On April 4, 2024, the Consumer Financial Protection Bureau (CFPB) issued a new report, titled “Banking in Video Games and Virtual Worlds” (Report), that examines the growth of financial transactions in online video games and virtual worlds. The CFPB has previously signaled the expansion of its monitoring capabilities to new markets, and this Report continues that expansion to the gaming industry. 

According to the Report, the CFPB is monitoring non-traditional markets where financial products and services may be offered, including the use of virtual currencies in games and virtual worlds in response to “concerning issues regarding gaming markets,” such as financial losses (due to theft, scams, and other criminal activity), fraud and money laundering, and the collection and use of consumer data by gaming companies. The Report also notes that there may be increased risks to consumers, specifically children, within the gaming industry. Gaming companies can use the insights from the Report to review their own policies and procedures to ensure compliance with federal consumer financial protection laws.

This update summarizes the Report’s key findings, describes the risks and trends identified by the CFPB, which are likely to inform the CFPB’s market monitoring activities, and provides key takeaways for companies doing business in this space to consider going forward.Continue Reading CFPB Issues New Report Examining Financial and Privacy Risks to Consumers in Video Gaming Marketplaces: What Now?

On January 2, New York Governor Kathy Hochul announced a proposal to establish regulations for the “Buy Now Pay Later” (BNPL) loan industry.

Gov. Hochul announced that she will propose legislation to require BNPL providers to obtain a license to operate in the state and to authorize the New York Department of Financial Services to propose and issue regulations for the industry. Her announcement notes that the legislation and regulations will establish industry protections around disclosure requirements, dispute resolution and credit reporting standards, late fee limits, consumer data privacy, and guidelines to curtail dark patterns, debt accumulation, and overextension. Specific legislative language will be unveiled as part of Gov. Hochul’s executive budget presentation in late January, according to her office.  We will provide an update here as those details become available.Continue Reading N.Y. Governor Proposes Measures To Ensure Fairness in “Buy Now Pay Later” Services

On January 9, the California Department of Financial Protection and Innovation (DFPI) issued an order against a consumer financing platform that enables merchants to offer installment contracts to their customers. The platform was ordered to pay a $50,000 penalty for allegedly not disclosing information about possible convenience fees assessed to its customers’ accounts. As part of the order, the platform is required to disclose this information to consumers in the future.

According to DFPI’s order, the platform contracts with a third-party servicer for the installment contracts that it originates, and this servicer informs consumers that their account has been assigned to them before their first payment is due. As part of that communication, the servicer provides consumers with information on how to make payments without incurring any fees, as well as information on other ways to make payments that will incur fees (e.g., making payments online or over the phone).Continue Reading California DFPI Orders Consumer Financing Platform To Cease Hidden Junk Fees

CFPB Seeks Public Input on Consumer Credit Card Market

On January 24, the Consumer Financial Protection Bureau (CFPB) issued a request for information seeking public feedback on how the consumer credit market is functioning.

The CFPB’s request for information is part of a comprehensive review of the entire industry, as required by the Credit Card

OCC Revises Civil Money Penalty Manual

The U.S. Office of the Comptroller of the Currency (OCC) announced revisions to its civil money penalty (CMP) manual on November 29, 2022. This may have important implications for smaller banks that have entered into partnerships with fintech companies. The updated manual will go into effect on January 1

Weekly Fintech Focus

  • On November 16, 2022, the U.S. Department of the Treasury (USDT) released a new report titled “Assessing Impacts of New Entrant Non-bank Firms on Competition in Consumer Finance Markets.” The report calls for enhanced oversight of the consumer financial activities of non-bank firms (particularly bank-fintech relationships) and offers several recommendations that aim

Consumer Protection Agencies Target Junk Fees and Dark Patterns for Enforcement Action and Rulemaking

The Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) are cracking down on the assessment of junk fees and the use of dark patterns, which harm consumers. Recently, the CFPB sued an online event registration company for its

Weekly Fintech Focus

  • FTC explains that merchants using BNPL services are also subject to consumer protection obligations.
  • CFPB ends its no-action letter and compliance sandbox policies.
  • CFPB sues an online lender for Military Lending Act violations related to the lender’s membership fees.

Continue Reading Fintech Legal Report—Week of September 30, 2022