Like most industries today, Consumer Finance Services businesses are being significantly impacted by the novel coronavirus (COVID-19). Troutman Pepper has developed a dedicated COVID-19 Resource Center to guide clients through this unprecedented global health challenge. We regularly update this site with COVID-19 news and developments, recommendations from leading health organizations, and tools that businesses can use free of charge.
Our bank and loan servicing clients also face novel challenges affecting their industry due to COVID-19, particularly the ever-changing rules and regulations concerning evictions and foreclosures. We are closely tracking these updates and have assembled an interactive tracker containing state orders and guidance documents concerning residential foreclosure and eviction moratoriums. Please click here to visit this new interactive tool: https://covid19.troutman.com/trackers-ef.php.
To help you keep abreast of relevant activities, below find a breakdown of some of the biggest COVID-19 driven events at the federal and state levels to impact the Consumer Finance Services industry this past week:
- Federal Activities
- State Activities
- Privacy and Cybersecurity Activities
- On November 10, the Federal Reserve Board announced the approval of fee schedules, effective January 4, 2021, for payment services the Federal Reserve Banks provide to depository institutions. The Reserve Banks project that they will recover 98.7 percent of their priced services costs in 2021. While the Reserve Banks do not expect to recover fully actual and imputed expenses, including profit that would have been earned if a private-sector firm provided the services, they do expect to fully recover expenses over the long run. This approach recognizes the uncertainties created by the COVID-19 pandemic and offers price stability for customers facing unique challenges in 2021. For more information, click here.
- On November 9, Consumer Financial Protect Bureau Director Kathleen Kraninger issued a letter stating that all companies continue to remain responsible for compliance with the Fair Credit Reporting Act, which requires that credit reporting agencies and data furnisher investigate disputes filed by consumers regarding information on their credit report within 30 days. Due to the COVID-19 pandemic, the CFPB announced that it would not take supervisory or enforcement action against companies that try, but fail, to meet the FCRA deadlines, "However, during the extraordinary times in which we find ourselves, the bureau does not intend to cite in an examination or bring an enforcement action against firms [that] exceed the deadlines to investigate such disputes - but only as long as efforts are made in good faith to do so as quickly as possible." For more information, click here.
- On November 9, the U.S. Treasury Department and Internal Revenue Service (IRS) released a notice regarding proposed regulations, clarifying that state income taxes imposed on and paid by a pass-through entity are allowed as a deduction by the pass-through entity in computing its non-separately stated taxable income or loss for the taxable year of payment. For more information, click here.
- On November 5, the U.S. Treasury Department issued "Federal Resources for Quicker Financial Relief," which provides a summary of resources available to Americans to assist with financial recovery during the COVID-19 pandemic. For more information, click here.
- On November 13, New Mexico Governor Michelle Lujan Grisham issued a temporary order closing in-person services for all nonessential businesses due to rising levels of COVID-19 cases. Debt collection activities are not considered essential. Presently, the restrictions are effective Monday, November 16, through Monday, November 30. For more information, click here.
- On November 12, the Maryland Court of Appeals issued an order moving back to Phase III of its progressive reopening plan due to the recent increase in COVID-19 cases in Maryland. Clerks offices for both the district and circuit courts will remain open to the public. Phase III, among other things, suspends jury trials through December 12. For more information, click here.
- On November 12, the Maryland Court of Appeals issued an order regarding the suspension of foreclosures, evictions, and other ejectments involving residences during the COVID-19 pandemic. The order requires that parties seeking to foreclose a lien on a residential property or to foreclose the right of redemption of a residential property to file a verified Declaration of Exemption from Moratorium. For more information, click here.
Privacy and Cybersecurity Activities:
- On November 13, Wired reported that an analysis of nearly 500 COVID-19 contact-tracing applications found significant differences in how much data they expect individuals to give up. The analysis found that 44 percent of developers would request access to the device's camera, while 22 percent would ask for access to the device's microphone; Wired reports that access to such features are hard to justify for contact-tracing purposes. Check out this link to read more about the apps analyzed. To read more about the analysis, click here. For more information about existing privacy guidelines for COVID-19-related apps, read our primer on Law360.
- On November 12, the Federal Trade Commission (FTC) reminded the public that it continues to monitor the marketplace to protect consumers from allegedly unsubstantiated COVID-19 claims. Twenty more businesses received warnings from the FTC about allegations relating to "prevention or treatment claims, bringing the total to more than 330" businesses receiving these warnings since the start of the pandemic. While the letters target various products and services, those sent this week targeted products and treatments the FTC had warned about earlier this year. To read more, click here.
- On November 11, Reuters reported that technology experts have found that many independent contractors are at an increased privacy risk due to COVID-19. Experts state that app-based independent contractors are generally monitored during the pandemic while on and off the job. Public policy innovators are also calling for "more tools to help create a 'healthy internet.'" To read more, click here.
- On November 9, the FTC released settlement details relating to Zoom's security practices. As the pandemic made video conferencing "a daily fixture for business people conferring about trade secrets, doctors, and mental health professionals discussing sensitive patient information, kids keeping up with school work, and the rest of us sharing everything [else]," the FTC filed a complaint that Zoom allegedly engaged in deceptive and unfair practices, misleading consumers about the security of their communications on the platform. The proposed settlement would prohibit Zoom from making a variety of privacy misrepresentations. The settlement "also requires Zoom to put in place a far-reaching information security program that includes [.] a security review for all new software before release, a vulnerability management program, regular security training for all employees, specialized training for developers and engineers, and independent program assessments by a qualified third party within 180 days and every other year after that for the next 20 years." To read the proposed settlement, click here. For those interested in submitting a comment about the proposed settlement, the FTC is currently accepting comments until December 14.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.