Manatt, Phelps & Phillips, LLP

Consumer Financial Services

The regulation of consumer financial products and services, as well as related enforcement actions and litigation, has expanded dramatically since 2008, following a worldwide economic slowdown blamed in large part on existing regulation of mortgage loans and credit cards. This expansion is expected to continue unabated as federal regulatory agencies adopt new rules under the Dodd-Frank and the Bureau of Consumer Financial Protection exercises its powers, including the authority to prohibit "unfair, deceptive or abusive acts or practices". State attorneys general are expected to continue their aggressive enforcement campaigns, and plaintiff’s class action lawyers likely will ride the wave of regulatory change with a spate of new lawsuits.

For help in navigating this rapidly evolving regulatory environment, Manatt’s clients turn to our Consumer Financial Services practice. The group consists of an interdisciplinary team of lawyers and advisors who have both a deep knowledge of the laws and regulations governing consumer financial products and services and years of experience assisting clients in developing and implementing compliance programs and defending clients in consumer litigation and regulatory enforcement actions.

Our team is unique in having substantial experience representing not only traditional sources of consumer products and services, including depository institutions ranging in size from community banks to global financial institutions, mortgage lenders and payment card companies, but also nonfinancial companies, including brick-and-mortar, catalog and online consumer goods marketers and retailers; entertainment and media businesses; and technology and telecommunications companies offering noncore products and services or engaging in billing and collection practices that fall within the scope of the new rules.

Counseling
Attorneys in our Washington, D.C., office and our other offices throughout California and in New York have decades of experience advising both banks and nonbanks on consumer financial laws and regulations, and are recognized in this highly specialized area.

Credit Products
We advise a wide range of depository institutions and nonbanks regarding the large and growing number of laws that regulate extensions of credit to consumers. Much of our work focuses on the increasing overlap between products and services offered by nonfinancial institutions and the expanding reach of consumer financial protection laws.

The CFPB regulates credit products extensively, and our Consumer Financial Services practice has responded by closely monitoring developments at the bureau, regularly interfacing with staff attorneys, and assisting clients in submitting comment letters on proposed regulations.

The federal and state consumer credit laws on which we regularly provide guidance include, among others:

• The Truth in Lending Act and Regulation Z
• The Real Estate Settlement Procedures Act of 1974 and state mortgage laws and regulations, including loan originator licensing and compensation rules and foreclosure requirements.
• The Fair Credit Reporting Act, advising consumer reporting agencies as well as users of prescreened lists and other consumer reports and scores.
• The provisions of the Electronic Fund Transfer Act and Regulation E impacting upon consumer credit, including recurring payment plans.
• The Fair Debt Collection Practices Act and state debt collection rules.
• State lender licensing and usury laws, including rules targeting payday and other high-rate loans.
• State retail installment sales acts.
• Federal preemption applicable to federally chartered lenders after the Dodd-Frank Act.

Deposit Products and Operations
Our attorneys are recognized leaders in advising banks, prepaid card issuers and others offering deposit products regarding account and operational issues. A particular focus of this practice is the structuring of cash management arrangements. Laws that we frequently encounter in this area of our practice include:

• Federal and state laws protecting the privacy of consumer financial information, including the Gramm-Leach-Bliley Act.
• Laws imposing various obligations in the event of a data breach.
• Unclaimed property rules.
• Rules governing the provision of treasury management services.
• Office of Foreign Assets Control and Bank Secrecy Act regulations.
• Restrictions on affiliate transactions and insider loans.
• Anti-tying prohibitions and exceptions.
• UCC provisions and other rules applicable to negotiable instrument disputes.

Payment Cards
Our Consumer Financial Services Practice represents many credit, debit and prepaid card industry members, including issuers, acquirers, payment card networks, processors and independent sales organizations, affinity and co-brand partners, and merchants. We advise on "prepaid access" products, mobile payments, alternative payment mechanisms such as Internet and carrier billing and peer-to-peer payments, and other new developments in this space. A significant part of what we do involves negotiating contracts, including sponsorship and processing agreements, among industry participants. We regularly advise clients regarding the following:

• EFTA and Regulation E, including the Durbin Amendment.
• The Payment Card Industry Data Security Standard.
• Payment card network rules.
• The National Automated Clearinghouse Association  rules.

UDAAP/Advertising and Marketing
Our Consumer Financial Services practice includes several nationally recognized lawyers in advertising, marketing and sales promotion law who regularly review the marketing and advertising campaigns of some of the world’s leading providers of consumer goods and services, including finance-related services. In connection with their work, they regularly interface with the FTC and state attorneys general offices and now with the CFPB. Because the bureau is likely to draw upon principles of consumer protection that have been established in FTC proceedings and state attorney general actions, their extensive dealings with these enforcement bodies should provide them with keen insight into how the CFPB is likely to exercise its broad rulemaking and enforcement authority or prevent UDAAPs. Our clients have already begun asking us what representations, omissions, acts or practices the CFPB is likely to deem unfair, deceptive, or abusive, particularly as regards the marketing of products through social networking websites and mobile platforms, including cell phones, apps, e-readers, location-based services and QR codes.

We regularly advise clients regarding the following:

• The UDAAP provisions of the Dodd-Frank Act.
• Section 5 of the FTC Act.
• State "mini-FTC acts" and other unfair and deceptive acts and practices  statutes and unfair competition laws.
• Federal and state telemarketing laws as they relate to the provision of consumer financial products and services.
• Federal and state gift card rules, including the gift card provisions of federal Regulation E.

Enforcement Actions
Our Consumer Financial Services Practice includes attorneys with a strong track record of success defending clients in enforcement actions brought by federal banking agencies, the FTC and state attorneys general offices and a growing base of experience advising clients on issues arising during CFPB examinations.

Litigation
More than half of Manatt’s professionals are litigators, including some of the most respected trial lawyers in the country. Several have substantial experience defending actions involving consumer financial products and services, leveraging the knowledge of our consumer compliance attorneys to develop an effective response strategy.

We have successfully represented banks, finance companies, insurance companies, hedge funds and other institutional lenders as well as nonfinancial companies offering products and services falling within the ambit of consumer financial protection laws, including brick-and-mortar and online retailers, publishers and subscription services, telecommunication and satellite television service providers, and TV networks, affiliates and production companies. Matters have ranged from individual consumer and class action suits to civil actions initiated by attorneys general and regulatory agencies.

A particular focus for the consumer litigation team is the drafting and implementation of effective arbitration clauses in the consumer context.

Lawsuits handled by our litigators include matters asserting claims under the following laws, among others:

• TILA and Regulation Z
• FCRA including amendments made by the Fair and Accurate Credit Transactions Act of 2003
• EFTA and Regulation E
• RESPA and state mortgage lending laws
• Federal and state UDAAP and other unfair competition laws
• Telephone Consumer Protection Act