Last Week, This Morning

March 10, 2025

Below you will find several key developments in the financial services industry, including related developments in information privacy and data security, from the past week. We add an "Amicus Brief(ly)¹" comment to each item, where we briefly (see what we did there?) note for friends (and again?) of CounselorLibrary the important takeaways from the developments outlined in the email. Our legal reporters - CARLAW, HouseLaw, InstallmentLaw, PrivacyLaw, and BizFinLaw - provide more comprehensive, real-time updates of federal and state laws, regulations, litigation, and other industry items of interest. For a personal guided tour and free trial of any of these legal reporters, please contact Michael Willer at 614-855-0505 or mwiller@counselorlibrary.com.

You're invited! If you have enjoyed receiving Last Week, This Morning® and would like to learn more about the capabilities of our legal reporter products, please consider joining us for a webinar featuring a demonstration of the CounselorLibrary website. Click here to sign up for a 30-minute webinar on Wednesday, March 26 at 1:30 EST.

On March 3, the Massachusetts Office of the Attorney General announced that it finalized the junk fee regulation that it proposed on November 30, 2023. The AG's office also issued a business guidance document that provides additional interpretive gloss to the regulation's requirements. The final rule, which will be codified at 940 C.M.R. Part 38, will be effective for any acts committed or practices after September 2, 2025.

In terms of its overall scope, the final rule is a mixed bag. For example, it squarely addresses the question of the rule's applicability to business-purpose transactions. The final rule is clear that its application covers the marketing, offer, and sale of "Products" (broadly defined to mean both tangible and intangible goods as well as services) that are sold, leased, or bartered for personal, family, or household use. This relatively broad scope of covered entities is more expansive than the Federal Trade Commission's December 2024 "junk fee" disclosure rule; marketing and leasing of rental housing, for example, is covered under the Massachusetts rule but not the federal rule.

The final rule includes several transactional exceptions that limit its scope. For one, transactions that comply with AG regulations that impose requirements on manufacturers and dealers governing the advertising and sale of motor vehicles are out of scope. Also out of scope are actions regarding the advertisement, sale, and/or renewal of credit undertaken by creditors in compliance with the federal and Massachusetts Truth-in-Lending requirements.

The substance of the final rule is generally aimed at certain pricing disclosure practices. Like the proposed version, the final version of the junk fee regulation will make a series of acts and practices involving the disclosure of the Total Price of a Product an unfair and deceptive act or practice. The definition of the term "Total Price" is the maximum price to be paid by a consumer for the Product, which specifically includes the amount a consumer must pay for mandatory ancillary products sold in connection with the main Product. The Total Price definition in the final rule excludes shipping charges as well as "Government Charges." Going beyond the FTC's "junk fee" rule, the Massachusetts final rule requires the disclosure of both mandatory and optional or waivable fees alike in initially presenting the Total Price, with "readily available instructions" describing how the optional/waivable fees may be avoided or declined by the consumer. The final rule also requires the Total Price of any Product to be disclosed clearly and conspicuously prior to requiring a consumer to provide any personal information (including billing information) unless such information is used for underwriting, determining product availability, compliance, or certain methods of computing a price.

The other important substantive feature of the final rule represents the most significant change from the proposed version of the rule. Whereas the proposed rule would have imposed certain requirements applicable to recurring fees and trial offers, the final rule adopts and expands on many of the requirements of the FTC's Negative Option Rule. For example, while the Massachusetts final rule largely tracks the FTC's requirements regarding trial offer and negative option disclosures, and the manner in which the latter must provide a simple cancellation mechanism, the Massachusetts rule also includes specific requirements related to consumer cancellation rights that are tied to the length of the negative option feature.

Amicus Brief(ly): The final rule does not address industry concerns raised during the rulemaking regarding the jurisdictional reach of the rule. Both the proposed and final versions of the rule apply if an advertising, marketing, solicitation, or offer of sale is "Targeted To" or results in a sale in Massachusetts. The term "Targeted To" means an inducement of Massachusetts consumers to enter into a sale transaction, which suggests that a concerted solicitation effort aimed toward Massachusetts consumers, even if no sale arises from such efforts, is covered by the rule. The final rule casts a wide net, as it applies to any party (regardless of location) that engages in marketing efforts specifically toward Massachusetts consumers (regardless of the success of those efforts) and anyone, anywhere who makes a sale in Massachusetts (regardless of whether it engaged in targeted marketing efforts toward Massachusetts consumers). In effect, it is a nationwide marketing and sales rule.

On February 28, Wyoming adopted Senate File 146, which amends the state's Consumer Rental-Purchase Agreement Act. The new law, effective July 1, 2025, primarily allows for digital transactions between the merchant and the consumer but also concerns merchant licensing. Specifically, the new law allows rental-purchase property to be offered digitally or physically by the merchant or an independent third-party retailer. The new law also allows rental-purchase agreements and liability damage waivers to be entered into electronically. The new law further allows disclosures and notices under the Act, including notices of default, to be given by email or other electronic means if the consumer provides written consent in response to a clear and conspicuous request for consent. Finally, the new law revises licensing application and renewal requirements and fees for merchants.

Amicus Brief(ly): Wyoming's Consumer Rental-Purchase Agreement Act is almost 30 years old, and these amendments that go into effect this summer are an attempt to catch the Act up with the modern marketplace that features digital transactions. The express authorization to conduct these transactions digitally is good to have, but Wyoming appears to have been careful not to disrupt much of the substance of the Act, like the reinstatement rules and the rules related to renegotiation of an agreement (a renegotiation is still a new agreement requiring new disclosures, but a deferral or extension of a payment due date is not). There are a couple of clarifications to the disclosure requirements, but this amended law should not require a compliance overhaul by providers in the space.

On March 5, the Maryland Office of the Attorney General announced that it entered into a consent order with a car dealership, its parent company, and both companies' individual owners, resolving allegations that they committed unfair and deceptive trade practices, in violation of the Maryland Consumer Protection Act, in connection with their offer and sale of vehicles.

Specifically, the Maryland AG's complaint alleged that the respondents violated the MCPA by:

• charging consumers a "sales commission" fee equal to an extra 2% of the vehicle sales price, but the fee is not in fact a sales commission;
• advertising vehicles for prices lower than their true selling prices because the advertised prices failed to include charges for dealer-added equipment and markups;
• including unwanted equipment and products in vehicle sales transactions;
• failing to prominently disclose dealer processing fees on websites advertising new vehicles for sale;
• failing to adequately disclose and itemize in vehicle sales transaction documents all goods and services that consumers are purchasing and the price of those goods and services; and
• failing to place a "price statement" with the selling price on each new vehicle offered for sale.

The AG alleged that the individual respondents were responsible for the actions of the car dealership because they possessed and exercised the authority to control the dealership's policies and trade practices.

The consent order requires that the respondents: refrain from charging any so-called "sales commission" fees or similar fees; refrain from advertising vehicle prices that are less than the full delivered price, excluding fees for taxes, tags, and title, and include markups and charges for equipment in the advertised price; disclose any dealer processing charge close enough to an advertised price so that the viewer can see it at the same time; include price statements on all vehicles offered for sale; provide the purchasing consumer with a contract that reflects a description of all charges making up the difference between the base price of the vehicle and the sale price; refrain from offering or selling any add-on products to consumers unless they first clearly and conspicuously disclose the total selling price of the vehicle without any added cost or charges for the add-on products.

The consent order requires the respondents to refund the "sales commission" fees they charged consumers, refund amounts consumers paid for the difference between the advertised price and the sale price of vehicles, and refund amounts consumers paid for any add-on products that they did not knowingly purchase. The respondents are also required to pay the AG's Consumer Protection Division $3 million for future consumer protection enforcement or consumer education.

Amicus Brief(ly): As we have reported in these pages for a while, attorneys general take particular issue with deceptive advertising and sale practices by car dealers. The dealership in this case did not admit the allegations in the complaint but agreed to new practices that have become somewhat standard expectations for dealer advertising: advertising prices that are inclusive of all costs (e.g., add-on products already installed on the vehicle) except the typical official fees paid to register the vehicle, limitations on mislabeling fees charged to the consumer, and prominent fee disclosures featured close to the advertised price of the vehicle. Other states have adopted regulations focused on vehicle price advertising in an effort to find consistency in such advertising in those states. Dealers ought to read this consent order and review their price advertising practices against the allegations in the order, as well as the compliance requirements, to ensure that their advertising practices are not far off what the states increasingly require in the context of vehicle price advertisements.

The Consumer Financial Protection Bureau recently dismissed a lawsuit it filed in August 2023 in the U.S. District Court for the District of South Carolina against an installment lender and several of its subsidiaries, alleging that their business practices concerning the refinancing of borrowers' installment loans are unfair and abusive under the Dodd-Frank Act. The CFPB's complaint had alleged that the defendants; coerced delinquent borrowers into refinancing multiple times; operated incentive-compensation programs that reinforced these coercive practices by rewarding employees who encouraged borrowers to refinance their loans; weighed past, repeated refinancing as a positive attribute in their refinance-approval process; and marketed refinances as "solutions," "fresh starts," and best options for delinquent borrowers. In its blog post discussing the dismissal, the American Financial Services Association notes that "[i]t is telling that the allegations in this suit had no basis in the specific laws that the CFPB was created to enforce. Rather, this is a clear example of the CFPB attempting to make new law, commonly known as regulation by enforcement."

The CFPB also dropped its December 2024 lawsuit against the operator of the peer-to-peer payment network Zelle, along with three of its owner banks. The complaint alleged that the defendants failed to implement appropriate fraud prevention and detection safeguards for the Zelle network and failed to properly investigate fraud complaints by Zelle customers or provide them with legally required reimbursements for fraud.

Amicus Brief(ly): This dismissal follows a number of similar CFPB dismissals of cases it brought under Rohit Chopra's leadership, though this case was not among the last-minute complaints filed after the election at the end of the year. As AFSA noted in its blog about the case, this was a pretty clear instance of the CFPB having attempted to regulate by enforcement, a practice that harkens back to the Cordray-era CFPB. Specifically, the lender allegedly refinanced its customers' small-dollar, high-interest loans frequently but complied with state and federal laws while doing so. So, what was wrong? The complaint illustrated the often-discussed-but-hard-to-resolve tension between making credit available to underserved, low-income borrowers who need credit while pricing the attendant credit risk into those transactions and leaving those borrowers underserved because regulators object to the APRs that make offering that risky credit tolerable for creditors and/or the frequency with which lenders make low-dollar, high-cost credit available. The new CFPB leadership is likely to let the market sort itself out on that score, but it is certainly possible that states will remain focused on the issues raised in the complaint.

On March 3, the Federal Trade Commission announced that it obtained a temporary restraining order with an asset freeze against several interrelated companies that allegedly engaged in deceptive and abusive debt collection practices in connection with their collection or attempted collection of debts owed to a payday lender, in violation of the FTC Act, the Fair Debt Collection Practices Act and its implementing Regulation F, the Gramm-Leach-Bliley Act, and the FTC's Trade Regulation Rule on Impersonation of Government and Businesses.

The FTC specifically alleged that the defendants sent debt collection letters and placed telephone calls to consumers concerning debts that the consumers did not actually owe. The defendants also allegedly misrepresented that: they were law firms or affiliated with law firms and planned to imminently file a lawsuit to collect the purported debt if the consumer did not pay; consumers could avoid a lawsuit if they paid to settle the purported debts; consumers' credit scores were being damaged due to the purported debts; consumers would be arrested or imprisoned for failing to pay the purported debts; and consumers' wages would be garnished or they would have liens placed on their property if they did not pay their purported debts. In addition, the FTC alleged that: the defendants placed telephone calls without meaningful disclosure of the caller's identity; failed to disclose to consumers in the initial oral communication that the defendants are debt collectors attempting to collect a debt and that any information obtained from consumers will be used for that purpose; failed to send consumers a validation notice within five days after the initial communication with consumers; and used business names other than the true names of the defendants' businesses. Finally, the FTC alleged that the collection letters often contained sensitive personal information about consumers.

Amicus Brief(ly): If the allegations in this complaint are true, debt collectors that focus on running a compliant business have little to learn from it. The practices described in the complaint, all of which the FTC claimed were false, are easy to avoid: attempting to collect debts that did not exist, making deceptive threats about litigation and garnishment, threatening harm to consumers' credit if they fail to pay, and the like. The practices described are simply not allowed. In fact, allegations like these give reputable debt collectors a bad name by association. Based on the information we have, the TRO was appropriate, and the FTC - whose commissioners agreed 4-0 to bring the lawsuit, lending credibility to its allegations - saved consumers and the industry some headaches by bringing this case.

---

¹ For the unfamiliar, an “Amicus Brief” is a legal brief submitted by an amicus curiae (friend of the court) in a case where the person or organization (the “friend”) submitting the brief is not a party to the case, but is allowed by the court to file the brief to share information or expertise that bears on the issues in the case.