Where There’s a Will, There’s a Way: The Importance of Estate Planning

“[I]n this world nothing can be said to be certain, except death and taxes.” 

Benjamin Franklin’s words still ring true today, but even death and taxes can lead to uncertainty if you don’t plan correctly. 

For your reference, five reasons to create an estate plan while you still can: 

1. You get to make the decisions: 

“Without a plan, state law controls.  State law will not: adequately address dispositions to minors, who will inherit at 18; eliminate disputes over who gets specific items of tangible property or what happens to a closely-held, family-run business; provide anything for a non-marital partner; or avoid disputes over who will serve as your fiduciary where more than one person is eligible.” (Planning During Turbulent Times by Katten Muchin Rosenman LLP) 

2. Your family gets more (and the IRS gets less):

“… gifting is a very powerful tool in reducing the amount of taxes families pay when a loved one dies—sometimes saving valuable family assets such as farms, ranches, and businesses from being lost to the biggest creditor in the world—the IRS. Estate planners and financial advisors have long known how to make gifts out of your estate of appreciating assets so they don’t count in your taxable estate.” (State of the Estate Tax Redux by Crider Law PC) 

3. You decide who takes charge of your affairs when you’re no longer able to do so:

“Technically a power of attorney is a separate document from a will, but they really go hand-in-hand, and if you are making a will, you might as well get powers of attorney too. By granting someone power of attorney, you are giving them permission to make certain decisions for you when you are incapable… The documents can be worded so your agent can only make decisions when you are medically incapable. Without powers of attorney, a court has to step in to appoint someone to make decisions.” (Reasons You Need A Will by Davis, Brown, Koehn, Shors & Roberts, P.C.) 

4. Not having an estate plan can be catastrophic: 

“Due to the ever changing and broadly applied federal estate tax laws, families can face dire and catastrophic consequences, such as a forced-sale of assets at less than optimal values, even with extensive advance planning. Simply put, in the context of family wealth, the unexpected death of a family matriarch or patriarch is not only a family tragedy, but it can also significantly affect the family wealth and business. The federal estate tax can play a large part in this loss.” (Estate Taxes; Where Do We Go From Here? by Akerman Senterfitt) 

5. The law generally doesn’t account for non-traditional families:

“It is important for same sex couples to know that through proper estate planning, they can obtain many of the abilities that a married couple has with regards to inheritance, hospital visitation, and the power to make medical decisions for their partners. What’s even more important for same sex couples to know is that if they have not engaged in proper estate planning, because they are not considered related to their partner, they have virtually none of the rights that a legally married couple has with regards to these issues.” (Same Sex Couples Need Estate Planning Even More than Legally Married Couples by David Shulman)

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Looking for more? Find it here»

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Report: Bankruptcy Costs Have Gone up [Video]

[Link: Report Shows Bankruptcy Reforms Raised Costs For Consumers and Creditors]

…but bankruptcy attorneys aren’t necessarily making larger profits. Watch the Bloomberg Law video for the whole story.

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CISPA Would Allow Government to Monitor Personal Internet Use

On April 26, the Cyber Intelligence Sharing and Protection Act of 2011 (CISPA) was approved by the House of Representatives. 

The bill is intended to help federal authorities investigate and fight cyber threats. It has significant support from lawmakers on both sides of the aisle as well as corporations that could be targets of cyber terrorism.

But the proposed law is seen by privacy experts as yet another attack on the personal liberties of internet users. Their principal criticism? CISPA’s vague language and limited checks on government – and corporate – power, make it even more dangerous than earlier legislative attempts to monitor internet use for illegal activity.

The fate of the bill remains uncertain: although it is expected to pass in the Senate, President Obama has threatened to veto CISPA if it reaches his desk in its current form. 

In the meantime: five things you should know about the law:

1. Your online history would be shared without your knowledge (or permission):

“Critics claim that the bill does not do enough to protect users’ privacy, because there are no limits on what can be done with the personal information once obtained. Private companies would be able to share this information and there are not enough measures in place to make sure that the data is being used for the right purpose.  Another danger is that the bill does not make companies accountable for failing to protect the personal information of the general public. Others complain that the bill gives the government too much access to private information.” (New Law Will Let the Feds Monitor Your Email by Lawyers.com) 

2. The government would monitor your internet use for illegal activity:

“According to the bill sponsors, CISPA is an essential update to the National Security Act of 1947 that adds provisions allowing for information about ‘cyber threats’ to be shared between the government and private industry. The bill loosely defines ‘cyber threats’ as potential vulnerabilities to government or private networks, including risks associated with efforts to disrupt those networks or steal intellectual property or personally identifiable information. Under CISPA, the government would act as a central information clearinghouse for cyber threat information collected across the country.” (Cyber Intelligence Sharing and Protection Act Bill Passes House by Scott & Scott, LLP) 

3. Private companies would be authorized to spy on your email:

“[The law would] create new channels for communication between government intelligence entities and private firms regarding potential and emerging cybersecurity threats. It allows a company to intercept emails or text messages and to modify those messages or prevent them from reaching their destination if they qualify as a cybersecurity threat. It would allow the companies and the federal government to share information with each other in an attempt to foil hackers.” (CISPA, Approved by House, Poses Threat to Internet Freedom by Ifrah Law) 

4. Existing privacy protections would be rolled back:

 “Under CISPA, Corporations and Government, in the name of protecting us all from cyber attack, could, with immunity, violate our privacy wholesale by sharing all kinds of data that we have come to think of as legally protected.” (CISPA – Evil Spawn of SOPA and PIPA? by Sands Anderson PC) 

5. Much of the corporate world is in favor of the law:

“An anti-SOPA style campaign is already underway by privacy advocates to ensure that any Senate bill that emerges contains privacy protections that were not successfully included in CISPA.  It is likely that substantial revision is necessary to avoid the threatened veto [by President Obama].  In addition, while players in the online industry have been silent or quietly supportive of CISPA, Mozilla came out against it in the wake of its passing the House.” (House Passes Cyber Intelligence Sharing Bill With Substantial Industry Support, But Veto Threat Looms by Davis Wright Tremaine LLP) 

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Want more information? Watch this Bloomberg Law interview with Trevor Timm from the Electronic Frontier Foundation:

[Link: Vague Definitions in CISPA Raise Concerns of SOPA 2.0] 

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Find related law news and updates on JD Supra»

3 Reasons to Consider a Short Sale

Short sales, where owners sell their houses for less than they owe, can offer underwater borrowers an alternative to foreclosure. Equally important, they can give financially troubled homeowners a fresh start.

Critics say that selling a home for less that it is worth can come with a steep price, including a lower credit score and the loss of any built up equity. But for a growing number of homeowners, the benefits outweigh the risks, particularly when their only alternative is foreclosure. 

Why should you consider a short sale? Three reasons: 

1. They can get you out of debt:

“With the incentive for banks to forgive debts that remain after the sales, the typical homeowner walks away debt-free. ‘For most borrowers, it’s a good idea,’ said Todd K. Helwig, a real estate attorney with Mirick O’Connell in Massachusetts. ‘If you want to get out from under the burden of your loan, it’s usually the best way, as long as you can convince the bank to agree not to collect the remaining debt.’ (Short Sales Soar as Home Foreclosures Fall by Lawyers.com) 

2. They can benefit your lender: 

“[A short sale] allows the lender to avoid adding another piece of property to their foreclosed inventory (which for many lenders is overloaded already). The lender also saves time and money in avoiding the foreclosure process. Finally, in most cases, the lender can get more money from the short sale than it can at a foreclosure auction.” (Short Sale in Surprise, Arizona: When It Is the Best Option by Dan Dodds) 

3. They’re getting easier:

“On April 17, the FHFA directed Fannie Mae and Freddie Mac to develop enhanced and aligned strategies to facilitate short sales, deeds-in-lieu and deeds-for-lease to help more homeowners avoid foreclosure, including requiring that servicers review and respond to short sale requests within 30 days from receipt of a short sale offer.” (Fannie and Freddie Streamline Short Sales by Orrick, Herrington & Sutcliffe LLP) 

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Want more real estate law news? Find it here»

Most Popular Posts on Is That Legal? – Apr 2012

What’s on your mind? Illegal foreclosures, estate planning, debt collectors, divorce, and other legal issues, that’s what.

For your (re)reading pleasure, here’s a look at the most popular subjects on the site over the past month:

1. 5 Tips for Reducing the Financial Stress of a Divorce 

“Financial difficulties are among the leading causes of divorce in the United States. But those difficulties don’t go away after the divorce is over. For your reference, here are five tips for reducing the financial stress during and after a divorce.” Read on»

2. Illegal Foreclosure? It Might Be More Common Than You Think 

“Think the foreclosure you’re facing might be illegal? If the results of a recent California audit are indicative of what’s going on in the rest of the country, you may be on to something. So what can you do about it? For now, not much, according to Lawyers.com…” Read on»

3. What Is An Executor? 5 Things You Should Know

“Being asked to act as an executor for a friend or family member’s estate can be flattering. But it can also mean a lot of work, and potential legal liabilities if you don’t do the job right. For your reference, five things you should know – before you say ‘yes’ – about the role of executor.” Read on»

4. 7 Illegal Habits of Highly Unscrupulous Debt Collectors

“Dealing with debt collectors? Be thankful they’re not Frank Lindstrom and Kevin Medley, recently fined more than $1 million by the Federal Trade Commission for abusive and over-the-top practices…” Read on»

5. The Plot Thickens: United States of America v. Apple Inc.

“Read any good e-books lately? How much did you pay? The Department of Justice just announced that it filed a lawsuit against Apple and five of the six largest book publishers in the US, claiming they entered into a conspiracy to fix prices for e-books.” Read on»

6. What Does Crowdfunding Mean to Me as An Investor?

“Earlier this month, President Obama signed into law the Jumpstart Our Business Startups (JOBS) Act, which authorized ‘crowdfunding’ – the process of raising small amounts of money from a large group of people, in particular via the internet. For supporters, it’s a huge step forward for small businesses seeking startup and growth capital, one that will lead to more jobs and a stronger economy.” Read on»

7. My Facebook Password? To Work Here? Really?

“Guess what: hackers aren’t the only ones trying to access your otherwise-private personal online information. Believe it or not, some employers and recruiters feel like they have a right to peek inside your Facebook account - but they’re not hacking or phishing for it, they’re just asking. In fact, some potential employees request login credentials as part of the job interview. True!” Read on»

8. Cyberbullying Laws: What’s Being Done to Stop Online Abuse?

“On March 16, 2012, Dharun Ravi was convicted of hate crime and invasion of privacy for spying on his roommate, Tyler Clementi, who committed suicide after Ravi and another student secretly watched via webcam Clementi in an embrace with another man. Ravi’s crime, for which he faces deportation and up to 10 years in prison, re-ignited the national debate about cyberbullying, its causes and effects, and what should be done to prevent it from happening.” Read on»

9. The Divorce Process: A Legal Guide to Common Issues

“If you’re considering divorce or separation, you’re likely to have many more questions than answers. For your reference, we’ve put together the following brief guide to some of the more common issues that arise during this difficult transition. A legal primer, if you will, on divorce and…” Read on»

10. Big Brands and their Intellectual Property Woes: Michael Jordan, Disney, Apple, Target, & More

“Big brands. Intellectual property fights. How could it get any better? Don’t answer that. But even if you don’t read the IP section of the newspaper first (like we do), you’re bound to recognize a few of your favorite brands on this list of 10 big brands with intellectual property woes…” Read on»

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Find more law news and updates on JD Supra»

Hydraulic Fracturing: What the Frack? →

Digging deep from JDSupra Buzz:

For your interest, here’s a handful of latest updates and law firm advisories covering a controversial topic that always draws interest on JD Supra: hydraulic fracturing, aka fracking:

- Federal Agencies Move to Regulate Aspects of Hydraulic Fracturing (Morgan Lewis)

“On May 4, both the U.S….

Read the entire update: WTFrack»

Once More Into The (Data) Breach

Data breaches are on the rise, and the numbers are staggering:

“According to Symantec, approximately 1.1 million identities were stolen per data breach on average in 2011, and hacking incidents exposed 187 million identities in 2011 — the largest number for any type of data breach in 2011. Now here comes the ‘kicker’…….the most frequent cause of data breaches was theft of loss of unencrypted data on a computer or other medium on which data is stored or transmitted, such as a smartphone, USB drive, or a backup device.” (Symantec: Malicious Cyber Attacks Increased by 81 Percent in 2011 and Data Breaches Up by Mintz Levin) 

For your reference, a roundup of recently legal commentary and analysis on the problem and possible solutions:

Data Breaches: Will You Be Sued, And Can You Lower Risk? (Bryan Cave)

“Statistics regarding data security breaches can be sobering. For instance, according to one widely reported study conducted by the Ponemon Institute, 90 percent of organizations have had at least one data breach in the last year. More troubling is that the study concluded that the majority of organizations (almost 60 percent) had two or more breaches over the year.” Read on»

Navigant: Reports of Data Breaches On the Increase Across Industries (Mintz Levin)

“Navigant recently published the latest update of its comprehensive Information Security and Data Breach Report, which adds yet another analytic view of the data breach picture.   And the view is not a pretty one. ” Read on»

Data Breach Case Research Paper Sheds Light (Proskauer)

“In a draft research paper titled ‘Empirical Analysis of Data Breach Litigation’, three prominent scholars have collected and analyzed a sample of over 230 federal data breach lawsuits in order to deduce just what makes them tick… As an interesting example, they found that the odds of a company being sued over a data breach are six times lower when the company offered free credit monitoring following the breach.” Read on»

Data Security Breach Alert: 1.5 Million Credit Card Customers Affected (Mintz Levin)

“Global Payments, Inc. (‘Global’) has reported a significant data security breach for approximately 1.5 million credit card customers.  According to a statement that Global released on Sunday, their investigation has revealed that ‘Track 2 card data may have been stolen, but that cardholders’ names, addresses and social security numbers were not obtained by criminals.’ Using Track 2 data, a hacker can transfer a credit card’s account number and expiration date to a fraudulent card, and then use the fraudulent card for purchases.” Read on»

Rapid Response to Data Breach Pays Off (Davis Wright Tremaine LLP)

“The Oregon Supreme Court last week affirmed the dismissal of a class action lawsuit against Providence Health & Services-Oregon arising out of the theft of patient data on backup media that were stolen from an employee’s car in late 2005. The case underscores the importance of taking prompt and effective action to protect patients after a data breach. The Supreme Court noted approvingly the substantial—and costly—steps Providence took to protect its patients in the wake of the theft.” Read on»

Massachusetts Office of Consumer Affairs and Business Regulation Publishes Report on Data Breaches (Mintz Levin)

“The Massachusetts Office of Consumer Affairs and Business Regulation received nearly 2000 data breach notifications affecting nearly 3.2 million individuals between October 31, 2007 and September 30, 2011, according to a report released on Monday. The health care industry experienced only 214 of the nearly 2000 breaches, but it had more affected individuals than any other industry.” Read on»

Data Breach Laws Become Even Stricter For All Companies With California Or Massachusetts Customers Or Users (Fenwick & West LLP)

“How can a 21st century U.S. company do its best to comply with data-security-related obligations imposed by the various laws of 46 states? A company can implement practices and procedures designed to achieve maximum compliance with the laws adopted by the two states widely acknowledged to impose the strictest obligations: California and Massachusetts.” Read on»

Massachusetts Data Security Regulation: New Requirements for Service Provider Contracts (White & Case LLP)

“Effective as of March 1, 2012, organizations that own or license personal information about residents of the Commonwealth of Massachusetts must include in all agreements with vendors and other third-party service providers contractual provisions that require those providers to maintain appropriate security measures to protect personal information.” Read on»

Massachusetts Attorney General Data Breach Investigation Results in $15,000 Settlement with Property Management Firm (Mintz Levin)

“Last October, a Maloney Properties, Inc. (‘MPI’) company laptop was stolen containing unencrypted personal information, including social security numbers, for over 600 Massachusetts residents… Massachusetts Attorney General Martha Coakley … alleged that MPI violated the Massachusetts Standards for the Protection of Personal Information of Residents of the Commonwealth, and the Massachusetts Consumer Protection Act by (a) maintaining personal information on an unencrypted laptop, and (b) failing to follow its own Written Information Security Program.” Read on»

When a Client Suffers a Data Breach (Gregg Rapoport)

“Companies unwittingly heighten their vulnerability in the name of productivity and efficiency by integrating cloud-based services and embracing the use of consumer-friendly smartphones and ever-evolving tablet devices which rely on those services and/or provide access to corporate networks. In 2011, the risk of outsourcing the custody of sensitive customer data was exposed by incidents involving ‘secure’ cloud vendors Epsilon5 and Dropbox.” Read on»

Credit Processor Pays $1 Million for Data Breach (Lawyers.com)

“Think your credit card information is secure? Think again. Last month, Heartland Payment Systems, a national credit processor, settled a class action lawsuit to the tune of $1 million after a staggering 130 million credit card numbers were stolen from its system by hackers in December 2007.” Read on»

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Find related law news and updates on JD Supra»

Supreme Court Could Uphold Controversial Arizona Immigration Law

[Link: Supreme Court Decision Could Spur New Immigration Laws] 

The Supreme Court held oral arguments last week over the constitutionality of Arizona’s controversial immigration law, S.B. 1070. According to early reports, the Justices appeared to find little wrong with parts of the law, including in particular the provision that requires police to check the immigration status of people stopped for other reasons. Watch this video, just in from Bloomberg Law, for early analysis of what a favorable ruling could unleash.

Some choice excerpts from the discussion:

• “We have a law whose purpose is basically to make life so inhospitable to millions of people that they will self-deport” - Careen Shannon (attorney at Fragomen, Del Rey, Bernsen and Loewy, LLP)

• “We’re already seeing copycat legislation and unfortunately I think we’re going to see more if any part of this law is upheld ” - Ian Millhiser (Senior Constitutional Policy Analyst at the Center for American Progress)

• “The two sections having to do with inquiries and arrests by law enforcement will probably be upheld based on the tone during the oral arguments.” (Careen Shannon)

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Read additional commentary on this important case here:

Justices Seem Open To Upholding Ariz. Immigration Law (Mintz Levin) 

“The federal government appeared to find little support at the U.S Supreme Court on Wednesday for its arguments that one key provision of Arizona’s controversial immigration law is preempted by federal law, though the justices’ position on other provisions, including one related to employment, seemed less clear.” Read more»

ICE Storm Predicted: Arizona Employers Beware, I-9 Audits are on the Rise! (Jaburg Wilk) 

“In a speech to the US House of Representatives, Secretary of Home Land Security, Janet Napolitano, stated that since 2009, Immigration and Customs Enforcement (“ICE”), has conducted more than 6,000 audits of employers for I-9 compliance and levied fines to non-compliant employers of more than $76 million!” Read more»

Supreme Court Poised to Hear Arizona Immigration Law Arguments (Lawyers.com)

“In drafting the law, Arizona lawmakers wrote that the law’s goal was ‘attrition [of illegal immigrants] through enforcement’ and to ‘discourage and deter the unlawful entry and presence of aliens.’ Since it was passed, the state has been the focus of protests and boycotts. It’s also believed that many Arizona residents who are immigrants have relocated to other states.” Read more»

Arizona Immigration Statute: DOJ Raises Law Enforcement Issues (Ifrah Law)

“Although many supporters of the law have characterized the opposition of the Obama administration to S.B. 1070 as the outgrowth of a misguided sympathy for illegal immigrants, it is interesting and noteworthy that as expressed by the administration, its opposition to the law is based on a pro-law-enforcement perspective. The complaint is thus an interesting read, partly for its explication of DOJ’s enforcement priorities.” Read more»

Federal Court Issues Preliminary Injunction Against the Most Controversial Sections of Arizona Immigration Law (Mintz Levin)

“On July 28, 2010, U.S. District Court Judge Susan R. Bolton issued a ruling in the case of United States v. State of Arizona et al, in which the federal government as plaintiff challenged the constitutionality of S.B. 1070 on the grounds that the power to regulate immigration rests solely in the federal government, and that the Arizona law is therefore preempted by federal law. In her ruling, Judge Bolton found that the U.S. is ‘likely to succeed on the merits in showing that’ some sections of S.B. 1070 are preempted by federal law, and therefore issued a preliminary injunction on those sections.” Read on»

The Unconstitutional and Inefficient Law That May Just Fix Immigration (Lane Powell PC)

“… immigration law enforcement is one area in which Congress has already created a mechanism for states to cooperate and work with the federal government. Other criminal law issues are often addressed separately by the states and the federal government. For example, drunk driving is a serious and pervasive problem nationwide, but enforcement of drunk driving laws is nonetheless generally left to the states (with the exception of mandating a drinking age through the use of federal highway funds), as is speeding. Enforcement of federal tax laws is an example of an area that is left solely to the federal government.” Read on»

Arizona’s Immigration Law S.B. 1070: What Exactly Does the U.S. Object To? (David Palinsky)

“District Court Judge Susan Bolton’s 28 July 2010 decision granting, in part, the Obama administration’s motion for preliminary injunction against Arizona’s new immigration law, raised two questions: ‘Isn’t the State of Arizona merely attempting to enforce existing federal immigration law?’ and ‘What exactly does the Obama Administration object to?’ The answer to the first question is a resounding ‘No’: SB 1070 goes much further than existing federal immigration law in seeking to regulate the presence of foreign nationals — primarily Mexican nationals — on U.S. soil; the answer to the second question is much more complex.” Read on»

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[Full Text Copy:]  United States v. The State of Arizona; and Janice K. Brewer, Governor of the State of Arizona, in her Official Capacity: Challenge to Arizona Immigration Law S.B. 1070

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You can find additional updates at JD Supra»

Space Laws and Asteroid Mining? Sure Thing! Watch the Video →

Bleep. Bleep. We’re just now picking up a faint signal from JDSupra’s Pluto HQ. They’ve found gold:

Interesting, dare we say far out, video interview posted today by Bloomberg Law: Asteroid Mining in Space: Is it Legal?

“Frans von der Dunk, professor of Space Law at University of Nebraska-Lincoln, College of Law, talks with Lee Pacchia about the legal implications of a new company’s…

…

Consumer Financial Protection: Who’s Got Your Back? The CFPB, That’s Who

Established less than a year ago, the Consumer Financial Protection Bureau (CFPB) has rapidly become a significant and powerful advocate for consumers. 

Its deceptively simple mission – “to make markets for consumer financial products and services work for Americans” – has allowed the CFPB to set up mechanisms for stopping a broad range of potentially fraudulent practices across the financial services industry.

For your reference, here’s a look at nine areas the CFPB targets:

1. Debt Collection 

“Regarding consumer debt collection, the Bureau casts a wide net to capture ‘a range of consumer debt collection activities, including consumer debt collection activities undertaken by third party collectors, law firms, attorneys, and debt buyers.’ The Rule defines ‘consumer debt collection’ as: Collecting or attempting to collect, directly or indirectly, any debt owed or due or asserted to be owed or due to another and related to any consumer financial product or service.” (Consumer Financial Protection Bureau Gives important Guidance on Supervisory Jurisdiction by Davis Wright Tremaine LLP) 

2. Credit Reporting 

“… the Consumer Financial Protection Bureau (“CFPB”) proposed a new rule which defines the contours of CFPB’s authority to supervise certain debt collectors and consumer reporting agencies to ensure their compliance with federal consumer financial laws. Until now, the affected entities/persons were principally supervised at the state level, and generally were not subject to federal oversight. The Proposed Rule thus represents a new shift in consumer protection, and sets the tone for the CFPB for the future.” (Consumer Financial Protection Bureau Broadens Its Oversight to Include Certain Debt Collectors and Credit Reporting Agencies by Schnader Harrison Segal & Lewis LLP) 

3. Credit Card Provider Practices 

“The CFPB receives credit card complaints from consumers. The CFPB intends to disclose certain information about credit card complaints in a public database and in the CFPB’s own periodic reports. The purpose of this disclosure is to provide consumers with timely and understandable information about credit cards and to improve the functioning of the credit card market. By enabling more informed decisions about credit card use, the CFPB intends for its complaint data disclosures to improve the transparency and efficiency of the credit card market.” (CFPB Amends Complaint Manual; Banks Will Be Subject to Public Complaints on Credit Cards by Katten Muchin Rosenman LLP) 

4. Mortgage Servicer Practices

“… the Consumer Financial Protection Bureau (CFPB) outlined new rules it is proposing to adopt to increase accountability and transparency in the mortgage servicing industry… The proposed rules aim to provide borrowers with detailed and accurate information about their loan on a regular basis so that they can make informed decisions, and to provide them with resources to navigate changes in their financial position.” (CFPB Proposes New Rules for Mortgage Servicing Industry by King & Spalding) 

5. Discriminatory Lending 

“The CFPB today put consumer lenders on notice that it ‘will use all available legal avenues, including disparate impact, to pursue lenders whose practices discriminate against consumers.’ The CFPB intends to employ disparate impact when examining auto lenders, credit card issuers, student lenders, mortgage lenders, and other providers of consumer credit, allowing the CFPB to claim an institution has engaged in discriminatory lending based on the effects and not the intent of the lending practices.” (CFPB Puts Consumer Lenders on Notice Regarding Discriminatory Practices by BuckleySandler LLP) 

6. Financial Product and Service Contracts

“The Consumer Financial Protection Bureau (‘Bureau’) has started a process that could lead to the eventual unraveling of recent Supreme Court decisions that have upheld consumer arbitration in class-action lawsuits for consumer financial products and services. The Bureau has launched a public inquiry into how consumers and financial services companies are affected by arbitration and arbitration clauses, and will assess whether imposing conditions or prohibitions on arbitration would better protect consumers.” (CFPB Investigates Benefit of Arbitration Agreements by Venable LLP) 

7. Bank Relationships with Third-Party Vendors

“This bulletin signals that the Bureau is focusing its supervision and enforcement efforts on both direct providers of consumer financial products and services and their service providers, including companies involved in advertising and marketing, lead generation and affiliate marketing, fulfillment, other back-office services, and customer service. The bulletin makes clear that the CFPB views the use of service providers as ‘often an appropriate business decision,’ but that entering into a business relationship with a service provider ‘does not absolve’ the supervised entity of responsibility for complying with Federal consumer financial law to avoid consumer harm.” (CFPB Warns of Service Provider Scrutiny by Venable LLP) 

8. Foreign Money Transfers

“… the Consumer Financial Protection Bureau (‘Bureau’) published … a final rule setting forth an entirely new regulatory scheme for companies that provide remittance transfers, including banks. Remittance transfers are electronic transfers of money from U.S. consumers to recipients in foreign countries. Among other things, the Bureau’s final rule: (1) requires that specific disclosures be given to each ‘sender’ of a remittance transfer showing how much money will be received by the recipient of the transfer in local currency; (2) enables senders to dispute errors for up to 180 days following a remittance transfer; and (3) allows senders to cancel remittance transfer transactions within 30 minutes.” (Consumer Financial Protection Bureau Finalizes Regulatory Scheme for Remittance Transfers by Morrison & Foerster LLP) 

9. Payday Lenders

“… the CFPB has released an examination procedure for short-term, small-dollar lending. The guidelines, available here, set forth the agency’s examination objectives and provide an outline of the ‘modules’ that examiners will use in five examination areas: 1. Marketing; 2. Application and Origination of Loans; 3. Payment Processing and Sustained Use; 4. Collection, Accounts in Default, and Consumer Reporting; and 5. Third-Party Relationships (i.e., privacy and safeguards).” (CFPB Issues Examination Procedures for Short-Term, Small-Dollar Loans by Katten Muchin Rosenman LLP) 

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The CFPB is not without controversy, however. Since its inception, there have been political battles over leadership of the Bureau, leading President Obama to appoint current director Richard Cordray via recess appointment. Those fights continue: Cordray Acknowledgment of Possible Invalidity of His Appointment is Much Ado About Nothing (Ballard Spahr LLP)

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See also: 

• The Consumer Financial Protection Bureau’s Whistleblower Program: How It Works and What It Means for Financial Services Companies (Benjamin Saul) 

• The Consumer Financial Protection Bureau Completes its First Six Months - But Questions About its Future Remain (Schnader Harrison Segal & Lewis LLP) 

• THE CFPB: New Director, New Powers, New Threats - Political And Judicial (Patton Boggs LLP) 

• CFPB and FTC to Coordinate on Oversight of Financial Products and Services (Loeb & Loeb LLP) 

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Find additional Consumer Protection updates on JD Supra»