged that the company vio
The agency said Omni Financial in Las Vegas illegally required service members to designate a portion of their paychecks to repay loans, depriving of them of other payment options.
The
Consumer Financial Protection Bureau (CFPB) has issued “compliance assistance sandbox” (CAS) approval for
PayActiv regarding its “earned wage access” (EWA) products. EWA products allow employees access to their earned but unpaid wages prior to payday.
A Public Benefit Company, Payactiv can help employees access financial relief between paychecks, a service that is said to be needed by two-thirds of the workforce. While offering various financial services, Payactiv’s EWA is said to be used by over 1 million workers every month.
Issued under the CAS Policy from last year, the CFPB explains that a CAS approval offers an entity confronting regulatory uncertainty a “safe harbor” from liability under specified legal provisions. Entities are offered a safe harbor for specified conduct that the Bureau finds compliant with those legal provisions, subject to good faith compliance with the terms of the approval. The CAS Policy implements the existing safe harbor appr