Cornerstone Newsletter
Cornerstone Licensing
The premiere licensing, bonds and insurance service provider for more than 25 years.
Your go-to for concise regulatory updates and emerging trends for financial service businesses. Stay informed and boost efficiency with tailored insights to support your compliance efforts.
CALIFORNIA
THREE KEY DEBT COLLECTION BILLS SIGNED
?California Governor Gavin Newsom has recently signed three bills into law that will significantly impact the debt collection industry in the state, aiming to enhance consumer protections and regulate collection practices.
?SB 1061:?Prohibits reporting medical debt to credit agencies, making reported medical debts unenforceable. It also prevents the use of medical debt in credit decisions, effective January 1, 2025.
?AB 1286: Expands the Rosenthal Fair Debt Collection Practices Act to protect individuals from deceptive or unfair debt collection practices for commercial debts under $500k that were entered, renewed, sold, or assigned on or after July 1, 2025.? Effective January 1, 2025.
?SB 2837: This bill broadens the range of retirement plans protected from money judgments, ensuring these assets are safeguarded to the extent necessary for the debtor’s support and to meet tax obligations. This creates complex new service and execution requirements,?effective on January 1, 2025.
?Businesses handling collections for California consumers are advised to inform their legal, compliance, and operations teams about these new legislative changes.
INDUSTRY NEWS
CFPB STRESSES AI COMPLIANCE WITH CONSUMER PROTECTION LAWS
?The Consumer Financial Protection Bureau (CFPB) submitted a comment letter to the Treasury Department, stressing that AI and other emerging technologies in financial services must comply with existing consumer protection laws such as the Equal Credit Opportunity Act (ECOA) and UDAAP. It underscores the need to balance innovation with consumer protection, as each AI use case requires specific risk analysis. As technology adoption grows, firms must implement strong governance to ensure legal compliance and consumer safety, while involving key stakeholders for alignment and oversight.
FEDERAL REQUIREMENT
BOI REMINDER
?With less than 3 months remaining to report your Beneficial Ownership Information (BOI) to FinCEN, it’s important to act now and avoid penalties. This new federal mandate requires all reporting companies to submit their BOI for the first time, and non-compliance can result in fines of up to $591/day, effective January 25.
?FinCEN has clarified that dissolved entities are not exempt from this requirement—if your entity was dissolved after January 1, 2024, you are still obligated to file.?
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CORNERSTONE CAN HELP
?Cornerstone can handle the filing of your BOI report with FinCEN on your behalf. This service is designed to save you time and ensure accuracy. If you are a client, we likely already have all information needed in order to file on your behalf.?
?Our dedicated team is ready to assist you. Connect with us today to learn more or move forward with Cornerstone handling your CTA filing. If you are already a Cornerstone client, please book time directly with Beth Aide, Sr. Customer Success Manager.
BLOG POST
THE INTERSECTION OF LICENSING AND CYBERSECURITY
In today's digital-first world, licensing and cybersecurity are more intertwined than ever. Learn how compliance leaders can protect their businesses by addressing key cybersecurity risks tied to their licensing strategies. From mitigating data breaches to navigating complex regulatory frameworks, click here for actionable insights that could save your business time, money, and reputation.
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INDUSTRY NEWS
BILL TO PROMOTE AI INNOVATION IN FINANCIAL SERVICES
?U.S. Senator Mike Rounds has introduced the Financial Services Innovation Act of 2024, aimed at promoting AI innovation in the financial services sector. The bill proposes the creation of Financial Services Innovation Offices (FSIOs) within federal financial regulators to foster collaboration between innovators and regulators. It would establish a petition process for companies to request regulatory relief and testing of new products or services. The legislation also includes provisions for protecting consumers and addressing potential risks associated with AI technologies. Senator Rounds emphasizes that this act would help maintain U.S. leadership in financial technology while ensuring appropriate safeguards are in place.
ALASKA
STRONG CYBERSECURITY MEASURES FOR FINANCIAL LICENSEES
Alaska has enacted a mandate that financial licensees conduct thorough risk assessments to secure nonpublic information. Licensees must identify threats, assess potential damage, and review policies, focusing on employee training, system security, and incident response. Third-party providers must report cybersecurity breaches within three business days, while insurers must notify affected consumers. Additionally, licensees must establish an information security program with safeguards and retention policies. Insurers must submit annual compliance statements and maintain relevant records for five years. The bill emphasizes swift investigation and remediation of cybersecurity events.
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INDUSTRY NEWS
CFPB CRITICIZES MEDICAL AND RENTAL DEBT COLLECTION PRACTICES
The CFPB's 2024 FDCPA report highlights problematic medical and rental debt collection practices, including illegal medical debt collection and aggressive tactics by hospitals and non-profits. It also addresses improper rental charges and non-compliant collectors failing to validate disputes. The report signals increased compliance pressure for the debt collection industry, pushing creditors to better substantiate accounts upfront.?
CORNERSTONE CLIENT PORTAL?
TRUSTED VENDORS DIRECTORY COMING SOON
?Cornerstone's upcoming "Trusted Vendors" Directory is an exciting new client portal feature designed to enhance your experience and streamline your business operations. This carefully curated list of reliable partners will offer several key benefits:
Enhance your experience and find the services you need with confidence!
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CALIFORNIA
CPPA WARNS AGAINST DARK PATTERNS IN PRIVACY INTERFACES??
The California Privacy Protection Agency (CPPA) has issued an Enforcement Advisory focusing on the importance of avoiding dark patterns in user interfaces. Dark patterns, as defined by the California Consumer Privacy Act (CCPA), are interfaces that impair consumers' ability to make autonomous privacy decisions. The advisory emphasizes that businesses must present privacy choices clearly and symmetrically to avoid being considered dark patterns. Michael Macko, Deputy Director of CPPA's Enforcement Division, stressed that the effect of user interfaces matters more than intent. The CPPA encourages businesses to review their interfaces and consumers to report suspected dark patterns through the Agency's Complaint Form.
INDUSTRY NEWS
FTC HIGHLIGHTS EFFORTS TO COMBAT ILLEGAL DEBT COLLECTION
The Federal Trade Commission (FTC) has submitted its annual summary of debt collection activities to the Consumer Financial Protection Bureau (CFPB).?This summary highlights the FTC's efforts to protect consumers and small businesses from illegal debt collection practices.?Key actions include settlements against debt collection operations targeting small businesses, halting collections on illegally originated student debt, and combating unlawful practices in car debt.?The FTC also addressed issues with dark patterns in unwanted subscriptions and implemented the CARS Rule to protect consumers in the automotive market.?Additionally, the Commission provided educational materials to millions of people about their rights under the FDCPA and FTC Act, while also educating debt collectors about their responsibilities.
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BLOG POST
NAVIGATING NEW LICENSING CHALLENGES FOR DIGITAL FINANCIAL SERVICES
Digital-only financial services face new challenges as licensing requirements evolve to match the rapid growth of online operations. Staying compliant with jurisdictional regulations is critical as these changes are aimed at improving consumer protection and financial security in the digital realm. Companies must adapt by staying informed, implementing proactive strategies, and ensuring all licensing is up to date. This high-level overview provides insight into the key compliance steps businesses should take to remain competitive and avoid costly penalties in an increasingly regulated industry. Click here to read the entire article.?
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CALIFORNIA
DFPI REFINES DEBT COLLECTION LICENSING ACT DEFINITIONS
The California Department of Financial Protection and Innovation (DFPI) has announced further modifications to the definitions in the Debt Collection Licensing Act. These changes clarify the scope of the Act, particularly regarding the definition of "debt collector" and exemptions for certain entities. The DFPI has expanded the definition to include those who engage in debt collection "in the ordinary course of business," while also providing more specific exemptions for entities like depository institutions and their subsidiaries. Additionally, the modifications address the treatment of student loan servicers and clarify the application of the Act to out-of-state collection activities.
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INDUSTRY NEWS
CFPB PUSHES FOR MORTGAGE REFORMS?
The CFPB Director addressed the potential impact of falling interest rates on mortgage refinancing, highlighting the significant savings homeowners could realize.?He emphasized that over 12 million mortgages currently have interest rates above 5%, with 7 million above 6%, indicating a large market for potential refinancing. Chopra expressed concern that many homeowners might miss out on these benefits due to various obstacles. The CFPB is focusing on reducing barriers to refinancing, including high closing costs and complex processes, and is exploring regulatory changes to streamline the refinancing process. Additionally, the bureau is monitoring the implementation of new mortgage technologies, including AI, to ensure they benefit borrowers without exacerbating disparities. Chopra also mentioned the CFPB's efforts to accelerate "open banking" in the mortgage industry, which could reduce underwriting costs and improve access to refinancing opportunities.
INDUSTRY NEWS
FBI REVEALS $5.6B LOST TO CRYPTO SCAMS
The FBI's 2023 Cryptocurrency Fraud Report, released on September 9, highlighted the significant impact of crypto-related scams. The report documented over 69,000 complaints, with losses exceeding $5.6 billion. Investment schemes emerged as the dominant form of cryptocurrency fraud, comprising about 71% of the total financial damage. The report underscored the complexities in investigating these crimes due to cryptocurrency's decentralized structure and stressed the critical role of prompt reporting in assisting law enforcement investigations. Read the full report here.
INDUSTRY NEWS
VA LAUNCHED NEW PPM SYSTEM STREAMLINING LOAN GARANTY??
The Department of Veterans Affairs announced on September 9 the launch of the Program Participant Management (PPM) System for Loan Guaranty program lenders. This new electronic platform, set to go live on October 7, will allow lenders to submit applications, monitor request statuses, and handle administrative tasks online. To prepare for the transition, the VA will provide training resources and user guides. Lenders must register for the system and assign at least one VA relationship manager to oversee their account. The PPM System is designed to enhance efficiency and streamline processes for lenders involved in the VA's Loan Guaranty program.
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CALIFORNIA
ROBINHOOD CRYPTO FINED $3.9M FOR VIOLATING TRADING TRANSPARENCY LAWS
California Attorney General has announced a $3.9 million settlement with Robinhood Crypto, LLC for violating the California Commodities Law by failing to allow customers to withdraw their cryptocurrency from 2018 to 2022 and not fully disclosing trading practices. As part of the settlement, Robinhood must pay the penalty and adhere to requirements that include allowing customers to withdraw crypto assets to their own wallets and ensuring transparent communication about trading practices. This marks the first public action by the California Department of Justice against a cryptocurrency company, emphasizing that such firms must comply with California's consumer and investor protection laws.
CORNERSTONE CAN HELP
COMMERCIAL INSURANCE?
Did you know Cornerstone offers robust insurance services to safeguard your business? Simplify your operations by having licensing and insurance handled under one roof.?
Our promise is to cut through the jargon and hidden clauses that often leave businesses unprotected when they need it most. We leverage our relationships with vetted global insurance brokerage firms to give you the benefit of buying power, and we shop the market to make sure you get the best value in coverage and pricing, saving you time and energy.
Our insurance experts are excited and ready to answer your questions. Let us handle the legwork so you can focus on what matters—growing?your business.
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INDUSTRY NEWS
CFPB SETTLES WITH STUDENT LOAN SERVICER FOR $120M
The CFPB has reached a settlement with a nonbank student loan servicer over alleged violations of consumer protection laws. The settlement includes a ban on the company from servicing federal Direct Loans and acquiring additional FFELP loans, as well as restrictions on servicing existing FFELP loans. The company must pay $120 million, with $100 million going to affected consumers and $20 million as a civil penalty. The CFPB described the company as a "repeat offender" due to prior enforcement actions. The settlement concludes over seven years of litigation and imposes numerous requirements on the company's remaining loan servicing activities.
WISCONSIN
NEW MONEY TRANSMITTER LICENSE?
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The Wisconsin Department of Financial Institutions (DFI) announced a new money transmitter license, replacing the current "seller of checks" license. Applications open on October 1, 2024, via NMLS, and companies must comply with updated requirements by January 1, 2025. The change is part of Wisconsin's adoption of the Money Transmission Modernization Act, aiming to unify licensing standards nationwide. This new law simplifies compliance for businesses, including net worth, bonding, and investment requirements, while providing consistency across state regulations. For details, visit the DFI’s money transmitter page .
VIRTUAL SUGGESTION BOX
We’ve continued to hear great feedback from you, our clients, on how our newsletter provides value for your organization. To ensure we continue to research and provide the best data, we have created a virtual “suggestion box” for your ideas. Whatever topic you’d like to learn about, large and small, we will go research with our team and knowledgeable folks from our industry.?
INDUSTRY NEWS
REMITTANCE TRANSFERS UNDER THE ELECTRONIC FUND TRANSFER ACT
The CFPB has proposed an amendment to remittance transfer disclosure requirements under Regulation E. This update aims to enhance transparency, providing consumers with clearer information regarding the inquiries they should direct to the CFPB and state agencies that oversee their remittance transfer provider. The amendment also proposes adjustments to model forms for better consumer understanding. Public comments are being solicited to refine the rule.?
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INDUSTRY NEWS
PAYPAL AND VENMO STREAMLINE CRYPTO PAYMENTS?
PayPal and Venmo have integrated the Ethereum Name Service (ENS) into their platforms, streamlining cryptocurrency transactions by allowing users to replace complex wallet addresses with human-readable ENS domain names. This enhancement simplifies crypto payments, making it more user-friendly for financial services businesses and consumers alike. The move reflects the growing mainstream adoption of blockchain technology and digital payments, offering greater convenience and security in crypto transactions.
INDUSTRY NEWS
CFPB FINES $28M FOR CREDIT REPORTING VIOLATIONS
The CFPB has ordered TD Bank to pay $28 million in penalties and redress for violations that negatively impacted consumers' credit reports. The bank repeatedly furnished inaccurate information, including false credit card delinquencies and details from fraudulent accounts, to consumer reporting agencies. These errors persisted for years, affecting consumers' ability to access credit, housing, and employment. TD Bank also failed to properly investigate and address consumer disputes related to these inaccuracies, violating both the Fair Credit Reporting Act and the Consumer Financial Protection Act. This enforcement action includes $7.76 million in compensation for consumers and a $20 million fine.
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LOUISIANNA
DIGITAL CURRENCY EMBRACED FOR STATE PAYMENTS?
Louisiana has introduced cryptocurrency as a payment option for state services, accepting Bitcoin, Bitcoin Lightning, and USD Coin. Using Bead Pay’s services, cryptocurrency payments are converted to U.S. dollars, protecting the state from volatility and fraud risks. This move offers more flexibility for residents and enhances state government operations. The first cryptocurrency payment was made to the Department of Wildlife and Fisheries, with plans to expand further. This initiative reflects Louisiana's commitment to embracing digital payment innovations.
INDUSTRY NEWS
CLASS ACTION CLAIMS EWA FEES AS HIDDEN INTEREST
A class action lawsuit has been filed against EarnIn, a fintech provider of Earned Wage Access (EWA) services, alleging that the company’s optional tips and expedited funding fees are effectively hidden interest charges. The complaint claims that these fees result in high annual percentage rates (APRs), often exceeding 145%, which violates the federal Truth in Lending Act (TILA) and Georgia's Payday Loan Act. Plaintiffs argue that these practices constitute usurious lending, as the fees resemble interest on loans, despite EarnIn presenting them as voluntary. The lawsuit seeks restitution, treble damages, and the voiding of certain loans.
This case raises concerns for lenders and fintech companies about the classification of fees and their potential regulatory risks, particularly under state and federal lending laws.
INDUSTRY NEWS
CFPB FINES MONEY SERVICER, RESTRICTS CEO PAY FOR VIOLATION
?The CFPB has taken enforcement action against Fay Servicing for violating mortgage servicing laws and a 2017 consent order related to illegal foreclosure practices. The CFPB found that Fay Servicing continued prohibited foreclosure actions, overcharged borrowers for private mortgage insurance, and failed to properly inform consumers about loss mitigation options. As part of the settlement, Fay Servicing must pay $3 million in consumer redress and a $2 million penalty. Importantly, the CFPB’s order restricts executive compensation, requiring compliance measures or the company's CEO will forfeit compensation until issues are corrected. This move emphasizes the CFPB’s focus on holding senior management accountable for compliance failures.
INDUSTRY NEWS
SEC INCREASES SCRUTINY ON WHISTLEBLOWER COMPLIANCE
The SEC has intensified enforcement actions against companies that have agreements restricting whistleblower activity, even when there is no evidence that individuals were actively prevented from reporting. Companies must pay close attention to language in documents like nondisclosure and employment agreements, especially those that attempt to limit whistleblowers' rights to collect financial awards. Any provisions that deter whistleblowing, even unintentionally, could expose companies to SEC penalties. To mitigate risk, organizations should review their policies and contracts to ensure compliance with SEC whistleblower rules.?
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INDUSTRY NEWS
SUNSET OF FFIEC CYBERSECURITY ASSESSMENT TOOL
?The Federal Financial Institutions Examination Council (FFIEC) has announced the retirement of its Cybersecurity Assessment Tool (CAT) on August 31, 2025. Introduced in 2015, the CAT was a voluntary tool for financial institutions to evaluate their cybersecurity risks and preparedness. The FFIEC is not updating the CAT due to the availability of newer, more comprehensive resources from both government and industry. FDIC-supervised financial institutions are encouraged to transition to these newer tools for self-assessment activities. To support this transition, the FFIEC will host a webinar this Fall to discuss updated cybersecurity risk management resources.?
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INDUSTRY NEWS
CFPB ISSUES NEW GUIDANCE TO CURB IMPROPER OVERDRAFT FEES?
The CFPB recently issued a circular addressing improper overdraft fee practices, specifically targeting "surprise" overdraft and depositor fees. The Bureau emphasized that financial institutions must ensure they are complying with Regulation E, which requires consumers to affirmatively opt into overdraft services. Financial institutions that fail to provide clear evidence of this consent could face penalties. Additionally, the CFPB warned that even with disclosures, certain overdraft and depositor fees could still be classified as unfair or deceptive under the Consumer Financial Protection Act. This move highlights the Bureau’s continued focus on protecting consumers from unexpected fees and enforcing stricter oversight on financial institutions.
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CALIFORNIA
DFPI ACTION AGAINST STUDEN LOAN DEBT RELIEF COMPANIES
The California Department of Financial Protection and Innovation (DFPI) recently took enforcement actions against three student loan debt relief companies found to have illegally collected upfront fees from consumers before delivering services, violating both state and federal laws. As a result, they are required to cease unlawful practices, cancel existing contracts with California residents, and issue refunds. The crackdown highlights the state's focus on oversight of companies in the student debt relief space.
CALIFORNIA
NEW LAW REGULATES AI USE IN TELEMARKETING
CA Governor has signed a new law that regulates the use of automatic dialing-announcing devices in telemarketing calls. Effective January 1, the law requires that before any pre-recorded message is played, a live, unrecorded voice must inform the recipient of the nature of the call, the caller’s details, and ask for consent to proceed. If the pre-recorded message includes an "artificial voice," this must also be disclosed. The law defines an "artificial voice" as one generated or modified by artificial intelligence, which is described as a system capable of influencing environments based on inputs. The law is aimed at enhancing transparency and protecting consumers from misleading automated calls.
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INDUSTRY NEWS
CFPB WARNS COLLECTORS REGARDING SURVIVING SPOUSES
The CFPB has issued a new warning about the collection of debts from surviving spouses, emphasizing the potential violation of federal laws if debt collectors misrepresent the obligations of these individuals. The bureau highlighted that attempting to collect debts from spouses who are not legally responsible can breach the Fair Debt Collection Practices Act (FDCPA). Collectors must be cautious when pursuing debts from estates or family members, as inaccurate representations could lead to legal risks. This guidance reinforces the need for clarity and compliance when collecting debts tied to deceased individuals to avoid unlawful practices.
This information is not intended to be, nor is it, legal advice. It is intended for information purposes only. We make no warranty, express or implied, as to the accuracy or reliability of this information. We are not attorneys. You must retain your own attorney to receive legal advice. While Cornerstone strives to provide the most current and accurate state licensing information, the responsibility for any decision related to state licensing or agency compliance is solely yours.
Sales Admin
1 个月Great information!