Weekly Rewind...News from Your Regulators

TILA and Regulation Z: Top 10 Material Violations

By: Justin Hosie[1] and Cliff Cook[2]

June 5, 2022


Excerpt from presentation at the 2022 ACUIA Convention:


Failing to accurately disclose the balance subject to a finance charge on periodic statements

Under TILA, creditors providing open-end credit must furnish consumers with a periodic statement that includes several key disclosures, including the balance on which the finance charge is computed. This disclosure includes the amount of the balance to which a periodic rate was applied, along with an explanation of how that balance was determined. When a balance is determined without first deducting all credits and payments made during the billing cycle, creditors must disclose this information to the consumer, along with the amount of the credits and payments. As an alternative for transactions that are not home-secured plans, creditors are permitted to identify the name of the balance computation method and provide a toll-free telephone number that will explain the balance computation method and how resulting interest charges were determined. Failing to accurately disclose the balance on which the creditor calculates the finance charge is a TILA violation that will result in penalties, and possible contract violations.


CFPB Releases Interpretive Rule on Digital Marketing

Digital Marketing Providers – The CFPB released an interpretive rule to address digital marketing providers that commingle the targeting and delivery of advertisements to consumers, such as by using algorithmic models or other analytics, with the provision of advertising “time or space.” Digital marketing providers that are involved in the identification or selection of prospective customers or the selection of placement of content to affect consumer engagement, including purchase or adoption behavior, are typically service providers and subject to the Consumer Financial Protection Act, including its UDAAP provisions. 


CFPB Data Security


Data Security – The CFPB published a circular that reaffirms that nonbank entities may violate the Consumer Financial Protection Act’s (CFPA) prohibition on unfair, deceptive, or abusive acts and practices (UDAAP) if they fail to maintain adequate data security safeguards. The CFPB stated that “In addition to other federal laws governing data security for financial institutions, including the Safeguards Rules issued under the Gramm-Leach-Bliley Act (GLBA), ‘covered persons’ and ‘service providers’ must comply with the prohibition on unfair acts or practices in the CFPA.”

From the CSBS

Cybersecurity Exam – The Conference of State Bank Supervisors released two tools for nonbank financial services companies to improve their cybersecurity. The Baseline Nonbank Cybersecurity Exam Program and the Enhanced Nonbank Cybersecurity Exam Program are tools used by state examiners nationwide to assess the cyber preparedness of nonbank entities. The release of these tools provides these institutions the ability to improve their cybersecurity posture and better prepare for cybersecurity exams conducted by state examiners.


FTC Data Security

Commercial Surveillance and Data Security - The Federal Trade Commission announced that it would begin soliciting public feedback through an advance notice of proposed rulemaking, in an effort to mitigate harmful commercial surveillance and relaxed data security practices. The FTC defines commercial surveillance as “the business of collecting, analyzing, and profiting from information about people,” calling attention to the increased risks of data breaches, deceptions, and other harms it has caused consumers.

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Federal Reserve Consumer Compliance Outlook


Consumer Compliance Outlook – The latest Consumer Compliance Outlook is now available. It contains information about mergers and acquisitions, commercial flood insurance, regulatory updates, and recent federal court opinions. 

[1] Justin B. Hosie is a partner and practice group leader at Hudson Cook, LLP, a nationwide law firm focused on compliance with consumer protection laws governing financial services. Justin provides day-to-day compliance advice on various laws including the Federal Truth-in-Lending Act. Among various publications, Justin is co-authoring the “Annual Percentage Rates” chapter of the forthcoming American Bar Association’s Truth in Lending Manual, 2023 edition. He is AV rated by Martindale Hubbell and is recognized in The Best Lawyers in America for Financial Services Regulation Law.

[2] Cliff E. Cook is an Executive Consultant with Compliance Services Group. Cliff began his banking and compliance career in 1974, and has since been widely recognized by the Banking, Credit Union, Consumer Loan, Payday Loan, and Title Loan industries as an authoritative source for Truth-in-Lending Act compliance, with particular expertise in assisting lenders in complying with the Annual Percentage Rate requirements, as well as issues related to product development, loan agreements, loan origination systems, and loan servicing systems. Recently, Cliff has been assisting commercial lenders and law firms to comply with the new state-required commercial loan APR disclosures.

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