CFPB Opts Not To Take Action Against Banking App – Technology | #itsecurity | #infosec

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CFPB Opts Not To Take Action Against Banking App

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Ahead of an upcoming merger between a digital banking platform
and a special purpose acquisition company, both parties disclosed
in a regulatory filing last week that the
platform received a Civil Investigative Demand (“CID”) in
June 2020 related to its “cash paycheck advance business in
compliance with the prohibition against UDAAPs, the EFTA, and, to
the extent it applies, the Truth in Lending Act.” According to
the filing, the platform provided the CFPB with all information and
documents required by the CID, and on September 27, 2021, the CFPB
staff notified us that it currently did not intend to recommend
that the CFPB take any enforcement action.

Putting It Into Practice: While this news did
not garner headlines since last week, it is an important reminder
that the CFPB and other regulators are monitoring the cash advance
space for activities that may run afoul of consumer protection laws
(we discussed cash advance products in previous Consumer Finance
& Fintech Blog posts here and here). Industry participants
should also note that the CFPB’s decision to close its
investigation and not proceed with a public enforcement action
should not be viewed as an indication that the earned wage access
model was acceptable this case. Rather, the CFPB generally does not
provide its reasoning for not recommending enforcement actions at
the conclusion of investigations. That said, nonbanks, including
FinTechs that offer consumer lending products, should consistently
revisit their lending practices in order keep from attracting
attention from regulators and lawmakers.

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.

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