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Wiley Consumer Protection Download (June 7, 2021) | Wiley Rein LLP

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Welcome to Wiley’s update on recent developments and what’s next in consumer protection at the Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC). In this newsletter, we analyze recent regulatory announcements, recap key enforcement actions, and preview upcoming deadlines and events. We also include links to our articles, blogs, and webinars with more analysis in these areas. We understand that keeping on top of the rapidly evolving regulatory landscape is more important than ever for businesses seeking to offer new and ground-breaking technologies.

Regulatory Announcements

Second Circuit Rules Against Challenge to OCC’s Proposed Issuance of Federal Charters to Non-Depository Financial Institutions. On June 3, the U.S. Court of Appeals for the Second Circuit vacated the lower court’s decision in Lacewell v. Office of the Comptroller of the Currency. The case involves whether the Office of the Comptroller of the Currency (OCC) can issue federal bank charters to non-depository financial institutions, such as financial technology companies. The opinion concludes that the plaintiff New York Department of Financial Services (DFS) lacks Article III standing because it failed to allege that the OCC’s decision caused it to suffer an actual or imminent injury in fact, and that DFS’s claims are constitutionally unripe for substantially the same reason. The court’s decision reverses a 2019 decision by the U.S. District Court for the Southern District of New York, finding that the OCC exceeded its authority under the National Bank Act in accepting applications for federal bank charters from financial technology companies and ordering that the DFS complaint be dismissed without prejudice.

FTC Submits 2020 Financial Acts Enforcement Report to the CFPB. On June 1, FTC staff submitted the 2020 Financial Acts Enforcement Report to the CFPB on its enforcement and related activities regarding the Truth in Lending Act, Consumer Leasing Act, and Electronic Fund Transfer Act. Among other things, the report highlights the FTC’s enforcement actions related to automobile purchases and financing, payday lending, credit repair and debt relief, and electronic funds transfers. The report also discusses the agency’s relief and policy efforts pertaining to truth in lending, including the release of two staff reports on a study of auto buyers and the car buying and financing process. One of those reports, issued by the Bureau of Consumer Protection staff, concluded that consumers were sometimes unaware of key terms of sales and financing practices in the auto buying process.

FTC Submits FY 2022 Budget Request, Performance Plan and Report to Congress. On May 28, the FTC submitted its annual budget request, and performance plan and report to Congress for fiscal year (FY) 2022. In support of President Biden’s budget plan for the agency, the FTC is requesting $389,800,000, which would represent an increase of $38,800,000 over FY 2021. The FTC’s vote to submit the documents to Congress was 4-0.

CFPB Report Finds That Manufactured Housing Loan Borrowers Have Higher Interest Rates, Risks, and Barriers to Credit. On May 27, the CFPB released a report finding that manufactured housing borrowers face higher interest rates and limited refinancing opportunities. Manufactured housing comprises a small segment – approximately 13% – of the overall U.S. housing market. However, it is one of the most affordable types of housing options available to low-income and rural consumers. The report also found that consumers that do not own the underlying land for manufactured homes are more likely to see their homes depreciate in value, and have fewer options if they fall behind on loan payments. The CFPB report uses new information collected under the Home Mortgage Disclosure Act in 2018.

Significant Enforcement Actions

FTC Approves Final Administrative Consent Orders Against Three Companies That Allegedly Made Deceptive Claims About Fish Oil Supplements. On June 1, the FTC approved final administrative consent orders against BASF SE, its subsidiary, BASF Corp., and DIEM Labs, which the agency claims deceptively marketed two dietary fish oil supplements as clinically proven to reduce liver fat in adults and children with non-alcoholic fatty liver disease. As we noted in our April 12 Newsletter, the companies settled charges with the FTC on April 1. The FTC alleges that the companies marketed the two drugs – Hepaxa and Hepaxa PD – until mid-2020. The final administrative consent orders, which were approved 4-0, note that the companies have agreed to pay a collective $416,000.

CFPB Proposes Settlement with Company for Allegedly Deceptive Deposit and Loan Products. On May 27, the CFPB filed a settlement proposal against Driver Loan, LLC (Driver Loan) in the U.S. District Court for the Southern District of Florida. If entered by the court, the settlement proposal would require Driver Loan to refund approximately $1 million in deposits to consumers and pay a $100,000 civil penalty. As we noted in our November 9, 2020 Newsletter, the CFPB filed a complaint against Driver Loan, alleging that the company misrepresented the risks associated with its short-term, high-interest loan product it offered consumers and the annual percentage rate for extensions of credit in violation of the Consumer Financial Protection Act of 2010 (CFPA).

FDA and FTC Send Warning Letters to Five Companies Allegedly Selling Dietary Supplements Claiming to Treat Infertility. On May 26, the Food and Drug Administration (FDA) and FTC sent warning letters to LeRoche Benicoeur/ConceiveEasyEU Natural Inc.; Fertility Nutraceuticals LLCSAL NATURE LLC/FertilHerb; and NS Products, Inc. The warning letters allege that the companies were making false or unproven claims that their products can cure, treat, mitigate, or prevent infertility, potentially in violation of the FTC Act. Additionally, the FDA letters discuss the Food, Drug, & Cosmetic Act (FD&C Act), under which products that are intended to “cure, treat, mitigate, or prevent disease are drugs and are subject to the requirements that apply to drugs, even if they are labeled as dietary supplements.” The letters indicate that, unlike drugs that are approved by the FDA, the agency has not evaluated whether the products that are the subject of the warning letters are effective for their advertised use.

Upcoming Comment Deadlines and Events

FTC Hosts Virtual Green Lights & Red Flags Public Workshop. On June 24, the FTC will host a “Green Lights & Red Flags: Rules of the Road for Business” public workshop. This workshop is focused on truth-in-advertising law and data security basic practices. The public workshop will provide insights from Texas business leaders and experts in consumer protection law. Acting FTC Chairwoman Rebecca Kelly Slaughter will present remarks to open the workshop. An agenda of the event is available here. Interested parties may register here.

CFPB Seeks Input on Financial Institutions’ Use of AI. Comments are due July 1 (extended from June 1) on a Request for Information released by the CFPB; the Board of Governors of the Federal Reserve System’s Bureau of Consumer Financial Protection; the Federal Deposit Insurance Corporation; the National Credit Union Administration; and the Office of the Comptroller of the Currency. The five agencies are gathering information on financial institutions’ use of artificial intelligence (AI) for fraud prevention, the personalization of services, credit underwriting, and a number of other operations. Among other things, the Request for Information seeks comment to understand the use of AI; appropriate governance and risk management controls over AI; and challenges in developing and managing AI.

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Are Sallie Mae Student Loans Federal or Private?

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When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

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Tips to do some fall cleaning on your finances

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Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

RELATED: Financial lessons learned through the pandemic

A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

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How to Get a Loan Even with Bad Credit

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Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.

 

 

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