Anyone else find it hard to believe July is in the rearview mirror!? With 2024 flying by, regulators have been keeping busy, so it’s a good time to recap the last few months. 

 As you all know, in May, the Supreme Court ruled that the funding of the CFPB is constitutional. Within days of that ruling, the CFPB hit the ground running.  First, the CFPB issued an interpretive rule that declares Buy Now, Pay Later lenders should be treated as credit card providers under Truth in Lending and Regulation Z. This will give BNPL borrowers some key legal protections and require lenders to treat BNPL debt similarly to credit cards by providing periodic statements and investigating disputes. You can read more about the interpretive rule here.  

 Another SCOTUS decision that will likely have a significant impact on the credit union industry was the overturning of Chevron. For the last 40+ years, courts have applied “Chevron deference” when ruling on the legality of federal regulations, which meant that if there was any ambiguity in a regulation, the court would give deference to the regulatory agency’s interpretation of the regulation. Without this deference, courts must exercise their own independent judgment in deciding whether or not an agency has acted within its statutory authority. The likely result will be a longer rule making process, partly due to more legal challenges resulting in a much longer timeline before the rule is finalized. Agencies will have to take extra time and precision during the rule-making process to try to protect themselves from these legal challenges.  This ruling does not impact any existing rules or regulations but does open the door to future challenges.

Our most recent episode of our podcast “In the CU” focused on the latest developments from the CFPB regarding their focus on eliminating junk fees. We also discussed strategies for credit unions to replace the potential loss of non-interest income. You can find our podcast here or on most streaming platforms. Don’t forget to subscribe to the podcast while you are there, so you don’t miss an episode.

The CFPB has also recently issued a final rule requiring certain types of nonbank covered persons subject to final public orders to report the existence of these orders to the CFPB. In the final rule, the CFPB determines that CUSOs are not exempt from the rule and must report any covered order to the CFPB. For more information on the final rule, you can read our LinkedIn article.

One important, non-CFPB rule to note, in April the FTC issued a final rule to prohibit the use of non-compete clauses. This rule immediately faced legal challenges in multiple districts. We’ve seen a split in the rulings and we are watching to see what impact this may have on the effective date of the final rule. You can read our most recent update on LinkedIn.  

A friendly reminder to please follow Messick Lauer & Smith, P.C on LinkedIn to stay updated as we share updates and information there weekly. As always, if you have any questions or topics you’d like to see covered in a podcast or article, please email our office at Mailbag@cusolaw.com.