Last Week, This Morning

May 19, 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.

On May 14, the Consumer Financial Protection Bureau proposed to rescind its final rule titled "Registry of Nonbank Covered Persons Subject to Certain Agency and Court Orders," citing concerns about compliance costs the rule imposes on regulated entities, which may be passed on to consumers. The CFPB also believes that the rule is not necessary as a tool to effectively monitor and reduce potential risks to consumers where Congress has authorized multiple other federal and state agencies to enforce federal consumer financial laws. Comments on the proposal to rescind the rule are due by June 13, 2025.

On April 11, the Consumer Financial Protection Bureau announced that it would not prioritize enforcement or supervision actions with respect to entities that do not satisfy future deadlines to submit registration information under the non-bank registry rule and stated its intention to issue a proposal to repeal the rule.

The final rule establishing the non-bank registry was finalized on June 3, 2024. The final rule requires covered nonbank entities that offer or provide consumer financial products or services to register certain final, public orders, including consent and stipulated orders, issued against them by government agencies or courts.

Amicus Brief(ly): The CFPB has now taken a formal step to begin unwinding one of the more controversial Chopra-era regulations finalized in 2024. As reported among these pages last year, the CFPB issued the rule creating the registry for non-banks as a means to allow it to track which companies were operating under final, public orders like consent orders and stipulated orders, with a focus on accountability. But industry resisted the rule as redundant, expensive, and punitive. Because the CFPB finalized the rule last year, it had to take the administrative steps to propose rescission and invite comment on the proposal. The CFPB is taking these required steps to make its non-enforcement stance from April 2025 permanent by eliminating the rule, putting this bad idea to rest.

The Federal Trade Commission recently announced that it will delay enforcement of its amendments to the Negative Option Rule until July 14, 2025.

The final amendments to the Negative Option Rule were published in the Federal Register on November 15, 2024, with an initial effective date of January 14, 2025. The Commission originally deferred enforcement of some provisions of the amendments until May 14, 2025, but extended the compliance deadline again in order to account for the complexity of compliance with the amendments to the rule.

The amendments to the Negative Option Rule define the following acts and practices as unfair or deceptive within the meaning of Section 5 of the FTC Act:

• misrepresenting any material fact made while marketing using a negative option feature;
• failing to clearly and conspicuously disclose material terms prior to obtaining a consumer's billing information in connection with a negative option feature;
• failing to obtain a consumer's express informed consent to the negative option feature before charging the consumer; and
• failing to provide a simple mechanism to cancel the negative option feature and immediately halt charges.

Amicus Brief(ly): We reported on this development among these pages last year as well, identifying the rare positive comments from the FTC about negative option programs among a sea of typically critical comments. This delay in enforcement allows companies another two months to get compliance affairs in order and review existing marketing materials to ensure they avoid the misrepresentations described above and provide accurate disclosures.

On May 13, the Federal Housing Administration's Office of Single Family Housing announced that it officially archived nearly 600 Mortgagee Letters ("MLs") that are no longer active in an effort to help lenders and others obtain more accurate FHA Single Family policy information. According to the FHA's announcement, this streamlining effort followed a recently completed review of Single Family policy artifacts posted on HUD's Client Information Policy System (HUDCLIPS) webpage. Some MLs were still listed in the Single Family online active policy directory. These MLs were expired and/or superseded by the Single Family Housing Policy Handbook 4000.1 or other policy documents but not moved to the archives for various reasons. With that review completed, those MLs have been archived in the inactive or superseded MLs webpages on HUDCLIPS.

Amicus Brief(ly): Spring cleaning has arrived across the U.S., including at the FHA. This administrative step simply declutters the publicly available MLs to allow for easier, less-obstructed access to current MLs. It's an inspiration, in a way. How does your desk look? Your email inbox? Some of ours could benefit from a spring cleaning. We may follow the FHA's lead on this one.

On May 15, the Consumer Financial Protection Bureau published notices in the Federal Register withdrawing two proposed rules and one proposed interpretive rule.

First, the CFPB withdrew its proposed rule titled "Protecting Americans from Harmful Data Broker Practices (Regulation V)," which, among other things, would have required data brokers to comply with the Fair Credit Reporting Act. According to the FR notice, "[t]he Bureau is withdrawing this NPRM in light of updates to Bureau policies. Although the proposed rule intended to implement portions of the FCRA, in many respects it did so in a manner not aligned with the Bureau's current interpretation of the FCRA, which it is in the process of revising, and its changed policy objectives. Further, commenters raised numerous concerns related to this proposed rule that the Bureau believes require careful consideration before proceeding with a final rule. At least one commenter raised concerns related to the proposed rule's propriety under the plain text of the FCRA, and there were similar questions as to the Bureau's statutory authority to issue many of the proposals. In light of these and other comments, the Bureau believes it would be inappropriate to proceed to a final rule. When and if the Bureau determines it necessary to issue a rule implementing the relevant definitions and provisions of the FCRA, it will propose a new rule and seek public comment thereon."

Second, the CFPB withdrew its proposed rule titled "Prohibited Terms and Conditions in Agreements for Consumer Financial Products and Services (Regulation AA)." According to the FR notice, "[t]he Bureau is withdrawing the proposed rule in light of changes in and updates to its policies, agenda, and objectives. The Bureau is re-evaluating the need for this proposed rule's prohibition on the use of certain contractual provisions that limit expression or purport to waive substantive consumer legal rights and protections, or their remedies, under State or Federal law. Specifically, as the NPRM acknowledges, this proposed rule is largely duplicative of the Federal Trade Commission's Credit Practices Rule. Given this duplication and the Bureau's policy of erring on the side of limiting regulatory burdens on the American people, the Bureau believes it is necessary to withdraw this NPRM. In addition, the Bureau received comments warranting withdrawal and further consideration of the merits of the proposed rule, including arguments that the Bureau lacks authority to adopt the proposed rule. In light of these comments, the Bureau believes it necessary to withdraw the proposed rule pending further consideration of whether the Bureau has the authority to issue it."

Third, the CFPB withdrew its proposed interpretive rule titled "Electronic Fund Transfers Through Accounts Established Primarily for Personal, Family, or Household Purposes Using Emerging Payment Mechanisms." According to the FR notice, "[t]he proposed interpretive rule was intended to assist companies, investors, and other market participants evaluating existing statutory and regulatory requirements governing electronic fund transfers (EFTs). ... The Bureau is withdrawing this notice of proposed interpretive rule because further rulemaking action with respect to this proposal does not align with current agency needs, priorities, or objectives. The Bureau is continuing to evaluate the need for guidance related to the legal requirements associated with EFTs and will take further action if deemed necessary. Moreover, the comments received on this notice of proposed interpretive rule raise multiple issues warranting further attention related to, for example, whether the proposed interpretive rule properly interprets the EFTA. ... Should the Bureau determine that an interpretive rule related to the legal requirements associated with EFTs is necessary in the future, the Bureau believes such proposal would benefit from an additional comment period on any proposals accounting for the issues raised by commenters."

Amicus Brief(ly): And...more of less is more. These rules were administratively easier for the new-look CFPB to unwind because they had not yet been finalized, unlike the non-bank registry rule referenced earlier. True to form, the CFPB is taking apart these proposed rules and proposed interpretive rule that industry resisted and that the CFPB correctly identifies as inconsistent with its current priorities. The agencies administering the new administration's executive orders and implementing its vision are working to reduce what they view as unnecessary and duplicative regulation, while also evidently siding with industry commenters who levied serious and legitimate concerns about these proposals. No great loss for industry here - these withdrawals make doing business a little less complicated.

On May 14, Oregon Governor Tina Kotek signed House Bill 3178, which requires a dealer in a motor vehicle sale or lease transaction that involves a retail installment contract or lease agreement that is subject to a lender's agreement to purchase the contract or agreement to provide the buyer/lessee with a specified "Retail Installment Contract Disclosure." The disclosure form requires certain dealer, buyer/lessee, and vehicle information and states that the buyer/lessee has the right to void the vehicle transaction if a lender does not agree to purchase the retail installment contract or lease agreement on the exact terms the buyer/lessee and dealer negotiated within 10 calendar days after the buyer/lessee takes possession of the vehicle. The disclosure form also states that if the dealer refuses to comply with a buyer's/lessee's right to void the retail installment contract or lease agreement, the buyer/lessee may wish to consult with a lawyer, contact the Oregon Department of Justice, or file a complaint online. The state attorney general must provide a model form for the disclosure and make the disclosure form available in multiple languages.

The new law also requires a dealer in a motor vehicle transaction that involves a retail installment contract or lease agreement to make a good faith effort to sell the retail installment contract or lease agreement to a lender on the exact terms that the dealer and the buyer/lessee negotiated.

In addition, the new law states that if, within 10 calendar days after a buyer/lessee takes possession of a vehicle, a lender does not agree to purchase the retail installment contract or lease agreement on the exact terms that the dealer and the buyer/lessee negotiated and the dealer does not receive final approval of funding from a lender, the dealer must: (1) unconditionally accept the retail installment contract or lease agreement after satisfying, removing, or waiving any conditions on the dealer's acceptance or performance, including financing, assignment, lease approval, and delivery, and finance the transaction under the exact terms to which the dealer and the buyer/lessee previously agreed; or (2) reject the retail installment contract or the lease agreement and thereby void the transaction. If the dealer chooses to void the transaction, the dealer must: (1) send, within a specified time period, a notice stating that a lender has not agreed to purchase the retail installment contract or lease agreement and that the dealer has chosen to void the transaction; and (2) return to the buyer/lessee all items of value the dealer received from the buyer/lessee as part of the transaction.

The new law also provides that, if the dealer has accepted a trade-in motor vehicle from the buyer/lessee, the dealer may not sell or lease the trade-in or pay off an outstanding balance owed by the buyer/lessee on the trade-in before the dealer receives final approval of funding from the lender.

Amicus Brief(ly): This new law rings in a new day for Oregon vehicle dealers and their finance partners. There are new disclosure requirements, but more important are the substantive rights afforded to vehicle buyers and lessors in Oregon, including the right to void the contract or lease if no finance source will buy it on its disclosed terms. Dealers will have to place applications carefully and may be reluctant to offer spot deliveries as a result of this statute that effectively cuts off the current and reasonably common flexibility allowing finance sources to make counteroffers that help deals fit the finance sources' underwriting criteria. But dealers also have a right to void a contract or lease if the dealer cannot place it on its disclosed terms, unless the dealer prefers to hold and service the contract or lease. One last wrinkle: the statute does not define what constitutes a "good faith" effort to sell the contract or lease on the exact terms that the dealer and the buyer/lessee negotiated, so the courts may have an opportunity to define those parameters if/when the litigation starts.

---

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.