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Troutman Pepper Weekly Consumer Financial Services Newsletter | #datingscams | #lovescams | #datingscams | #love | #relationships | #scams | #pof | #match.com | #dating


To help you keep abreast of relevant activities, below find a breakdown of some of the biggest events at the federal and state levels to impact the Consumer Finance Services industry this past week:

Federal Activities

State Activities

Federal Activities:

  • On August 31, the interbank messaging system, Swift, and Web3 service platform, Chainlink, announced the successful transfer of tokenized value across multiple private and public blockchains. Swift previously announced its intent to conduct the experiment in June, partnering with Chainlink and dozens of financial institutions to test connecting blockchains. The experiment demonstrates that existing secure and trusted Swift infrastructure may provide the central point of connectivity, unlocking a hurdle to the development of tokenization. For more information, click here.
  • On August 30, U.S. District Judge Katherine Polk Failla (SDNY) dismissed a class action alleging that Uniswap, a decentralized exchange, was responsible for losses related to scam tokens listed on the platform. The putative class asserted two sets of federal securities claims: one for rescission of allegedly unlawful contracts under Section 29(b) of the Securities Exchange Act of 1934; and another for Uniswap’s alleged violation of Section 12(a)(1) of the Securities Act of 1933. Judge Failla dismissed the complaint, reasoning that Uniswap’s decentralized nature left the identities of scam tokens unknown and unknowable, and declined to stretch federal securities laws to cover the alleged conduct by Uniswap. For more information, click here.
  • On August 30, the Federal Reserve Bank of Kansas City published an overview of the Bitcoin ATM (BTM) industry. According to the article, BTMs are high-fee, high-margin businesses that allow consumers to purchase and sometimes sell cryptocurrencies in three basic steps. A typical user either prefers to transact in cash, is older, is privacy-oriented, or seeks the convenience. Approximately 49,337 BTMs are in operation nationwide, producing an average monthly income ranging from $5,000 to $7,250 each. Notably, the industry has repeatedly been charged with predatory and illicit behavior based on its high fees. Other risks the article associated with the BTM industry include their use in scams and money laundering, as well as the fact that they obscure a highly volatile cryptocurrency transaction as an investment promising financial stability. For more information, click here.
  • On August 30, the Consumer Financial Protection Bureau (CFPB) issued a Consumer Advisory notifying consumers about actions they should take when their home insurance policy is cancelled or if the cost of the policy becomes unaffordable. For more information, click here.
  • On August 29, the Federal Deposit Insurance Corporation (FDIC) and Federal Reserve Board invited public comment on proposed guidance to help certain large bank holding companies further develop their Dodd-Frank Act Title I resolution plans. The guidance would generally apply to bank holding companies and foreign banking organizations with more than $250 billion in total assets but that are not the largest and most complex companies, which are already subject to guidance on resolution planning. The guidance would address the specific characteristics of, and risks posed by, this group of companies. For more information, click here.
  • On August 29, the U.S. Court of Appeals for the District of Columbia ruled in favor of Grayscale Investments, requiring the SEC to review the company’s application to convert its over-the-counter Grayscale Bitcoin Trust into a listed Bitcoin exchange-traded fund. Previously, the SEC rejected the application on the ground that the products were “not designed to prevent fraudulent and manipulative acts and practices.” Grayscale filed a petition for review, and Judge Rao found that the SEC’s decision to reject the Grayscale application was arbitrary and capricious. For more information, click here.
  • On August 29, the Office of the Comptroller of the Currency issued a proclamation allowing national banks, federal savings associations, and federal branches and agencies of foreign banks to close offices in areas of Florida affected by Hurricane Idalia. For more information, click here.
  • On August 29, the FDIC Board of Directors approved a notice of proposed rulemaking to strengthen resolution planning for insured depository institutions (IDIs) with at least $100 billion in total assets. In addition, the FDIC’s Board joined with other federal regulators to propose new long-term debt requirements for large banks and their holding companies and new resolution planning guidance for living wills for large bank holding companies. These three proposals were developed to enhance the stability and resilience of the U.S. banking system, to reduce the costs and impacts of large bank resolution, and to support the rapid and orderly resolution of their holding companies. For more information, click here.
  • On August 29, the Justice Department announced a multinational operation involving actions in the United States, France, Germany, the Netherlands, the United Kingdom, Romania, and Latvia to disrupt the botnet and malware known as Qakbot and take down its infrastructure. The Qakbot malicious code is being deleted from victim computers, preventing it from doing any more harm. The Department also announced the seizure of approximately $8.6 million in cryptocurrency in illicit profits. For more information, click here.
  • On August 29, the Securities and Exchange Commission (SEC) announced charges against Archipelago Trading Services Inc. (ATSI) for failing to file hundreds of legally required reports of suspicious financial transactions, known as Suspicious Activity Reports (SARs), between August 2012 and September 2020. The charges were related to transactions in over-the-counter (OTC) securities executed on ATSI’s alternative trading system. ATSI, a Chicago-based broker-dealer, has agreed to pay $1.5 million to settle the charges. For more information, click here.
  • On August 28, the SEC charged Impact Theory, LLC with conducting an unregistered offering of crypto asset securities in the form of non-fungible tokens. The SEC’s order alleges that Impact Theory marketed the NFTs as investments into the business, and stated that investors would profit if the company was successful in, amongst other things, “building the next Disney.” Impact Theory agreed to a cease-and-desist order finding it violated the registration provisions of the Securities Act of 1933, and will be required to pay more than $6.1 million in disgorgement, prejudgment interest, and a civil penalty. For more information, click here.
  • On August 28, the Chairman of the House Financial Services Committee, Patrick McHenry (R – NC), the Vice Chairman of the Financial Services Committee and Chairman of the Digital Assets, Financial Technology and Inclusion Subcommittee, French Hill (R – AR), and the Chairman of the Oversight and Investigations Subcommittee, Bill Huizenga (R – MI-), sent a letter to the Federal Reserve Board Chairman Jerome Powell, objecting to the Fed’s efforts to undermine Congress’ progress on legislation to establish a regulatory framework for payment stablecoins through supervision and regulation letters SR 23-7 and 23-8. The congressmen stated that the supervisory letters effectively prevented banks from issuing payment stablecoins, and created regulatory obstacles for banks seeking to engage in the payment stablecoin ecosystem. For more information, click here.
  • On August 28, the Federal Trade Commission (FTC) published an alert, warning consumers that the hallmark of a scam is requiring an individual to transfer value using cryptocurrency. The warning further warned consumers to avoid paying a fee to get a job, and to never mix cryptocurrency with online dating. For more information, click here.
  • On August 28, the Justice Department announced a settlement agreement to resolve allegations that American Bank of Oklahoma engaged in a pattern or practice of lending discrimination by redlining in Tulsa, Oklahoma. The affected area includes the historically Black neighborhoods that were the site of the 1921 Tulsa Race Massacre. This resolution is part of the department’s nationwide Combating Redlining Initiative launched by Attorney General Merrick B. Garland in October 2021. For more information, click here.
  • On August 28, the SEC filed a brief in its appeal to the U.S. Supreme Court seeking to reverse the decision of the U.S. Court of Appeals for the Fifth Circuit’s 2022 ruling that the SEC’s in-house adjudication is unconstitutional. The Fifth Circuit held that the SEC’s in-house adjudication of a petitioners’ case violated their Seventh Amendment right to a jury trial and relied on unconstitutionally delegated legislative power. For more information, click here.
  • On August 25, the FDIC released a list of orders of administrative enforcement actions taken against banks and individuals in July 2023. One administrative hearing is scheduled for September 2023. For more information, click here.

State Activities:

  • On September 1, California Attorney General Rob Bonta announced a settlement with a mortgage servicing company that will require the company to pay $58,000 in penalties and fully reimburse the affected parties. The settlement resolves allegations that the company failed to timely process and grant mortgage deferment requests that were submitted to it by California military reservists called to active duty. Under California law, reservists called to active duty may defer payments on certain financial obligations, including their mortgage, if they send a written request and copy of their military orders to the lender or other responsible entity. In response to a complaint, the AG launched an investigation last year into the company’s practices as they relate to processing such requests. The investigation revealed that, on at least 10 occasions, the company delayed granting deferment requests or otherwise failed to meet its obligations with respect to process reservists’ requests. In addition to levying a civil penalty, the settlement also requires the company to take certain action in the event it continues to engage in the mortgage-loan servicing business within the state. For more information, click here.
  • On August 31, Florida Attorney General Ashley Moody issued a consumer alert in the wake of Hurricane Idalia, warning Floridians to be cautions of price gouging. The AG warned that “[s]cammers may try to exploit this tragedy to rip off Floridians through contractor fraud, debris removal scams, price gouging or even looting.” The AG provided a list of tips to help keep Floridians safe, including, among other things: (a) have an insurance company evaluate damage before arranging repairs to ensure the work will be covered under the policy; (b) obtain multiple written, itemized estimates on bids or repairs; (c) never pay the full amount of a repair expense upfront; and (d) do not sign a certificate of completion or make final payment until satisfied with the work perform. The AG also provides several helpful tips for Floridians who intend to seek aid from disaster relief organizations. For more information, click here.
  • On August 28, New York Attorney General Letitia James, along with the FTC, secured a $1.6 million settlement from an online apartment search platform and its owners. The settlement resolves a lawsuit that the AG and FTC filed against the company in August 2022, alleging that the company defrauded millions of consumers nationwide by posting unverified listings and fake reviews. The terms of the settlement also prevent the company and its executives from purchasing and posting fake reviews about their listings. The consent order between the parties includes a monetary judgment of $36.2 million and civil penalties totaling $10.9 million. However, the larger sums will be suspended due the company’s inability to pay, so long as the company pays the $1.6 million to the states involved in the suit. For more information, click here.

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