• Consumer Protection
  • August 10, 2017 | Authors: Christia A. Pritts; Lawrence D. Coppel; Andrew D. Bulgin; Marjorie A. Corwin; Peter B. Rosenwald; D. Robert Enten; David S. Musgrave; Robert A. Gaumont; Christopher R. Rahl; Bryan M. Mull; Chastity E.C. Threadcraft
  • Law Firm: Gordon Feinblatt LLC - Baltimore Office
  • Maryland Financial Consumer Protection Commission
    SB884 / HB1134 (Chapters 18 and 781)
    (effective June 1, 2017)

    In response to a concern that the new federal administration will repeal or amend the Dodd-Frank Wall Street Reform and Consumer Protection Act and related laws, the General Assembly established the Maryland Financial Consumer Protection Commission. The Commission is charged with the duty of assessing the impact of potential changes to federal financing industry laws and regulations and providing recommendations to protect Maryland residents in financial transactions and when receiving financial services. The Commission is required to submit a report of its findings and recommendations for any legislation on or before December 31, 2017 and December 31, 2018. The members of the Commission must include, among others, the Commissioner of Financial Regulation, a representative of a financial institution operating in Maryland, and persons with knowledge of federal laws and regulations that impact the financial and lending industry.

    Maryland Securities Act – Vulnerable Adults
    HB1149 / SB951 (Chapters 837 and 838)
    (effective October 1, 2017)

    This new law makes several changes to the Maryland Securities Act. Most notably, the law will require a broker-dealer, an investment adviser, an agent of a broker dealer, an investment adviser representative, and any person who serves in a supervisory, compliance, or legal capacity for a broker-dealer or an investment adviser, who reasonably believes that an “eligible adult” has been, is currently, or will be the subject of “financial exploitation” or attempted financial exploitation to file a report of the exploitation or attempted exploitation with the Maryland Securities Commissioner and local law enforcement officials. Subject to certain notice and other requirements, the law also permits one of these regulated persons who suspects financial exploitation to delay a disbursement from an account of an eligible adult or of which an eligible adult is a beneficiary. A reporting person also may notify a third party who has been designated by the eligible adult to receive notices, as well as any other third party that is permitted to receive notices by federal or state laws or the rules of any self-regulatory organization. The term “eligible adult” is defined to include a Maryland resident who is at least 65 years of age and any other adult who lacks the physical or mental capacity to provide for his or her daily needs.

    Practice Point: Similar Maryland reporting obligations regarding elder adults already apply to depository institutions in Maryland. However, many depository institutions have networking arrangements with broker-dealers, investment advisers, and insurance professionals under which securities are offered and sold at branch locations through “dual employees” deemed to be agents of these regulated persons. Depository institutions will need to review their compliance policies and procedures in light of this law and ensure that their employees who act on behalf of networking broker-dealers, investment advisers, and insurance professionals are aware of the new reporting obligations.

    Commercial Law – Consumer Protection – Door-to-Door Sales
    SB929 / HB959 (Chapters 93 and 94)
    (effective June 1, 2017)

    These Acts move existing exemptions found in the Maryland Door-to-Door Sales Act out of the definitions section and into their own section. In addition, these Acts clarify and change a few exemptions. Specifically, the Acts clarify that the existing exemption for a bona fide immediate personal emergency applies to the renovation or construction of residential property to improve accessibility of the property for individuals who are mobility impaired or disabled. The Acts expand the existing exemption for transactions conducted entirely by mail or telephone to include transactions conducted entirely through electronic communications. The Acts eliminate the exemption for buyer-initiated transactions where the buyer requests the seller to visit the buyer’s home and repair or perform maintenance on personal property. The Acts add a new exemption for transactions resulting from written change orders when the change order is agreed to, and is part of a transaction under a contract previously signed, by the buyer and seller, but only if a certain written personal statement is provided by the buyer to the seller.

    Practice Point: These new exemptions are intended to alleviate some concerns raised by last year’s legislation (Chapter 485 of the 2016 Laws of Maryland) which added longer “cooling off” periods for home improvement contracts.

    Credit Report Security Freezes – Prohibition of Fees
    HB212 / SB270 (Chapters 827 and 828)
    (effective October 1, 2017)

    Under existing Maryland law, an individual may request that a consumer reporting agency place a restriction (security freeze) on the individual’s consumer report that prohibits the consumer reporting agency from releasing the consumer report (or any information derived from the consumer report) without the consumer’s authorization. A consumer reporting agency may charge a reasonable fee for imposing a security freeze (up to $5 for each request) but, under existing law, may not charge a fee for a security freeze where an individual has obtained a report of alleged identity fraud. In addition to the existing limitation on charging a fee, these Acts prohibit a consumer reporting agency from charging a fee for the first placement of a security freeze (where the individual has not previously requested a security freeze from the consumer reporting agency).

    Practice Point: It is possible this new law will increase the number of consumer reports subject to a security freeze because there will be no fee for the first placement of a security freeze by any individual.