Regulatory Developments
CFPB Issues Guidance Regarding Comparison-Shopping Results for Credit Cards and Other Financial Products
On February 29, the CFPB issued a circular to law enforcement agencies and regulators, explaining how digital comparison-shopping tools, which allow consumers to compare financial products, and lead generators, who help connect consumers to lenders, may violate the Dodd-Frank Act's prohibition on unfair, deceptive, or abusive acts or practices by representing that they are acting in a consumer's best interest, or otherwise taking unreasonable advantage of a consumer's trust, while steering consumers toward financial products or services for which the digital comparison-shopping tool or lead generator receives a kickback – for example, presenting certain products as a "match" or "featured" to consumers in exchange for a kickback. While the CFPB previously issued guidance for mortgage kickbacks, this new circular addresses kickbacks in relation to other financial products and services, including credit cards.
The CFPB is working to ensure that digital advertisements for financial products are not disguised as unbiased and objective advice.
‒ Rohit Chopra, Director, Consumer Financial Protection Bureau
CFPB Caps Credit Card Late Fees, Lowers Typical Fee from $32 to $8
On March 5, the CFPB issued a final rule amending Regulation Z, which implements the Truth in Lending Act, to require credit card issuers with 1 million or more open accounts to reduce their maximum late fee to $8 or justify a higher amount by demonstrating the need to charge more to cover actual collection costs. The rule also removes automatic annual inflation adjustment for late fees. The rule does not change a credit card issuer's ability to raise interest rates, reduce credit lines, and take other actions to deter consumers from paying late.
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Latest Fintech Flash - Navigating the Hazy Landscape: Challenges and Solutions in Cannabis Payment Processing
The sale of adult-use cannabis has been legalized in 24 states in the United States, but this does not mean there are not other legal impediments to the cannabis industry in those jurisdictions. For example, cannabis dispensaries can still have a difficult time establishing banking relationships. More important, cannabis dispensaries have not been able to take full advantage of modern payment methods, such as virtual wallets, because major credit card networks have viewed cannabis sales as illegal transactions and prohibit cannabis payment processing as a result. To read more about challenges and solutions in this industry, click here.
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