MN Bill Proposes to Ban Medical Debt Sales

The Minnesota legislature was busy in February 2024. Though the Minnesota Debt Fairness Act captured recent headlines (a deep dive into the bill can be found here), another bill that proposes to ban the sale of medical debt in the state, could also cause significant disruption to the industry and to Minnesota citizens. 

The bill, SF 3681, proposes to amend MN statute 332.37. Though the bill contains only one amendment,  it is a powerful one:

“(a) No collection agency, debt buyer, or collector shall : […]

(25) purchase medical debt owed to: (i) a medical provider; (ii) a medical facility, including but not limited to a hospital; or (iii) an affiliate of any such provider or facility.”

If passed, medical providers who are unable to collect patient debt using their own devices would be limited to using the services of collection agencies or not collecting anything on the debt at all. In other words, the bill does exactly what it looks like: if passed, it would ban the sale of medical debt in Minnesota. 

insideARM Perspective

The proponents of this bill seem to be operating under the assumption that the problem with medical debt is the sale of it to debt buyers. As with the Debt Fairness Act, the legislature in Minnesota is ignoring potential consequences and focusing on the symptom of debt collection instead of the actual problem of increased costs of medical care.

Though requiring medical providers to collect debt on their own or through an agency may seem preferable to the idea of allowing them to sell the debt, additional costs might flow down to patients. Medical providers may be less willing to offer beneficial deals or payment terms to a patient than a debt buyer. Further, providers might move to litigation on accounts they would otherwise sell, which would move up the timeline for when that debt becomes a burden on the patient. 

Additionally, this proposal doesn’t consider the potential repercussions this could have for medical care and patients in the state. What happens when medical providers can’t collect or sell the debts owed to them? Will they want to stay where they may struggle to get paid for the work they do? And will medical facilities be able to stay open facing the increasing costs and difficulty of collection?

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Skit.ai Launches New Multichannel Offerings for the Debt Collections Industry

NEW YORK, NY  Skit.ai, the leading
provider of Conversational AI solutions for the accounts receivables industry,
announced today the launch of an innovative suite of multichannel, self-service
offerings aimed at enhancing debt collection processes and elevating consumer
experiences. The company has introduced a comprehensive range of Generative
AI-powered solutions across voice, chat, email, and text communications.

Designed to cater to consumer preferences
through multiple digital self-service channels, Skit.ai’s latest offerings aim
to simplify and accelerate the collections process and improve consumer
engagement. Leveraging large language models and industry-leading AI
technology, Skit.ai ensures more efficient, fully compliant, multichannel
interactions with consumers.

“Following the success of our Voice AI
solution in the collections industry, we’ve received many requests for
additional channels in our product lineup. We are thrilled to unveil a new,
unified multichannel platform to our current and future customers,” said Sourabh Gupta, founder and CEO of Skit.ai.
“Offering consumers the ability to choose between multiple communication
channels and providing 24/7 availability will greatly simplify and enhance
revenue recovery.”

The launch of Skit.ai’s multichannel solutions
marks a significant milestone in the use of AI technologies in the accounts
receivables industry. By integrating Generative AI across multiple contact
points, Skit.ai not only facilitates a more personalized and efficient
collections process but also sets a new standard for consumer interactions in
the financial services space.

Schedule a meeting to learn more about how
Skit.ai can help you accelerate revenue recovery with higher efficiency and at
an infinite scale.

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About Skit.ai:

Skit.ai is the accounts receivables industry’s leading
Conversational AI company, enabling collection agencies and creditors to
streamline and accelerate revenue recovery. Skit.ai’s compliant and
easy-to-deploy suite of multichannel solutions—featuring voice, text, email,
and chat powered by Generative AI—delivers seamless and effective consumer
interactions at scale, boosting recoveries and elevating consumer experiences.
Skit.ai has received several awards and recognitions, including Stevie Gold
Winner 2023 for Most Innovative Company by The International Business Awards,
Disruptive Technology of the Year 2022 by CCW, and Gold Globee CEO Awards 2022.
Skit.ai is headquartered in New York City, NY. Visit
https://skit.ai/

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New Hampshire Enacts Comprehensive Consumer Data Privacy Law

New Hampshire Gov. Chris Sununu on March 6 signed into law Senate Bill 255, making New Hampshire the 14th state to enact a comprehensive consumer data privacy law, following California, Virginia, Colorado, Utah, Connecticut,  Iowa, Indiana, Tennessee, Montana, Texas, Oregon,  Delaware, and New Jersey.  The law will go into effect Jan. 1, 2025.

Applicability 

The Act applies to persons that conduct business in New Hampshire or persons that produce products or services that are targeted to residents of New Hampshire that during a one-year period:

  • Controlled or processed the personal data of not less than 35,000 unique consumers, excluding personal data controlled or processed solely for the purpose of completing a payment transaction; or
  • Controlled or processed the personal data of not less than 10,000 unique consumers and derived more than 25 percent of their gross revenue from the sale of personal data.

Exemptions

Exemptions include, but are not limited to:

  • A financial institution or data subject to Title V of the Gramm-Leach-Bliley Act, 15 U.S.C. § 6801, et seq.;
  • Protected health information under the Health Insurance Portability and Accountability Act of 1996;
  • The collection, maintenance, disclosure, sale, communication, or use of any personal information to the extent that such activity is regulated by and authorized under the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq.

Consumer Rights

Consumers have the right to:

  • Confirm whether a controller is processing their personal data and access such personal data;
  • Correct inaccuracies in their personal data;
  • Delete personal data provided by, or obtained about, the consumer;
  • Obtain a copy of their data processed by the controller in a portable and, to the extent technically feasible, readily usable format;
  • Opt-out of the processing of the personal data for purposes of targeted advertising, the sale of personal data (subject to exceptions), or profiling in furtherance of solely automated decisions that produce legal or similarly significant effects concerning the consumer.

Sensitive Data

A controller may not process sensitive data concerning a consumer without obtaining the consumer’s consent or, in the case of the processing of sensitive data concerning a known child, without processing such data in accordance with the Children’s Online Privacy and Protection Act.

“Sensitive data” means personal data that includes data revealing:

  • Racial or ethnic origin;
  • Religious beliefs;
  • Mental or physical health condition or diagnosis;
  • Sex life or sexual orientation;
  • Citizenship or immigration status;
  • Genetic or biometric data processed for the purpose of uniquely identifying an individual;
  • Personal data collected from a known child;
  • Precise geolocation data.

Contract Requirements

A contract between a controller and a processor must set forth instructions for processing data, the nature and purpose of processing, the type of data subject to processing, the duration of processing and the rights and obligations of both parties. The contract shall also require that the processor:

Ensure that each person processing personal data is subject to a duty of confidentiality with respect to the data;

  • At the controller’s direction, delete or return all personal data to the controller as requested at the end of the provision of services, unless retention of the personal data is required by law;
  • Upon the reasonable request of the controller, make available to the controller all information in its possession necessary to demonstrate the processor’s compliance with the obligations in this chapter;
  • After providing the controller an opportunity to object, engage any subcontractor pursuant to a written contract that requires the subcontractor to meet the obligations of the processor with respect to the personal data; and
  • Allow, and cooperate with, reasonable assessments by the controller or the controller’s designated assessor, or the processor may arrange for a qualified and independent assessor to conduct an assessment of the processor’s policies and technical and organizational measures in support of the obligations under this chapter, using an appropriate and accepted control standard or framework and assessment procedure for such assessments. The processor must provide a report of such assessment to the controller upon request.

Data Protection Assessments

A controller must conduct and document a data protection assessment for each of the controller’s processing activities that presents a heightened risk of harm to a consumer, including:

  • The processing of personal data for the purposes of targeted advertising;
  • The sale of personal data;
  • The processing of personal data for the purposes of certain profiling; and
  • The processing of sensitive data.

Enforcement

The Act does not create a private right of action. A violation that is not cured within 60 days of notice from the Attorney General is an unfair method of competition or an unfair or deceptive act or practice in the conduct of any trade or commerce under N.H. Rev. Stat. Ann. § 358-A:2 which provides for injunctive relief and civil penalties up to $10,000 for each violation.

Impression

This law follows the pattern of many post-California comprehensive data privacy laws and should not present overly burdensome compliance challenges for those complying with those other laws. For a chart comparing the state comprehensive data privacy acts, and more information and insight from Maurice Wutscher on data privacy and security laws and legislation, click here.

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Jessica Klander Elected Chief Operating Officer of Bassford Remele

MINNEAPOLIS, Minn. — Jessica Klander, shareholder and co-chair of Bassford Remele’s consumer finance practice group and recruiting committee, has been elected Chief Operating Officer. Jessica will bring a fresh perspective on firm operations that will benefit Bassford Remele and its clients.

Jessica’s practice focuses on defending lawyers, financial entities, healthcare providers, and other organizations against consumer financial protection claims, malpractice, and professional liability claims. In particular, she counsels organizations on privacy, data security, and governmental and regulatory affairs. She advises and represents health care organizations, collection agencies, and law firms against state and federal regulatory inquiries, civil investigative demands, and consumer lawsuits.

Jessica has been named as a Top Lawyer by Minnesota Lawyer, a Minnesota Super Lawyer by Super Lawyers, an Up & Coming Attorney by Minnesota Lawyer, and to Best Lawyers: Ones to Watch. Jessica serves as Treasurer of the Hennepin County Bar Association and on insideArm’s Legal Advisory Board.

Bassford Remele proudly serves as local and national counsel for many major corporations and Fortune 500 Companies and is a go-to litigation firm representing local, national, and international clients in state and federal courts across the region.

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Executive Appointment: Phillips & Cohen Announces the Hiring of Kacey Rask to SVP, Growth & Partnerships, North America.

WILMINGTON, Del.– Phillips & Cohen Associates, Ltd. (PCA), the global leader in deceased account care management and technology solutions, servicing clients in the United States, Canada, United Kingdom, Ireland, Australia, New Zealand, and Germany is pleased to announce the appointment of Kacey Rask as SVP, Growth and Partnerships.

With over a decade in the Accounts Receivable Management industry, Rask is an experienced leader, holding several senior positions, including VP of Portfolio Servicing at Unifund CCR, LLC, and VP of Sales and Marketing at CenterPoint Legal Solutions. Commencing her career at The National List of Attorneys, Kacey’s versatile expertise and client-focused approach have supported her success. She is consistently recognized for enhancing processes, introducing innovative solutions, and fostering significant revenue growth.  In addition, she has served on various committees and taken part in multiple events contributing to the improvement of the industry’s reputation.

Rask commented, “Embarking on this exciting journey with Phillips & Cohen Associates is not merely joining a team; it’s becoming part of a legacy dedicated to excellence, integrity, and innovation in the Probate and estates space.” 

Adam S. Cohen, Co-Chairman/CEO commented, “We have known Kacey for years and been impressed by her impact on our industry.  With her proven track record of fostering innovation, she will play a pivotal role in accelerating our already exciting growth. Her passion and leadership will be critical as we look to expand our market presence.”

Matthew Saperstein, SVP, Business Development North America, commented, “We are delighted to add another transformative leader like Kacey to our team.  These are exciting times for our organization and Kacey will strengthen our strong business development team and benefit our many new and existing clients.”

About Phillips & Cohen Associates, Ltd. 

Phillips & Cohen Associates, Ltd. is a specialty receivable management company providing customized services to creditors in a variety of unique market segments.  Phillips & Cohen Associates, Ltd is domestically headquartered in Wilmington, DE, with additional offices in Colorado and Florida as well as international offices in the UK, Canada, Germany, and Australia.  For more information about Phillips & Cohen Associates visit www.phillips-cohen.com. PCA provides Equal Employment Opportunity for all individuals regardless of race, color, religion, gender, age, national origin, disability, marital status, sexual orientation, veteran status, genetic information, and any other basis protected by federal, state, or local laws.

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CBA “Checks the Math” on Recent CFPB Credit Card Report Finding Large Bank Issuers Charge Higher Interest Rates Than Smaller Issuers

After targeting credit card late fees in its proposed rule, the CFPB has set its sights on further attacking credit card pricing through interest rates. The CFPB published a blog late last month stating that credit card interest rate margins are at an all-time high, with an average 14.3% margin in 2023 compared to 9.6% margin in 2013, and have fueled the profitability of revolving balances. The CFPB also issued a data spotlight late last month that found that interest rates charged on credit cards issued by large banks are higher than interest rates charged on credit cards issued by smaller banks and credit unions. 

The report concluded with the statement that “[t]he CFPB is working on a number of fronts to jumpstart competition in the credit card market, including the development of rules to promote consumers’ freedom to switch providers, addressing loopholes that obscure upfront pricing, taking enforcement actions against illegal rewards conduct, and scrutinizing comparison websites for deceptive design and business practices.” In the press release about that report, the CFPB previewed that it was developing a new tool that will give consumers “an unbiased way to compare credit card terms and interest rates.”

On February 29, 2024, the Consumer Bankers Association (“CBA”) published a new blog post, Checking the Math Behind the CFPB’s Comparison of Credit Card Interest Rates Between Large and Small Issuers. The CBA reviewed the math behind the CFPB’s claims that large issuers charge higher annual percentage rates (APRs) than small issuers. The CBA noted that federal credit unions (whose APRs are capped by statute and regulation at 18%) were included in the CFPB’s data comparison and skewed the data. Moreover, credit unions are not subject to the Basel capital and Community Reinvestment Act requirements that apply to large banks and under federal law cannot serve the general public.

When the CBA excluded the credit unions from the CFPB’s data, it obtained very different results:

  • The APR difference between large and small issuers range from 2.2% to 5% instead of “8 to 10 points higher” as claimed by the CFPB.
  • Only 13 small issuers offered products to customers with subprime credit scores versus 68% percent of large issuers.
  • 80% of large issuers offer products nationwide compared to less than half of small issuers.
  • 18% more large issuers offer reward programs.

The CBA stated, “[W]hile the Bureau focuses solely on APRs, credit issuers compete on a number of different dimensions: their ability to underwrite consumers; fees; rewards; and broader benefits like airline lounges, and a range of product innovations.” Consumers have many credit card options and choose among the credit cards that are available to them based on their credit score and which card will work best for their planned use. Transactors, who pay their balance in full each billing cycle, typically shop for different card terms than revolvers, who carry a balance from month to month, typically shop for. The CFPB should understand those differences and not take actions to reduce credit card competition that is prevalent in the marketplace.

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Pollack & Rosen Expands Litigation Defense Division with Addition of Attorney Michael A. Gold, LL.M.

MIAMI, Fla.  —  Pollack & Rosen P.A. today announced the strategic hire of Attorney Michael A. Gold, LL.M., a seasoned litigator with specialized expertise in financial, securities fraud, and class action defense.

Attorney Gold will lead the expansion of the firm’s litigation defense division, bolstering its capabilities for existing and new clients while providing a substantial complement to Pollack & Rosen’s best-in-class litigation debt collection strategy.

With extensive experience in both state and federal courts, Attorney Gold has a proven track record in handling complex litigation matters, including commercial and construction disputes, healthcare compliance, antitrust issues, and intellectual property. He brings particular depth in defending FDCPA and FCCPA counterclaims and class action lawsuits to the firm.

“Attorney Gold’s addition aligns with our commitment to providing clients with the highest caliber litigation defense,” said Joseph Rosen, President of Pollack & Rosen. “His proven ability to navigate complex legal challenges and deliver successful outcomes in the courtroom makes him an invaluable asset.”

Attorney Gold possesses extensive courtroom experience, honed through years of meticulous witness preparation, conducting effective depositions, and delivering persuasive arguments that have secured favorable outcomes for his clients. While he maintains an active trial practice, his reputation as a litigation defense expert has established him as a sought-after speaker. Attorney Gold regularly conducts seminars for debt buyers and their counsel, equipping them with the necessary litigation strategies to navigate complex cases.

Attorney Gold holds a Master of Laws in Securities and Financial Regulation from Georgetown University Law Center (with distinction) and a Juris Doctorate from St. Thomas University School of Law (with honors).

About Pollack & Rosen P.A.

Headquartered in Miami since 1995, Pollack & Rosen P.A. is well positioned as an experienced and compliant partner dedicated to providing clients across the financial industry with exceptional receivables management expertise, along with superior litigation strategies for its clients. The firm’s expanded litigation defense division, led by Attorney Gold, offers clients robust protection against a broad spectrum of disputes, empowering them to confidently navigate complex legal landscapes.

Attorney Gold can be reached directly at (305) 448-0006 ext. 231 or via email at mgold@pollackrosen.com.

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The War on Fees Intensifies: Presidential Strike Force and Industry’s Legal Counterattack

As discussed here, on March 5, 2024 the Consumer Financial Protection Bureau (CFPB or Bureau) finalized its credit card late fee rule (Final Rule). The Final Rule sets a safe harbor amount for late fees at $8 and eliminates the annual inflation adjustments to that safe harbor amount, for larger card issuers. The timing of the Final Rule’s announcement, just days before the State of Union address, did not go unnoticed. President Biden highlighted this development in his speech, emphasizing his administration’s commitment to eliminating so-called hidden fees.

However, the administration’s efforts do not stop at late fees. They are assembling a Strike Force to combat unfair and illegal pricing. Led by the Department of Justice and the Federal Trade Commission, the Strike Force aims to “root out” illegal corporate behavior that raises prices through anti-competitive, unfair, deceptive, or fraudulent business practices.

The industry, however, is not standing idle. The announcement of the Final Rule on credit card late fees sparked immediate reaction. A collective of trade groups, including the U.S. Chamber of Commerce, Fort Worth Chamber of Commerce, Longview Chamber of Commerce, the American Bankers Association, the Consumer Bankers Association, and Texas Association of Business (collectively, the trade groups) filed a complaint in the U.S. District Court for the Northern District of Texas challenging the Final Rule.

The trade groups argue that in enacting the Final Rule “the CFPB violated the Appropriations Clause, exceeded its statutory authority, and offered deficient analysis and reasoning, all in order to achieve a pre-ordained outcome that will ultimately harm those consumers the CFPB is charged with protecting.” The trade groups further argue that the Final Rule’s effective date violates the Truth in Lending Act (TILA).

The complaint includes five counts. In the first count, the trade groups argue that the Final Rule should be invalidated because the CFPB’s funding mechanism violates the Appropriations Clause of the U.S. Constitution, a claim that is currently pending before the U.S. Supreme Court in Community Financial Services Association v CFPB (CFSA case). Oral arguments in the CFSA case, discussed here, were heard in October. A decision is expected in the coming months.

In the subsequent counts, the trade groups argue that the Final Rule violates the Administrative Procedure Act (APA) because the CFPB: (i) violated the express requirements of the Credit Card Accountability Responsibility and Disclosure (CARD) Act by repealing the old safe harbor and establishing a new safe-harbor amount based on only a fraction of the costs incurred by issuers from late payments, and not allowing issuers to charge fees that sufficiently account for deterrence; (ii) did not rationally analyze or explain its decisions, nor base those decisions on substantial evidence, including by using inappropriate, incomplete, and non-public data to estimate card issuers’ costs and using deeply flawed analysis to dismiss concerns about the decreased deterrent effect of reducing late fees to $8; (iii) relied heavily upon the Federal Reserve’s Y-14M data that was not made available to the public for comment; and (iv) violated TILA by having its new credit card disclosures take effect prior to the October 1 date required by the statute.

Concurrently with the complaint, the trade groups filed a motion for preliminary injunction requesting that the court enjoin the Bureau from implementing the Final Rule against their members until the conclusion of the case.

Troutman Pepper’s Take:

The federal “war on fees” has become highly politicized and multifaceted, targeting the financial services industry specifically but also encompassing many other industries as well. The inevitable has happened, with the dispute spilling over into the courts, which may be the final arbiter on the legality and limits of the federal initiatives. As for the financial services industry in particular, it appears that litigation is becoming an integral part of the rulemaking process going forward.

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Two Decades of Leadership: How SAM Redefined the Debt Industry Landscape

PITTSBURGH, Pa. — From the era of flip phones to the advanced age of AI, Solutions for Account Management (SAM) proudly marks its 20th anniversary, a testament to its enduring commitment to innovation, integrity, and the spirit of compassion within the debt management industry. Founded in 2004 with a heartfelt mission to honor Brenda Meli’s father, Sam, the company was born out of a vision to revolutionize the Accounts Receivable Management (ARM) industry with a unique ‘business concierge’ approach.

“Our story is one of struggle, sacrifice, and immense accomplishments,” says Brenda Meli, Co-founder and CEO. “It all began with a dream to pay tribute to my father’s legacy and to transform the ARM industry. What makes our journey special is the collective spirit and dedication of the SAM Squad, our remarkable team. We wouldn’t have come this far or accomplished so much without them.”

A Vision Turned Reality

SAM’s inception story is one of destiny and determination. Brenda’s first client, Lauren, was not just a client but a pivotal part of SAM’s evolution. In 2014, she joined forces with Brenda, transforming SAM into a woman-owned powerhouse that has since emerged as a leading debt sale broker. Together, they have championed the concept of corporate matchmaking, helping countless businesses navigate the complexities of debt management with unparalleled expertise and personalized care.

Two Decades of Pioneering Success

Over the years, SAM has introduced groundbreaking solutions, such as their proprietary DebtSales360 platform, setting new industry standards for managing and selling debt portfolios. The company’s relentless pursuit of excellence has not only earned it the status of an RMAi Certified Debt Sale Broker but has also redefined what it means to deliver client-centric solutions in the debt management space.

“As we look back on these 20 years, we’re filled with gratitude for every client, partner, and team member who’s been part of our journey,” Lauren McIlroy, Co-founder and COO, reflects. “Our story is made of every challenge we’ve faced and every success we’ve celebrated. And as we look to the future, we’re excited for the endless possibilities that lie ahead.”

In the spirit of celebrating two decades of success, SAM continues its commitment to community engagement by supporting meaningful initiatives with organizations like Autism Speaks, Maddie’s Message, and Special Olympics. These partnerships highlight SAM’s dedication to not just business excellence but also to making a positive impact in the lives of individuals and communities.

As SAM commemorates this monumental anniversary, it stands as a beacon of innovation, compassion, and excellence in the debt management industry. Here’s to 20 years of making a difference and many more to come. 

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Republican Representatives Urge CFPB to Revisit Proposed Payment App Rule

Recently, three Republican members of the U.S. House of Representatives’ Financial Services Committee, Patrick McHenry, Mike Flood, and French Hill, sent a joint letter to the Consumer Financial Protection Bureau (CFPB or Bureau) urging the agency to reopen the comment period and reconsider its November 2023 proposed rule regarding digital consumer payment applications. 

As discussed here, the Bureau is seeking to amend existing regulations by adding a new section to define larger participants that offer digital wallets, payment applications, and other services to fall within the CFPB’s supervisory scope. The Congressmen urge the CFPB to open the comment period on the proposed rule for an additional 60 days arguing that “[a]s it currently stands, this rule would introduce more regulatory uncertainty into the payment industry, particularly with respect to third-party service providers and digital asset companies.”

Specifically, under the proposed rule the CFPB seeks to supervise large nonbanks that provide peer-to-peer (P2P) payments, funds transfers, or wallet functionalities through a digital payment application. The proposed rule would subject companies that offer one or more of the covered activities to the CFPB’s supervisory authority, which would allow the CFPB to conduct examinations and assess compliance with all federal consumer financial protection laws and regulations enforced by the CFPB, not merely the ones relating to digital payments.

The comment period on the proposed rule closed on January 8, but the Congressmen argue it should be reopened for various reasons:

  • The proposed rule does not adequately justify the need to expand the Bureau’s regulatory scope into the payments industry. For example, the proposed rule fails to provide any evidence of non-compliance with federal consumer financial laws or explain how it would be addressed by this new regulation. As such, the Congressmembers urge the CFPB to provide sufficient justification demonstrating the need for the proposed rule, including a more detailed analysis of the scope of the proposed rule and its impact. “Absent such justification, the CFPB should forgo finalizing the rule.”

  • As written, it is unclear whether the proposed rule covers third party service providers and, if so, to what extent. “Service provider” is broadly defined under the Dodd-Frank Act and so relying on the statutory definition leaves many unanswered questions regarding how the CFPB intends to conduct oversight of third-party service providers to covered entities offering consumer payment applications.

  • It is unclear when the rule would apply to specific entities. On one hand, the proposed rule explicitly states that fiat-to-crypto and crypto-to-crypto transactions conducted on an exchange would not be covered. However, it remains unclear if this exclusion would exempt digital asset exchanges entirely, or only in instances where they offer services limited to the conversion of fiat-to-crypto and crypto-to-crypto transactions. Likewise, the proposed rule’s language pertaining to digital asset wallet providers raises questions as to which entities would be included under CFPB’s purview.

Notably, the day after the Republican Congressmen submitted their letter to the Bureau, three Democratic U.S. Senators issued a letter supporting the proposed rule.

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