Last Week, This Morning

February 2, 2026

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.

The Florida attorney general recently released a commissioned report that analyzed the economic impact of "deceptive" pet sales by large retailers and large, out-of-state breeders to Floridians, with a specific focus on the high incidence of consumers purchasing pets with preexisting health issues, the resulting veterinary bills, and the financing of such pet sales. Data for the study was drawn from a survey distributed to consumers in the counties that yielded the most complaints to the Humane World for Animals organization, the Florida Department of Agriculture, and the AG's office about allegedly deceptive pet sales and predatory financing of pet sales. The report estimates that the true economic impact of such practices is underestimated because such a low percentage of consumers actually file complaints about pet sales and financing.

The report found that store-branded credit cards finance many pet sales by large pet retailers and that this type of financing imposes high annual percentage rates, hidden fees, misleading "deferred interest" promotions, and unlawful contract terms. Among other recommendations concerning the overall pet sale market, commercial breeding and transporting of pets from breeders, modernization of the existing Florida "Pet Lemon Law," and general animal welfare, the report recommends that Florida ban the sale of pets at retail outlets. If no retail ban is enacted, then the report suggests that the state "require local breeders to adopt kennel-side pricing and prohibit, or tightly regulate, pet-purchase financing." Some of the policy recommendations include: (1) banning pet financing that includes forced arbitration, class action waivers, or hidden fees; (2) imposing certain standards on state-chartered and non-member banks operating in Florida that provide financing for pet sales; (3) mandating point-of-sale transparency for pet sales and financing, such as clear and conspicuous pricing, APR and fee disclosures, and a prohibition on "apply to see terms" marketing; and (4) implementing public education campaigns promoting responsible pet purchasing behavior, breeder vetting, and the true costs of pet ownership.

Amicus Brief(ly): Government reports and studies typically confirm what we already sort of know, and this report from the Florida AG fits that mold. It tells us, effectively, that pet breeders who sell pets through retailers may not be telling potential buyers the whole story about the relative health of those pets. But this one also cautions retailers and finance sources about issues that show up regularly in these pages - concerns about hidden fees, misleading promotions, and unlawful contract terms. The pet financing industry does not get a lot of press, but if pet retailers and their credit card-issuing partners are not able to clean up perceptions about their truthfulness about the pets they are selling and financing and the terms of that financing, then we can expect to see more about these practices. We'll be watching for that and to see if Florida amends its Pet Lemon Law to address some of the concerns raised in the report.

On January 26, the U.S. Supreme Court granted a petition for writ of certiorari in the case of Salazar v. Paramount Global, agreeing to consider the definition of "consumer" under the federal Video Privacy Protection Act.

In Salazar, a plaintiff brought a class action lawsuit against Paramount Global for alleged violations of the VPPA. The plaintiff claimed that he used 247Sports.com, a website owned by Paramount, to watch videos and that Paramount allegedly installed Facebook's tracking Pixel on the website. Paramount moved to dismiss the complaint. The trial court concluded that the plaintiff had Article III standing to sue but dismissed the complaint for failure to state a claim because the plaintiff was not a "consumer" as defined in the VPPA.

The U.S. Court of Appeals for the Sixth Circuit affirmed. To state a claim under the VPPA, the plaintiff needed to allege that: (1) Paramount is a regulated entity (a "video tape service provider," defined as "any person, engaged in the business, in or affecting interstate or foreign commerce, of rental, sale, or delivery of prerecorded video cassette tapes or similar audio visual materials"); (2) he is a protected party (Paramount's "consumer," defined as a "renter, purchaser, or subscriber of goods or services from a video tape service provider"); and (3) Paramount engaged in prohibited conduct (knowingly disclosed his "personally identifiable information" to a third party). The plaintiff alleged that he was a "consumer" under the VPPA because he subscribed to a digital 247Sports.com newsletter plan that provided video media content to his desktop, tablet, and mobile device. The plaintiff argued that the broad statutory phrase "goods or services" in the VPPA included Paramount's newsletter, but the Sixth Circuit disagreed. The Sixth Circuit noted that the statutory phrase "goods or services" cannot be construed in a vacuum; rather, it must be read in the context of the statute as a whole. The Sixth Circuit held that a person is a "consumer" only when he subscribes to "goods or services" in the nature of "video cassette tapes or similar audio visual materials." The Sixth Circuit acknowledged that this holding breaks from the Second and Seventh Circuits' approach to the issue. The Sixth Circuit then analyzed whether the 247Sports.com newsletter qualified as a "video cassette tape or similar audio visual material" and held that it did not because the videos were accessible to anyone who accessed the website, even those without a subscription.

Amicus Brief(ly): The standing issue is technical but important and has been a critical deciding factor in a number of reported VPPA cases over the past few years. The Sixth Circuit held that, while the plaintiff had watched videos for free, he did not become a "consumer" entitled to protection under the VPPA because he did not view that material as a subscriber, and his subsequent subscription to a newsletter from the provider of the videos did not change his status because the newsletter was not "audio visual material." The Second and Seventh Circuits recently held that the fact that a "good or service" to which a plaintiff subscribed under the VPPA was not "audio visual material" was not as important to the determination about VPPA coverage as whether the "consumer" had a viable complaint about the sharing of "personally identifiable information" under the VPPA. We'll be watching for SCOTUS to answer the critical question: Who is a "consumer" under the VPPA?

Three individuals filed a class action against two entities, alleging that their earned wage access product practices violated the Military Lending Act. The defendants moved to compel arbitration of the claims pursuant to an arbitration provision in one of the entity's Terms of Use that users agree to when they sign up for an ExtraCash advance that the entity offers in partnership with the other entity. The plaintiffs argued that the MLA, which "renders it 'unlawful for any creditor to extend consumer credit to a covered member or a dependent of such a member with respect to which ... the creditor requires the borrower to submit to arbitration,'" prohibits arbitration of their claims. The defendants countered that the MLA does not render its arbitration provision unenforceable for three reasons: the MLA does not apply to voluntary arbitration agreements that allow users to opt out, which the arbitration provision in the Terms of Use does; the question of arbitrability has been delegated to an arbitrator; and the ExtraCash product does not involve the extension of consumer credit subject to a finance charge that is required for the MLA to apply.

The U.S. District Court for the Central District of California denied the motion to compel arbitration. First, the court agreed with the plaintiffs "that every case to address this issue has determined that the MLA's prohibition on arbitration does not turn on the voluntariness of the agreement." Second, the court found that "[b]ecause the MLA 'displaces the [Federal Arbitration Act] altogether,' the delegation clause was unenforceable." Finally, the court found that the ExtraCash product involves the extension of consumer credit subject to a finance charge under the MLA. The court concluded that the ExtraCash product is "credit," like a payday loan or a deferred presentment transaction, in which a cash advance is provided in exchange for the consumer's authorization to debit his or her deposit account at a later date. The court further found that the ExtraCash advances are subject to a finance charge in the form of mandatory overdraft service fees assessed on every ExtraCash advance, tips that are difficult for users to avoid, and express fees that "must be paid in order to reap the advertised benefits that customers can receive cash 'instantly' or 'on the spot.'"

Amicus Brief(ly): The court dispensed pretty quickly with the MLA arbitration claims, pointing to other cases that deemphasized the question of the voluntariness of the arbitration provision and focused instead on the availability of remedies for servicemembers under the MLA. The court was unwilling to decide the case based on the arbitration opt-out provision, taking the court to the critical question that arises in many EWA cases: Was the product "credit" or something else? The court adopted the reasoning of other courts that have addressed the issue to find that the fees a consumer could incur with the EWA product amounted to "finance charges," making the product "credit" subject to TILA. While this issue plays out in the courts, readers should keep in mind that the states are actively weighing whether and how to regulate EWA products that look like loans (or "credit").

A homeowner financed the purchase of a home with a loan secured by a first deed of trust, which was later assigned to a national bank. After the homeowner failed to pay his homeowners' association dues, the HOA retained a law firm to foreclose on its lien.

When an HOA member defaults on dues, Nevada law gives the HOA an extraordinary lien against the member's property. The lien includes a superpriority component that extinguishes all other encumbrances, including senior deeds of trust, upon foreclosure. However, a prior lienholder may preserve its deed of trust by tendering the superpriority amount of the lien or by showing "that the party entitled to payment had a known policy of rejecting such payments."

The bank wrote the HOA's counsel offering to pay the superpriority portion of the HOA lien. The bank's letter stated that the superpriority portion would be equal to nine months of past due assessments and asked for the exact amount of such assessments. The HOA responded, stating in a letter that the superpriority amount included past dues and attorneys' fees and costs and did not come into existence until the first deed of trust was foreclosed. (The Nevada Supreme Court later rejected these contentions, holding that the superpriority portion of the HOA lien attaches prior to foreclosure and that the superpriority portion does not include attorneys' fees and costs.)

The HOA then sold the property at a foreclosure sale. The first deed of trust was later transferred to Carrington Mortgage Services, LLC, which sued the purchaser of the property to quiet title, alleging that its deed of trust survived the foreclosure. The federal district court entered judgment for the purchaser of the property.

In this decision, the U.S. Court of Appeals for the Ninth Circuit reversed, holding that the district court erred in finding that tender was not excused as futile. "Because [the bank] did not tender payment, the dispositive issue is whether tender was excused. Tender is excused if the HOA's agent ... had a 'known policy of rejecting such payments.' The district court found that Carrington failed to show 'any attempt to tender was subjected to automatic rejection' by [the HOA's counsel] because the law firm notified its HOA clients when it received a tender offer and asked them whether to accept it. However, [according to the Ninth Circuit,] the record evidence shows that when [the HOA's counsel] made these notifications during the relevant time period, it 'strongly recommend[ed] foreclosure,' warning its clients that they 'would be responsible to pay for any collection fees and costs' if they accepted a tender offer limited to nine months' worth of assessments, and that its clients invariably followed these recommendations to proceed with foreclosure."

The Ninth Circuit also found that the bank received hundreds of letters from the HOA's counsel that were materially identical to the one in this case. "A tender rejection policy may be shown 'by conduct,' and 'formal tender is not necessary where a party has shown that it would not be accepted.' [The HOA's counsel's] rejection of tender across hundreds of interactions with [the bank] shows that 'even if [the bank] had tendered a check for the superpriority amount, it would have been rejected.' In reaching a contrary conclusion, the district court relied on language in [the HOA's counsel's] letter stating that if [the bank] made a 'partial payment' to the HOA, the HOA 'would apply it to the owner's past due balance.' But the fact that [the HOA's counsel] would accept only 'partial' payment confirms that it would not accept a tender conditioned on agreement that 'acceptance of the tender would satisfy the superpriority portion of the lien.'"

In addition, the Ninth Circuit found that the Nevada Supreme Court has recognized that "tender is excused where the lienor claims a larger sum than he or she is entitled to collect," and the HOA's counsel's response letter to the bank erroneously asserted that the superpriority amount included attorneys' fees and costs.

Amicus Brief(ly): Counsel for Carrington in this case should feel good about the outcome at the Ninth Circuit, and Carrington should feel good about appealing the case after it lost at the trial court level. The Nevada statute is clear about the two triggers for the application of its rule that allows a prior consensual lienholder to preserve its lien when an HOA superpriority lien attaches. Because the bank never made a payment in this case, all the weight fell to that second consideration - whether the HOA has a known policy of rejecting superpriority payments, which excuses the lienholder from trying to tender payment. The Ninth Circuit looked past the language of the letter from counsel to its client and focused instead on the pattern and practice of that HOA client to find that its established course of conduct was to reject tender of superpriority payments. Whatever the reason for its policy (e.g., a concern about being liable for attorneys' fees and court costs), the impact of the policy allowed Carrington to prevail and preserve its lien.

On January 27, the Federal Housing Administration announced an extension to its temporary partial regulatory waiver of provisions at 24 CFR § 200.926d(c)(4) (drainage and flood hazard exposure provisions), which require a residential structure located in a Special Flood Hazard Area or a Federal Emergency Management Agency-designated "coastal high hazard area" to be constructed such that the lowest floor is at least two feet above the base flood elevation. The initial temporary regulatory waiver is set to expire on February 21, 2026. The FHA is extending this waiver to continue assisting in ensuring the availability of FHA new construction financing options to expand the housing supply and deliver emergency housing price relief.

According to the FHA, without this temporary regulatory waiver, the new Minimum Property Standards-required elevation standard will limit the land available for development and increase the cost of construction for FHA-insured properties, thereby contributing to the insufficient supply of new construction housing and rising home prices.

This waiver is in effect February 20, 2026, through February 19, 2027.

Amicus Brief(ly): The extended partial regulatory waiver of these building standards in certain flood hazard zones will allow for faster new construction, but we wonder whether the new houses will be desirable to consumers in those flood hazard zones. The prices and the costs of financing will have to be right to get informed consumers to overlook the potential for losing their homes and belongings in floods. For consumers in some states still reeling from flood damage in 2025, this may be a tough sell. The stated purpose of the original waiver and its extension is clear - housing prices are high, so HUD would like to provide some relief by making it a little easier to build new affordable housing. What we do not yet know, though, is whether the costs of an FHA loan (and its attendant insurance), together with some flood risk to consumers' homes and personal possessions, will keep consumers from buying homes in these zones.

---

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.