d by consumers to access BNPLs online or via an app, as "credit cards." Consequently, providers of digital user accounts would be "card issuers," and in turn, "creditors" under 12 CFR 1026.2(a)(17)(iii).The interpretative rule, however, presents compliance difficulties for BNPL lenders and is set to apply as of July 30 (with comments due by August 1). Moreover, as discussed further below, the interpretive rule could have the effect of applying credit card rules to other closed-end credit products (including those that are subject to TILA today) if they are accessed from time to time via a digital user account.1. The interpretative rule lacks sufficient guidance to enable BNPL lenders to comply with subpart B.In addition to the interpretive rule's lack of precision as what aspects of subpart B apply to BNPLs, compliance with the interpretative rule is further complicated by an apparent disconnect between 12 CFR 1026.2(a)(17)(iii)'s broad reference to Reg. Z's subpart B and the scope of 15 USC §1602(g), on which the CFPB's interpretation relies. The CFPB paraphrases §1602(g) in support of its authority to "apply [open-end credit] requirements" to BNPL lenders. But § 1602(g) does not encompass all of Regulation Z's subpart B. The statute specifically states that:[f]or the purpose of the requirements imposed under part D of this subchapter [15 USC 1666 et seq., TILA's credit billing laws] and sections 1637(a)(5), 1637(a)(6), 1637(a)(7), 1637(b)(1), 1637(b)(2), 1637(b)(3), 1637(b)(8), and 1637(b)(10) of [TILA], the term 'creditor' shall also include card issuers whether or not the amount due is payable by agreement in more than four installments or the payment of a finance charge is or may be required. The sections cited in §1602(g) correspond to some – but not all – provisions of Regulation Z, subpart B. And some provisions in Regulation Z, subpart B, are not found in §1602(g)'s cited references to "part D" or 15 USC § 1637. For example, Regulation Z's open-end credit advertising rule

“major rule” under the Congressional Review Act and will be reported to Congress.[28]This process allows Congress, by joint resolution, and the President, by veto, to override the rule.[29]By designating the BNPL Rule as interpretive of existing obligations under TILA and Regulation Z, the rule might expose BNPL providers to liability for TILA violations before the regulation’s effective date. The CFPB notes that “any act done or omitted in good faith conformity with the interpretive rule” would be shielded from civil liability despite any subsequent amendment, rescission or judicial invalidation of the rule.[30] However, this may offer little comfort to BNPL providers who, in good faith or otherwise, have not strictly complied with all of subpart B’s requirements of Regulation Z to date.Footnotes[1]15 U.S.C. 1601, et seq.[2] 12 CFR §1026, et seq.[3] Truth in Lending (Regulation Z); Use of Digital User Accounts to Access Buy Now, Pay Later Loans(May 22, 2024.)[4] BNPL Rule, p. 10. See 15 U.S.C. 1602(g); 12 CFR §12 CFR 1026.2(a)(17)(iii).[5] BNPL Rule, pp.7-8. SeeBuy Now Pay Later: Market Trends and Consumer Impacts, (September 2022), pp. 72-73.[6] CFPB, Consumer Response Annual Report, p. 64 (March 2024).[7] BNPL Rule, p.8.[8] 12 CFR 1026.1(c)(iii).[9] 12 CFR §§1026.4(c)(2).[10] 15 U.S.C. 1602(g).[11] 12 CFR §1026.2(a)(15)(i).[12] BNPL Rule, p. 3.[13] BNPL Rule, fn. 2, page 4.[14] 15 U.S.C. 1602(g).[15] 12 CFR §1026.6(b); 15 U.S.C. 1637(a)(5).[16] 12 CFR §1026.6(b)(5)(ii); 15 U.S.C. 1637(a)(6)[17] 12 CFR §1026.9(a); 15 U.S.C. 1637(a)(7).[18] 15 U.S.C. 1637(b)(1), (2), (8), (10).[19] 12 CFR §1026.60(a).[20] 12 CFR §1026.60(a)(5) Official Interpretation.[21] BNPL Rule, pp.10-15. See 16 U.S.C. 1602(1); 12 CFR 1026.2(a)(15)(i).[22] BNPL Rule, p.9. 12 CFR §1026.12. These provisions apply to cards issued for consumer, commercial and agricultural purposes, subject to certain exceptions for business use of credit cards. 12 CFR §1026.12(b)(5).[23]12 CFR §1026.12(c).[24] 15 U.S.C. 1602(g).[25

In its most recent amicus brief, filedwith the Fifth Circuit on April 9, 2015 in Billings v. Propel Financial Services, LLC, the Consumer Financial Protection Bureau (CFPB) argues thatentities who lend consumers money topay property tax delinquenciesare subject to the Truth In Lending Act (TILA) because they areextending “consumer credit.” 15 U.S.C. § 1602(g). The borrowers had filed a class action against Propel Financial Services, LLC (“Propel”), a property-tax lender,alleging various TILA violationsconcerning the borrowers’ Property Tax Payment Agreement and Tax Lien Contractwith Propel.

‎‎York cooperative apartment. This law (which former Governor Cuomo vetoed in 2019) ‎represents a ‎substantial expansion of the market for reverse mortgages in New York where a ‎significant portion of ‎the elderly population lives in cooperative apartment units. The new law ‎won’t take effect until May ‎‎30, 2022, and will be subject to small, agreed, legislative changes as ‎well as regulations promulgated ‎by the New York Department of Financial Services.Interaction with Federal RequirementsFederal Home Equity Conversion Mortgages insured by the Department of Housing and Urban ‎‎Developments continue to be restricted to loans secured by real property. 24 CFR 206.45(a). ‎Thus, ‎lenders wishing to take advantage of this expansion of reverse mortgages in New York ‎must do so ‎with a proprietary, non-federally insured, product.‎Unlike HUD’s regulations, the federal Truth-in-Lending Act defines reverse mortgage broadly to ‎‎include loans secured by an interest in a cooperative apartment. 15 USC § 1602(cc) (defining ‎reverse ‎mortgages as loan secured by “the consumer’s principal dwelling”); 15 USC § 1602(w) ‎‎(defining ‎dwelling to include “individual units of … cooperatives”). Thus, reverse mortgages ‎secured by ‎cooperatives will be treated as reverse mortgages under federal law.‎Unique Provisions of New LawThe new law has significant overlap with New York’s existing requirements for reverse mortgages ‎secured by real property, but it also has some unique provisions applicable only to loans secured by ‎co-ops. ‎Citations are to newly amended sections of the New York Banking Law and existing ‎provisions ‎of the New York Real Property Law and New York Administrative Code.‎Unique provisions of the new law (which do not change the existing requirements applicable to ‎‎reverse mortgages secured by real property) are as follows:‎‎Lenders may make reverse mortgages secured by shares or membership in a cooperative ‎‎apartment, subject to the restrictions in the law and forthcoming regulation

However, despite a considerable effort by the industry to educate CFPB on this chattel issue, thus far CFPB has not responded favorably to any request that the thresholds be raised. The good news is that bi-partisan bills are now working their way through Congress that would solve this problem by changing the HOEPA thresholds in section 103 of the Truth in Lending Act (15 U.S.C. 1602) to APOR plus 10% for transactions under $75,000. Known as the Preserving Access to Manufactured Housing Act (HR 650/S 682), this legislation would thereby protect the true value of an estimated 1.

(Hill v. StubHub, Inc., 727 S.E.2d 550 (N.C. Ct. App. 2012) review denied, 366 N.C. 424, 736 S.E.2d 757 (2013); Porras v. StubHub, Inc., C 12-1225 MMC, 2012 WL 3835073 (N.D. Cal. Sept. 4, 2012); Fabozzi v. StubHub, Inc., C-11-4385 EMC, 2012 WL 506330 (N.D. Cal. Feb. 15, 2012)) Although StubHub Inc. was able to avoid trial by alleging it was only a “marketplace” for resellers of tickets, a festival or event ticket seller would not avail themselves of such a defense. (Hill v. StubHub, Inc., 727 S.E.2d 550, 564 (N.C. Ct. App. 2012) review denied, 366 N.C. 424, 736 S.E.2d 757 (2013)) Another act that regulates layaway sales is TILA. (15 U.S.C.A. § 1601 (West)) Unlike FTCA, TILA only regulates those layaway plans that have four or more payments, or that charge a servicing fee. (15 U.S.C.A. § 1602 (West)) However, TILA is more likely to give rise to litigation given the fact that it provides for attorneys’ fees for the prevailing party. (15 U.S.C.A. § 1640 (West)) TILA requires those layaway merchants that meet the specified conditions to disclose: (a) any interest or finance charges, (b) the method of determining the finance charge and the balance upon which a finance charge will be imposed, (c) the total number of payments and amount of each payment, and (d) the due dates or periods of scheduled payments.

the CRA, Congress can move to rescind regulations with a simple majority vote in both chambers on a resolution of disapproval. If Congress passes the resolution, and it is signed by the president, the agency is prohibited from issuing a “substantially similar” rulemaking without further Congressional action.The interpretive rule will become effective 60 days after its publication in the Federal Register. While the CFPB claims that it is not required to provide a public comment period for the interpretive rule under the Administrative Procedure Act, it is accepting comments until August 1, 2024.Note that the CFPB indicated that it “may” make revisions to the interpretive rule based on public comment. While some BNPL providers may already comply with the applicable portions of Regulation Z – particularly if they operate in states that have similar requirements – other applicable Regulation Z requirements may provide new operational and logistical challenges.Notes12 CFR 1026.2(a)(15(i)).15 USC 1602(l).12 CFR 1026.2(a)(7).12 CFR 1026.2(a)(17)(iii).Id.[View source.]

rate information, and failure to provide meaningful customer assistance. In addition to these inconveniences, the CFPB claims that financial institutions’ widespread deployment of chatbot systems can engender security and data privacy risks.Given these risks, the CFPB asserts that financial institutions “run the risk that when chatbots ingest customer communications and provide responses, the information chatbots provide may not be accurate, the technology may fail to recognize that a consumer is invoking their federal rights, or it may fail to protect their privacy and data,” making these institutions out of compliance with federal consumer financial laws.“The shift away from relationship banking and toward algorithmic banking,” notes the report, “will have a number of long-term implications that the CFPB will continue to monitor closely.”We will continue to monitor, analyze, and issue reports on these developments.Endnotes[1] Certain exceptions and inclusions apply. Please reference 15 U.S.C. 1602(dd)(2) for a complete definition of “mortgage originator” as used in the proposed CFPB rule.[View source.]

s are applicable only to AVMs used in connection with making credit decisions or covered securitizationdeterminations regarding a mortgage, for example, when determining a new value before originating, modifying, terminating a mortgage, or making other changes to a mortgage including a decision whether to extend new or additional credit or change the credit limit on a line of credit, or placing a loan in a securitization pool. Other uses, such as monitoring collateral value in mortgage-backed securitizations after they have already been issued over time or validating an already completed valuation of real estate, would not be subject to the proposed rule.Applicability 0f the Proposed RuleMortgage Originators and BrokersThe proposed rule would not apply to mortgage brokers if they do not engage in making covered credit decisions or securitization determinations. As proposed, the term “mortgage originator” would follow the same definition contained in the Truth in Lending Act (TILA), at 15 U.S.C. § 1602(dd)(2). The term would generally include creditors, as defined in TILA, such as, any person who originates two or more high-cost mortgages in any 12-month period. Further, the term is also defined broadly to include mortgage brokers.Mortgage ServicersFollowing the exception in TILA, the proposed rule would also generally not cover mortgage servicers unless they perform any of the stated origination activities for any new extensions of credit, including a refinancing or an assumption. For example, the proposed rule would apply to a mortgage servicer that both uses covered AVMs to engage in credit decisions and performs any of the stated origination activities. According to the preamble, once the definition of “mortgage originator” is met, a mortgage servicer would be required to comply with the requirements of the proposed rule any time it uses an AVM to determine the collateral worth of a mortgage, including when such usage does not involve a new extension of credit such as a loan modificati

n overdraft line of credit. . .” as being covered by the offset provision “so long as there is some sort of credit card associated with the account.” Notably, Regulation Z broadly defines “credit card” as “any card, plate, or other single credit device that may be used from time to time to obtain credit.”10 and “credit” as “the right to defer payment of debt or to incur debt and defer its payment.”11 Accordingly, given these two broad definitions, borrowers could have more leeway in arguing that arrangements similar to HELOCs, irrespective of a card component, are nevertheless accorded protection under Regulation Z.* Jared Goldstein, Law Clerk, co-authored this OnPoint.FootnotesSee 15 U.S.C. § 1601; see also Truth in Lending, Federal Register, https://www.federalregister.gov/truth-in-lending-regulation-z-.See Real Estate Settlement Procedures Act, https://www.federalreserve.gov/boarddocs/supmanual/cch/respa.pdf.See Lyons v. PNC Bank, N.A, 1:20-cv-02234-SAG, 5‒8 (D. Md. 2022); see also 15 U.S.C. § 1602(1) (noting that the term “credit card” refers to “any card, plate, coupon book or other credit device existing for the purpose of obtaining money . . . on credit.”) (citation omitted).See Lyons v. PNC Bank, N.A, 1:20-cv-02234-SAG, 6 (D. Md. 2022).Id.See 15 U.S.C. § 1647; 12 C.F.R. § 1026.6(a).See Lyons v. PNC Bank, N.A, 1:20-cv-02234-SAG, 6 (D. Md. 2022). Notably, the Lyons court acknowledged the underlying policy implications making it “understandable why Congress might give financial institutions more leeway to allow withdrawals from depository accounts when there is outstanding debt on a HELOC if such action might preserve a customer’s home.” Id. In the alternative, “[n]o such loss of a basic necessity is associated with collections efforts on an unpaid credit card account.” Id.Lyons v. PNC Bank, N.A, 1:20-cv-02234-SAG, 7 (D. Md. 2022) (citation omitted); see 12 U.S.C. § 2602(1)(A).See § 1026.2(a)(15)(ii) (“Credit card account under an open-end (not home-secured) consumer credit plan