Regulation
CFPB Director Rohit Chopra Is Out
February 1, 2025
The CFPB director that wanted to “wipe out” all merchant cash advance companies has resigned his post (or been fired per the AP), according to a letter he shared on social media. Rohit Chopra had served in that position for four years.
While the CFPB is supposed to be a consumer-focused agency, it had gained the authority to collect data from the small business finance industry. Its 888 pages of complex rules are supposed to go into effect this year, for example, unless Trump’s January 20 executive order leads to a delay or repeal.
“This letter confirms that my term as CFPB Director has concluded,” Chopra’s letter states. “I know the CFPB is ready to work with you and the next confirmed Director, and we have devoted a great deal of energy to ensure continued success.”
California Passes Law Extending Debt Collection Rules
January 30, 2025The new year brings yet more distressing news from the Golden State. If you are in the commercial finance space, and you want to collect that gold in California, you will soon have to heed all the rules that, until now, only applied to consumer debt collectors.
Beginning July 1, 2025, commercial loans of $500,000 or less will be subject to the debt collection protections of the Rosenthal Fair Debt Collection Practices Act (“RFDCPA”). What is potentially more troublesome is that the statute will apply not only to debt collectors, but creditors! That means that your in-house collection department will have to heed all the prohibitions and restrictions of the RFDCPA.
The rules are fairly straightforward and apply to debt collectors and creditors attempting to collect on their own paper. There are many, including:
|
There is a plethora of other rules, but you get the picture.
There are other important issues, i.e.:
|
One good thing about the expanded statute is that there is no licensing requirement for commercial debt collectors/creditors (yet!).
There is much more, but it is, as they say, beyond the scope of this article. My best advice is to have an attorney prepare a best practices guide to help you navigate this minefield. That is exactly what I am doing for my clients.
The Law Offices of Kenneth Charles Greene present this article. All copyrightable text, the selection, arrangement, and presentation of all materials (including information in the public domain), and the overall design of this presentation are the property of the Law Offices of Kenneth Charles Greene. All rights reserved. Permission is granted to download and reprint materials from this article for the purpose of viewing, reading, and retaining for reference. Any other copying, distribution, retransmission, or modification of information or materials from this article, whether in electronic or hard copy form, without the express prior written permission of Kenneth C. Greene is prohibited. The materials available from this article are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any issue or problem. Use of and access to these materials does not create an attorney-client relationship between the Law Office of Kenneth Charles Greene and the user or viewer. The opinions expressed herein are the opinions of the individual author.
FCC’s Attempt to Close ‘Lead Generator Loophole’ is Stricken Down
January 30, 2025The FCC’s one-to-one consent rule has been stricken down by the U.S. Court of Appeals for the Eleventh Circuit. It was supposed to go into effect this past Monday and would have impacted lead generators in a major way. For example, the FCC rule stated that a consumer could not consent to a telemarketing or advertising robocall unless: (1) the consumer consents to calls from only one entity at a time, and (2) consents only to calls whose subject matter is “logically and topically associated with the interaction that prompted the consent.”
The Court in Insurance Marketing Coalition Limited v FCC, however, found that the FCC did not have the authority to redefine “prior express consent” under the TCPA to now mean one-to-one consent and vacated the rule.
deBanked put out a post last year telling readers to be prepared for the change.
Maryland, Illinois Reintroduce Commercial Finance Bills
January 27, 2025On January 24, legislators in both Illinois and Maryland introduced the latest edition of commercial finance bills. In Illinois it’s the Small Business Financing Transparency Act which would mandate that sales-based finance providers register with the state and include an APR on every agreement. In Maryland it’s the Small Business Truth in Lending Act which is a renewal of its push from 2024.
With Trump’s Freeze on New Regulations, What to Make of the New CFPB Rules?
January 23, 2025
On January 20, Trump’s ceremonial display of taking action and signing orders on his very first day might warrant a closer look for those in the small business finance industry. That’s because he signed a regulatory freeze order that could potentially affect rules promulgated by the CFPB on small business loan data collection that have yet to go into effect.
Specifically Trump’s order not only puts a freeze on issuing new rules but also mandates rules be withdrawn if they’ve been sent to the Office of the Federal Register. And then lastly, and most relevant, it orders agency heads to “consider postponing” any rules that have been published or “any rules that have been issued in any manner but have not taken effect, for the purpose of reviewing any questions of fact, law, and policy that the rules may raise.” It asks for a 60-day review period overseen by an agency head appointed or designated by Trump to review and approve the rule.
“Should actions be identified that were undertaken before noon on January 20, 2025, that frustrate the purpose underlying this memorandum, I may modify or extend this memorandum, to require that department and agency heads consider taking steps to address those actions,” the order concludes.
New Jersey Bill’s New Definition of “Commercial Financing”
January 2, 2025New Jersey Senate Bill 1397 is still alive in 2025. This particular commercial financing disclosure bill intends to require APR disclosures for a broad range of products in commercial financing, including non-loan products.
“Commercial financing means an open-end financing, closed-end financing, sales-based financing, factoring transaction, finance lease, as that term is defined in N.J.S.12A:2A-103, or any other form of financing, the proceeds of which the recipient does not intend to use primarily for personal, family, or household purposes,” the bill says.
Previously, there was a provision in the bill that allowed covered parties to use a “total dollar cost” disclosure OR the APR. The total dollar cost option was removed in a December 19 amendment.
The Other Side of the DFPI
December 30, 2024Last week I made some rather unfortunate comments about the California Department of Financial Protection and Innovation (“DFPI”). My error was based on a misreading of a portion of the DFPI website relating to the minimum equity requirements for mortgage loan brokers, which, at first glance, appeared to also refer to the equity requirements for finance lenders and brokers. This mistake was corrected in a subsequently published erratum.
I also wrote some rather critical observations about the departing commissioner, Ms. Chlothilde Hewlett. This, I now feel, was unfair. Commissioner Hewlett’s background and career in public service, consumer protection and law enforcement are nothing less than admirable. As an attorney representing lenders and brokers in the commercial finance industry for almost 45 years, I have seen more than my fair share of fraudulent behavior and bad players. The industry absolutely needs policing and oversight! Unfortunate but true. I have seen people rob charities, steal from relatives, and sue their “friends”. Not exactly what you want to hear during the Christmas season but nevertheless a reality.
I have worked extensively with the people at the DFPI for years. They are professional, courteous and responsive, almost without fail. I am grateful to these folks, who will remain unnamed, for assisting my clients in procuring the valuable CFL license. To them, and to you, I wish a happy holiday season and a prosperous and healthy new year.
The Law Offices of Kenneth Charles Greene present this article. All copyrightable text, the selection, arrangement, and presentation of all materials (including information in the public domain), and the overall design of this presentation are the property of the Law Offices of Kenneth Charles Greene. All rights reserved. Permission is granted to download and reprint materials from this article for the purpose of viewing, reading, and retaining for reference. Any other copying, distribution, retransmission, or modification of information or materials from this article, whether in electronic or hard copy form, without the express prior written permission of Kenneth C. Greene is prohibited. The materials available from this article are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any issue or problem. Use of and access to these materials does not create an attorney-client relationship between the Law Office of Kenneth Charles Greene and the user or viewer. The opinions expressed herein are the opinions of the individual author.
House Bill Seeks More Time for Lenders to Comply with CFPB Small Business Lending Rule, Redefine Small Business
December 18, 2024A recently amended bill that was introduced in the US House of Representatives earlier this year aims to push back compliance deadlines with the CFPB’s Small Business Lending data collection rule. Specifically, HR 8338 seeks a 3-year preparation period from the time the rule was issued (which was March 2023) followed by a 2-year safe harbor where penalties are not issued for a failure to comply.
Furthermore, the bill aims to clarify the definition of “small business” as being any entity having gross annual revenue of $1 million or less in the most recently completed fiscal year.
You can read the text of the bill here.
