The Illinois Attorney General has recently filed the first lawsuit by an AG of its kind.  The action is one against a small loan lender alleging violations of the Dodd-Frank prohibition of unfair, deceptive or abusive acts or practices, in addition to violations of state law.  Section 1042 of Dodd-Frank authorizes state AGs to bring civil actions in the name of the state against state-licensed entities.

According to the complaint, the lender offered lines of credit on which it charged a stated annual interest rate ranging from 18% to 24%.  The complaint alleges that, in an attempt to evade Illinois’ annual interest rate cap, the lender charged a mandatory “account protection fee” that was payable every two weeks in addition to accrued daily interest.  The lender allegedly misrepresented the true costs of the loans and provided consumers repayment schedules where no payments went toward paying down the principal balance.

Recently, the Consumer Financial Protection Bureau (the “CFPB”) filed suit in Massachusetts federal court against several companies that funded, purchased, serviced and collected online payday loans made by a tribally-affiliated lender.  The CFPB complaint alleged that the loans in question were void, as a matter of state law, because the lender charged excessive interest and/or failed to obtain a required license.  The defendants were charged with engaging in unfair, deceptive and abusive acts and practices.  The matter was noteworthy in that the CFPB’s legal theory included an attempt to bootstrap purported state law violations into an attack upon businesses in the online payday lending space.

Here, conversely, the Illinois Attorney General’s reliance upon Dodd-Frank appears to be an attempt to use its prohibition of abusive acts or practices as another way of challenging the “account protection fee” if it is ultimately determined not to violate Illinois law.


Rockefeller Introduces Data Broker Bill

February 28, 2014

Late last year, Sen. Jay Rockefeller (D-W. Va.) – chairman of the Senate Commerce Committee - released a report warning about the purported harms of data brokers and encouraging oversight from lawmakers. Now, as long expected, Rockefeller has introduced legislation aimed at overseeing and regulating the data broker industry.  He and Sen. Ed Markey (D-Mass.) have filed the Data Broker Accountability and […]

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Regulators Increase Oversight of Virtual Currencies

November 21, 2013

 A virtual currency is a medium of exchange without government backing that can be circulated over the Internet.  The Obama administration has made oversight of virtual currencies such as Bitcoin a high priority given the rise of criminal activity that exploits their quick and anonymous nature.  Treasury’s Financial Crimes Enforcement Network (“FinCEN”) has been working to bring regulatory certainty for […]

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New Mortgage Disclosure Rule Finalized by CFPB

November 20, 2013

The Consumer Financial Protection Bureau (“CFPB”) has finalized new, streamlined mortgage disclosures that are intended to improve the way consumers receive information about mortgage loans, both at the application and closing stages.  The implementation deadline for the disclosures is August 1, 2015 and will follow various new mortgage rules that take effect in January 2014. According to CFPB Director Richard Cordray, the new […]

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Are You Prepared for the New TCPA Express Consent Rules?

July 23, 2013

Beginning October 16, 2013, with limited exception, prior express written consent will be required for certain telemarketing calls or text messages, specifically, autodialed and pre-recorded calls to mobile phones, and pre-recorded residential calls.  Companies should deliberately review their marketing practices, guidelines, agreements with third party marketers and in-house training processes to ensure compliance with the […]

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