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New commercial lending disclosures in California, summer 2018 Supervisory Highlights, and more in this issue of Consumer Financial Services Practice Digest

October 5, 2018

New Commercial Lending Disclosures in California

California's governor signed into law on September 30, 2018, a bill that requires commercial finance companies to provide disclosures about the cost of financing to recipients. SB 1235 requires a commercial financing "provider" to make certain disclosures at the time it extends an offer. Commercial financing transactions subject to the requirements include commercial closed-end loans, open-end credit plans, accounts receivable purchase and factoring transactions, and lease financing transactions.

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Summer 2018 Supervisory Highlights

The Bureau of Consumer Financial Protection ("Bureau") published its most recent issue of the agency's Supervisory Highlights on September 11, 2018 (Summer 2018). This edition of Supervisory Highlights is the first publication since the change in the Bureau's leadership, and comes out nearly a year after the last edition. As the first edition under Acting Director Mulvaney and new Bureau leadership, it provides insight into the Bureau's approach to such guidance moving forward.

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Recent Ruling Threatens Ability of States to Bring Federal CFPA Claims

A New York federal judge recently held that New York's attorney general may not sue under the federal CFPA because the entire CFPA is unconstitutional. If that decision survives appeal and other courts follow suit, it would significantly impact state consumer finance enforcement.

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Identity Crisis in Payment Aggregator Models: Merchant of Record, Payment Facilitator, Marketplace, or Staged Digital Wallet?

Disruptive, fast-paced changes in the operations and rules applicable to the growing fintech payments sector are causing uncertainty for many companies trying to figure out where they fit in the industry. For startups and services providers, it can be difficult to navigate the different card brand classifications for merchant (of record), payment facilitator, marketplace, and staged digital wallet, as well as the corresponding regulatory and compliance requirements. For acquiring banks and processors, there are challenges in determining how to classify, on-board, and support different types of platform and aggregator customers. This article lays out the major differences between these categories and several of the primary challenges to pursuing each business model.

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The Definition of Autodialer Under the TCPA: A Tale of Two Courts

What is an autodialer under the TCPA? That's a good question and one with which courts across the country are struggling as much as Charles Darnay struggled with his aristocratic heritage leading up to the French Revolution. My memory of the CliffsNotes to the Dickens classic aside, fortunately, the FCC is, as its Chairman recently described it, "poised" to provide clarity on what types of devices fall within the definition as part of an ongoing declaratory ruling proceeding. Nonetheless, several courts recently have issued divergent decisions regarding technology that constitutes an autodialer under the statute.

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Venable Team Update

Venable LLP is pleased to announce that Laura R. Biddle has joined the firm as a partner in the Regulatory Practice in the Washington, DC office. Ms. Biddle advises domestic and foreign banking organizations, specialty finance firms, non-depository lenders, providers of payment, and other providers of financial products and services on all aspects of financial services regulations. Ms. Biddle has 20 years of financial services regulatory experience helping financial institutions adapt and grow in the complex and evolving regulatory environment.

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Upcoming Events

October 9, 2018: "Investor Pain Points and Perspectives for Fintech Consumer Lending," at the 2018 Lend360 Conference.

October 9, 2018: "As American as Apple Pie? The Trial by Media Phenomenon," 2018 Government Investigations & Civil Litigation Institute Annual Meeting.

November 8, 2018: "Credit Reporting: Navigating the Turbulent Waters" at the 2018 ACA International Fall Forum and Expo.