June 12 – Read the newsletter below for the latest Mortgage Banking and Consumer Finance industry news, written by Ballard Spahr attorneys. In this issue, we explore the CFPB’s plan to revoke Section 1033 Open Banking Rule, examine Maryland's newly enacted earned wage access legislation, discuss the introduction of the Mini-WARN Act in Washington State, and much more.
- National Ranking From Chambers USA Awarded Again to Ballard Spahr’s Consumer Financial Services Group in 2025
- Podcast Episode: What Is Happening at the Federal Agencies (Other Than the CFPB) That Is Relevant to the Consumer Financial Services Industry
- Podcast Episode: The Impact of the Newly Established Priorities and Massive Proposed Reduction in Force (RIF) on CFPB Supervision
- CFPB Files Rulemaking Items With Office of Management and Budget
- U.S. Supreme Court Temporarily Allows Independent Labor Board Firings; Impact on FTC, NCUA Ousters Is Unclear
- CFPB Will End Section 1033 Open Banking Rule
- CFPB States the Section 1033 Open Banking Rule Exceeds Its Authority
- Trustmark Redlining Consent Order Terminated
- DeSantis Signs Bill Allowing Debt Collection Emails Between 9 PM and 8 AM
- Maryland Enacts Earned Wage Access Legislation
- No Small Thing: Mini-WARN Act Comes to Washington State
- DAA Launches AI-Focused Review of Interest-Based Advertising Self-Regulatory Principles
- Looking Ahead
I am pleased to report that Ballard Spahr’s Consumer Financial Services Group was once again ranked nationally by Chambers USA: America’s Leading Lawyers for Business in all three national consumer finance categories: Compliance, Enforcement and Investigations, and Litigation. Chambers USA has year-after-year ranked our Consumer Financial Services Group ever since it began ranking firms in the U.S. about 20 years ago. There is no other firm in the country that has attained that stature. We are the only firm ranked in all three categories nationally and we are one of only two firms ranked in all national categories and Pennsylvania.
Here is what Chambers USA said about our Group:
Ballard Spahr LLP is an esteemed group noted for its work with banks and nonbanks on the full spread of consumer finance regulatory matters, including credit card, mortgage and auto finance issues. Harbors expertise pertaining to FinTech areas such as telemarketing, e-commerce and prepaid cards. Provides robust representation in CFPB enforcement actions, arbitrations and litigation. Capable of supporting clients at both state and federal regulatory levels.
The following five lawyers in our Consumer Financial Services Group were ranked this year (in alphabetical order):
- Richard J. Andreano, Jr., Practice group leader of Mortgage Banking Group: Financial Services Regulation: Consumer Finance, Compliance (Nationwide); Financial Services Regulation: Consumer Finance, Enforcement and Investigations (Nationwide).
- Thomas Burke, Financial Services Regulation: Consumer Finance, Litigation (Nationwide).
- John L. Culhane, Jr., Financial Services Regulation: Consumer Finance, Compliance (Nationwide); Financial Services Regulation: Consumer Finance, Enforcement and Investigations (Nationwide); Banking and Finance: Mainly Regulatory (Pennsylvania).
- Alan S. Kaplinsky, founder and former practice group leader for 25 years of Consumer Financial Services Group: Financial Services Regulation: Consumer Finance, Compliance (Nationwide); Financial Services Regulation: Consumer Finance, Enforcement and Investigations (Nationwide); Banking and Finance, Mainly Regulatory (Pennsylvania).
- Daniel JT McKenna, Co-practice group leader of Consumer Financial Services Group: Financial Services Regulation: Consumer Finance, Litigation (Nationwide).
Our Group is very proud of the work it does, and very grateful to our clients for entrusting us to help them develop new products, defend them in private litigation and against enforcement actions, and assist them in navigating the increasingly complex array of federal and state regulations.
Consumer Financial Services Group
On our podcast show, we recently released a repurposed webinar which we produced on May 13, 2025, titled “What Is Happening at the Federal Agencies (Other Than the CFPB) That Is Relevant to the Consumer Financial Services Industry.”
During this podcast, we informed you about recent developments at those other agencies, including the FTC, OCC, FDIC, FRB, and DOJ (collectively, the “Agencies”) and the White House (through the issuance of executive orders). Some of the issues we consider are:
- What are the strategic priorities of the Agencies, including cryptocurrency (OCC, FRB, and DOJ); reducing regulatory burden, promoting financial inclusion, embracing bank-fintech partnerships and expanding responsible bank activities involving digital assets (OCC); adopt a more open-minded approach to innovation and technology adoption (FDIC); public inquiry into anticompetitive regulations (FTC and DOJ); and regulation of AI technology, boosting protections for children and teens online and strengthening enforcement against companies that sell, transfer, or disclose Americans’ geolocation information and other sensitive data to foreign adversaries, more emphasis on antitrust enforcement and less on consumer protection (FTC).
- What is the status of proposed or final regulations of the Agencies? (e.g., FTC CARS Rule, Click-to-Cancel Rule, Junk Fees Rule, and Rule Banning Noncompetes; FDIC advertisement and brokered-deposit rules, OCC Rule on bank mergers; and the Community Reinvestment Act final rule)?
- What is the status of enforcement investigations and litigation of the Agencies?
- What impact will staff cuts have on supervisory examinations?
- What is the impact of President Trump’s executive order requiring the Agencies to obtain approval from the White House of all proposed and final regulations?
- Will the Supreme Court approve of President Trump’s firing of the Democratic members of the FTC and NCUA and other federal agencies (who have subsequently sued President Trump to challenge the firings) and, if so, what are its implications?
- What is the significance of the FDIC and OCC agreeing to eliminate “reputation risk” as a basis for evaluating risks to banks?
- Will the OCC adopt a regulation or other guidance, or will Congress enact legislation pertaining to debanking/fair access?
- Will the OCC and/or FDIC issue any guidance or regulations pertaining to federal preemption of state law in light of the Supreme Court’s opinion last term in Cantero and the impending Courts of Appeal decisions in Cantero, Kivett, and Conti?
- What is the significance of the FDIC withdrawing its amicus brief in support of the Colorado Attorney General in the 10th Circuit in the lawsuit brought by industry against him challenging a Colorado statute which purported to opt out of Section 521 of DIDMCA?
- Will there continue to be fair lending and disparate impact enforcement at any of the Agencies?
Alan Kaplinsky, former chair and now senior counsel of Ballard Spahr’s Consumer Financial Services Group, moderated the presentations of the following other members of the Consumer Financial Services Group: Scott Coleman, Ronald Vaske, and Kristen Larson.
To listen to this episode, click here.
Consumer Financial Services Group
Our podcast show features two former CFPB senior officers who were key employees in the Supervision Division under prior directors: Peggy Twohig and Paul Sanford. Peggy was a founding executive of the CFPB when the agency was created in 2010 and led the development of the first federal supervision program over nonbank consumer financial companies. Beginning in 2012, as head of CFPB’s Office of Supervision Policy, Peggy led the office responsible for developing supervision strategy for bank and nonbank markets and ensuring that federal consumer financial laws were applied consistently in supervisory matters across markets and regions.
Paul served as head of the Office of Supervision Examinations for the CFPB from 2012-2020 with responsibility for ensuring the credible conduct of consumer protection examinations.
The purpose of this podcast show was primarily to obtain the opinions of Peggy and Paul about the legal and practical impact of (i) a Memo to CFPB Staff from Mark Paoletta, Chief Legal Officer, dated April 16, 2025, titled “2025 Supervision and Enforcement Priorities” which rescinded prior priority documents and established a whole new set of priorities which in most instances are vastly different than the Supervision Priority documents which guided former directors and (ii) drastic steps taken by CFPB Acting Director Russell Vought to minimize the functions and staffing at the agency. That included, among other things, an order calling a halt to all work at the agency, the cancellation of all supervisory exams, and the creation of plans by Vought to reduce the agency’s staff (RIF) from about 1,750 employees to about 250 employees (including a reduction of Supervision’s staff to 50 employees). We also described the status of a lawsuit brought by the union representing CFPB employees and other parties against Vought seeking to enjoin him from implementing the RIF. The court has granted a preliminary injunction, which so far has largely prevented Vought from following through on the RIF. The matter is now on appeal before the DC Circuit Court of Appeals and a ruling is expected soon.
Peggy and Paul describe in detail the CFPB Supervision priorities under Director Chopra and compare and contrast those priorities with the new priorities established by Paoletta, which are:
- “Shift back” CFPB Supervision to the proportions focused on depository institutions to nonbanks to where it was in 2012 — to a 70 percent depository and 30 percent nonbank, compared to the more recent 60 percent on nonbanks to 40 percent depositories.
- Focus CFPB Supervision on “conciliation, correction, and remediation of harms subject to consumer complaints” and “collaborative efforts with the supervised entities to resolve problems so that there are measurable benefits to consumers.”
- Focus CFPB Supervision on “actual fraud” where there are “identifiable victims” with material and measurable consumer damages as opposed to matters where the consumers made “wrong” choices.
- Focus CFPB Supervision on the following priorities:
- Mortgages as the highest priority
- FCRA/Reg V data furnishing violations
- FDCPA/Reg F relating to consumer contracts/debts
- Fraudulent overcharges, fees, etc.
- Inadequate controls to protect consumer information resulting in actual loss to consumers.
- Focus CFPB Supervision on providing redress to service members and their families and veterans.
- The areas that will be deprioritized by CFPB Supervision will be loans for “justice involved” individuals, medical debt, peer-to-peer platforms and lending, student loans, remittances, consumer data, and digital payments.
- Respect federalism and not prioritize supervision where states “have and exercise” ample regulatory and supervisory authority and participating in multistate exams (unless required by statute).
- Eliminate duplicative supervision where other federal agencies have supervisory jurisdiction.
- Not pursue supervision under “novel legal theories.”
- For fair lending, ignore redlining or “bias assessment” based solely on statistical evidence, and only pursue matters with “proven actual intentional racial discrimination and actual identified victims.”
Peggy and Paul also discussed their skepticism as to whether CFPB Supervision will be able to comply with its statutory duties if the RIF is carried out and Supervision’s staff is reduced to 50 employees.
Alan Kaplinsky, former longtime chair of the Consumer Financial Group and now senior counsel, hosted the podcast.
To listen to this episode, click here.
Consumer Financial Services Group
CFPB Files Rulemaking Items With Office of Management and Budget
The CFPB recently made filings with the Office of Management and Budget (OMB) regarding the following rules:
- Loan Originator Compensation Requirements Under the Truth in Lending Act (Regulation Z).
- Discretionary Servicing Rules under the Real Estate Settlement Procedures Act (Regulation X).
- Discretionary Mortgage Servicing Rules Under the Truth in Lending Act (Regulation Z).
- Defining Larger Participants of the Consumer Debt Collection Market.
- Defining Larger Participants of the Consumer Reporting Market 2025.
The filings indicate that each item is in the prerule stage.
Of great significance, the filing with regard to the Regulation Z loan originator compensation rule includes in the heading “Rescission,” apparently indicating the intent of the CFPB to rescind the rule. While the mortgage industry has lobbied for various revisions to the rule, it would not favor a complete rescission of the rule, as that would eliminate beneficial provisions that are not included in the Truth in Lending Act (TILA) loan originator compensation provisions, and were not included in the original rule adopted by the Federal Reserve Board (Fed).
The main restrictions under the TILA loan originator compensation provisions are that (1) a loan originator may not receive compensation that is based on the terms or proxies for terms of one or more loan transactions, and (2) if any loan originator receives compensation directly from the consumer in a transaction, no loan originator (whether the same loan originator or another loan originator) may receive compensation, directly or indirectly, from any other party in connection with the transaction. The latter prohibition often is referred to as the “dual compensation prohibition.”
When Congress added loan originator compensation provisions to TILA in Dodd-Frank, it included a provision under which a loan originator may not receive compensation from anyone other than the consumer if the consumer pays any upfront discount points, origination points or fees. However, Congress expressly authorized the CFPB to waive or provide exemptions to this restriction, and the CFPB did so. Under the CFPB’s loan originator compensation rule, a loan originator may receive compensation from a party other than the consumer, such as the originator’s employer, regardless of whether the consumer makes any upfront payment of discount points, origination points, or fees, as long as the loan originator does not receive any compensation directly from the consumer.
The CFPB also created an exemption from the TILA dual compensation prohibition that permits a loan originator organization to compensate its employee loan originator in connection with a transaction even when the originator receives compensation directly from the consumer in connection with the transaction. Without this exemption, mortgage brokers could not compensate the loan originator that worked on a loan if the broker receives compensation directly from the consumer. Both of the exemptions are important for the mortgage industry.
The CFPB’s loan originator compensation also contains provisions not included in TILA or the prior Fed rule that expressly authorize:
- An employer to make a contribution to a 401(k) or other designated tax-advantaged plan of an individual loan originator.
- An individual loan originator to receive compensation based on the mortgage-related profits of the employer, subject to a cap of 10 percent of the employee’s total compensation for the applicable period.
- An individual loan originator to receive compensation based on the mortgage-related profits of the employer without any percentage limitation, as long as the individual loan originator was a loan originator for 10 or fewer covered transactions consummated during the 12-month period preceding the date of the compensation determination.
While the industry would favor the retention of the exemptions and authorizing provisions noted above, it would support various changes, including provisions that would provide exemptions to the rule’s general prohibition against varying a loan originator’s compensation based on loan terms or proxies for loans that would permit:
- Varying compensation for certain products, including:
- Down payment assistance, housing finance authority and similar loans, which are beneficial to consumers and typically are subject to limits on interest rates and fees that make it challenging to originate the loans and pay standard loan originator compensation amounts.
- Construction and reverse mortgage loans, which require particular expertise to originate and typically take longer to originate than standard mortgage loans.
- Reducing a loan originator’s compensation for errors made by the loan originator that cost money for the employer, such as when an originator forgets to disclose a cost, or discloses a cost lower than the actual, known cost, in the Loan Estimate.
- Reducing a loan originator’s compensation to help provide for a reduction in the cost of a loan to meet or beat the terms offered by a competing creditor.
The headings of the filings with regard to the four other rules do not include “Rescission,” apparently indicating the intent of the CFPB to revise and not rescind the rules.
Similar to the loan originator compensation rule, the servicing rules in Regulation X and Regulation Z implement various servicing provisions set forth in the Real Estate Settlement Procedures Act (RESPA) and TILA, respectively. As previously reported, last year the CFPB proposed revisions to the Regulation X mortgage servicing rules. While the mortgage industry favors revisions to the servicing rules, it does not favor the approach taken by the CFPB in the proposal. The industry seeks changes that will streamline the loss mitigation process, require consumers to engage with servicers to work to achieve sustainable loss mitigation results, and account for investor guidelines.
The Defining Larger Participants of the Consumer Debt Collection Market rule and Defining Larger Participants of the Consumer Reporting Market 2025 rule were adopted by the CFPB under its authority to establish supervisory authority for larger providers of consumer financial services or products that are not specifically identified in Dodd-Frank as being within the supervisory authority of the CFPB. Thus, unlike the loan originator compensation and servicing rules, these rules do not implement specific statutory requirements. While parties subject to these rules would likely favor their elimination, as noted above the headings for these items in the CFPB filings, do not specifically indicate an intent to rescind the rules. Potentially the CFPB may revisit who is a larger participant for purposes of the rules, particularly the Consumer Reporting Market Rule, given the specific reference to 2025 in the caption.
Richard J. Andreano, Jr. and John L. Culhane, Jr.
In a move that could have ramifications for lawsuits filed by former FTC and NCUA board members, by a vote of 6-3, the Supreme Court has issued a stay that prohibits the Democratic members of the National Labor Relations Board and the Merit Systems Protection Board who were fired by President Trump from continuing to serve while challenging the legality of their removal.
Although the Court indicated that it did not make a final decision on the merits, believing such a decision “is better left for resolution after full briefing and argument,” the Court made what appear to be significant statements signaling that it will uphold the President’s ability to fire board members of independent regulatory agencies. Citing the Constitution and the 2020 decision of the Court in Seila Law LLC v. Consumer Financial Protection Bureau, in which the Court struck the provision in the Consumer Financial Protection Act allowing the President to remove the CFPB Director only for cause, the Court stated that “[b]ecause the Constitution vests the executive power in the President . . ., he may remove without cause executive officers who exercise that power on his behalf, subject to narrow exceptions recognized by our precedents.” The Court continued by stating that “[t]he stay reflects our judgment that the Government is likely to show that both the NLRB and MSPB exercise considerable executive power,” and that “[a] stay is appropriate to avoid the disruptive effect of the repeated removal and reinstatement of officers during the pendency of this litigation.”
In this case, Cathy Harris, the chair of the MSPB, and Gwynne Wilcox, a member of the NLRB—both Democrats– had filed suit, contending that they could only be removed for cause.
The case is being closely watched by independent agencies as it a test of President Trump’s power over boards or similar bodies governing those agencies. Two former Democratic FTC members, Alvaro Bedoya and Rebecca Slaughter, who were fired by President Trump without cause have filed suit. Two former NCUA Democratic board members, Todd Harper and Tonya Otsuka, also have filed suit challenging their dismissals. The Court did not mention those suits in issuing its stay.
Regardless of the decision, the Supreme Court said that members of the Federal Reserve Board may not be simply fired from their jobs. “The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States,” the Court said.
The Supreme Court’s three liberal Justices, Elena Kagan, Sonia Sotomayor, and Ketanji Brown Jackson dissented from the majority decision.
To bolster their arguments, they cited Supreme Court precedent in Humphrey’s Executor v. United States, which upheld the constitutionality of the for cause removal standard applicable to FTC commissioners. In its Seila Law ruling noted above, the Supreme Court distinguished Humphrey’s Executor in finding the for cause removal standard applicable to the sole director of the CFPB to be unconstitutional.
The dissenting opinion provides it is thought that in certain spheres of “government, a group of knowledgeable people from both parties—none of whom a President could remove without cause—would make decisions likely to advance the long-term public good,” they wrote. “And that congressional judgment, Humphrey’s makes clear, creates no conflict with the Constitution.”
The dissent continues, “Or differently put, the interest at stake is in maintaining Congress’s idea of independent agencies: bodies of specialists balanced along partisan lines, which will make sound judgments precisely because not fully controlled by the White House.”
The dissent also states:
“Maybe by saying that the Commissioners exercise “considerable” executive power, the majority is suggesting that they cannot fall within the Humphrey’s “exception.” But if that is what the majority means, then it has foretold a massive change in the law—reducing Humphrey’s to nothing and depriving members of the NLRB, MSPB, and many other independent agencies of tenure protections. And it has done so on the emergency docket, with little time, scant briefing, and no argument.”
Addressing the important issue of what this decision may mean for the Federal Reserve Board members, which the majority found to be distinguishable from NLRB and MSPB members, the dissent states: “[T]he Federal Reserve’s independence rests on the same constitutional and analytic foundations as that of the NLRB, MSPB, FTC, FCC, and so on—which is to say it rests largely on Humphrey’s. So the majority has to offer a different story: The Federal Reserve, it submits, is a “uniquely structured” entity with a “distinct historical tradition”.”
The dissent then criticizes the majority’s citing of a footnote from Seila Law as support for distinguishing Federal Reserve Board members stating, “sorry [the] footnote provides no support.”
Richard J. Andreano, Jr. and John L. Culhane, Jr.
CFPB Will End Section 1033 Open Banking Rule
The CFPB is planning to repeal its Section 1033 Open Banking Rule, according to a filing in a federal lawsuit challenging the rule. On the same day the Final Rule was issued, the Banking Policy Institute (BPI) and Kentucky Bankers Association filed a lawsuit in the U.S. District Court for the Eastern District of Kentucky seeking injunctive relief, alleging that the CFPB exceeded its statutory authority.
“After reviewing the Rule and considering the issues that this case presents, Bureau leadership has determined that the Rule is unlawful and should be set aside,” the CFPB said, in a status report filed in the U.S. District Court for the Eastern District of Kentucky. The CFPB said it would file a motion for a summary judgment in the case by May 30.
The rule implements Section 1033 of the Dodd-Frank Act. It would have significantly expanded consumer access to their financial data. The rule would have had far-reaching implications for financial institutions, fintech companies, and consumers alike. This previously untapped legal authority would have given consumers the right to control their personal financial data and assign the task of implementing personal financial data sharing standards and protections to the CFPB.
Even though the CFPB is withdrawing the current rule, Section 1033 requires the CFPB to issue rules that would allow consumers to obtain, “transaction data and other information concerning a consumer financial product or service that the consumer obtained from the covered entity,” according to a Biden administration timeline providing background on the rule. “Section 1033 also directs the CFPB to prescribe by rule standards to promote the development and use of standardized formats for information made available to consumers,” according to a Biden administration timeline providing background on the rule.
It is unclear how the Trump administration will implement the requirements contained in Section 1033—or if the administration intends to implement it at all.
The Kentucky Bankers Association and BPI applauded the administration’s decision to end the rule.
“CFPB has taken the appropriate step of acknowledging Section 1033’s clear legal deficiencies, and we urge the big tech companies to do the same, rather than protracting a legal dispute that endangers consumer financial data,” they said, in a joint statement. “Banks have already made it possible for hundreds of millions of Americans to safely access and share their data – the current rule undermines and disrupts that ecosystem to the benefit of tech companies looking to profit even further from consumers’ data.”
However, the Financial Technology Association blasted the decision to withdraw the rule.
“Vacating the 1033 rule is a handout to Wall Street banks, who are trying to limit competition and debank Americans from digital financial services,” said Penny Lee, president and CEO of the Financial Technology Association. “Americans must have the right to control their financial lives, not the nation’s biggest banks.”
Kristen E. Larson and Ronald K. Vaske
CFPB States the Section 1033 Open Banking Rule Exceeds Its Authority
In its motion for a summary judgment in a lawsuit challenging the regulation, the CFPB stated it has concluded that the Section 1033 Rule (Rule) exceeds the agency’s statutory authority to create an open banking system by—among other things—requiring that consumer data be shared with third parties.
The motion states that “the limited legislative history confirms what the statute’s text and structure make clear: the statute was intended simply to ensure that consumers would have access to their own information.”
Therefore, the CFPB requested that the court grant plaintiff’s motion for summary judgment.
“In light of the President’s directive to review existing regulations, the Bureau’s new leadership has considered the Rule and the arguments set forth in Plaintiffs’ complaint and amended complaint and has concluded that the Rule exceeds the Bureau’s statutory authority and is arbitrary and capricious,” the CFPB said, in its motion, in the lawsuit filed by the Bank Policy Institute (BPI) and Kentucky Bankers Association. “Accordingly, Defendants agree with Plaintiffs that the Rule is unlawful and should be set aside under the Administrative Procedure Act.”
The CFPB recently announced that it planned to end the rule and ask for a summary judgment in the case. The motion formally asks for the summary judgment, and sets forth the CFPB’s reasoning behind that request.
The Rule would have had far-reaching implications for financial institutions, fintech companies, and consumers alike. This previously untapped legal authority would have given consumers the right to control their personal financial data and assign the task of implementing personal financial data sharing standards and protections to the CFPB.
The CFPB said that due to the legal issues involving the Rule, U.S. District Court Judge Danny C. Reeves should find that the Rule violates the APA.
The CFPB gives several reasons for why Trump administration officials believe the Rule is illegal. According to the CFPB, it unlawfully:
- Seeks to regulate open banking by mandating the sharing of data with “authorized third parties,” whereas Section 1033 is limited to ensuring that consumers can access their own data. Nothing in the law or its legislative history delegates to the CFPB “free-ranging authority to regulate the entire open banking system—that is, the intricate network of commercial entities sharing a consumer’s personal financial data well beyond sharing it with the consumer directly,” according to the CFPB. The Rule allows an authorized third-party to use consumer’s data for the purpose of improving the product or service requested.
- Prohibits data providers from charging fees to offset burdens the Rule imposes on them, even though Section 1033 does not expressly authorize the CFPB to prohibit the charging of fees. “To start, the Rule’s fee prohibition is in excess of the Bureau’s authority,” the Bureau said, in its motion. “Congress’s silence on fees is a particularly shaky foundation for the Rule’s absolute fee prohibitions. Even if the Bureau had statutory authority to prohibit data providers from charging fees, it was unreasonable for the Bureau to impose that prohibition in the Rule, and the prohibition is therefore arbitrary and capricious.”
- Places consumer data at risk. The Rule greatly expanded Section 1033 to encompass a vast data-sharing framework. That, the CFPB said, invites greater risk to consumer privacy and data security.
- Arbitrarily and capriciously sets compliance deadlines that do not account for the development of consensus standards. Instead, the CFPB tied compliance dates based on the Rule’s publication in the Federal Register.
Even though the CFPB is withdrawing the Rule, Section 1033 requires the CFPB to issue rules that would allow consumers to obtain transaction data and other information concerning a consumer financial product or service that the consumer obtained from the covered entity. It is unclear whether the CFPB plans to reinitiate the rulemaking process to meet its Section 1033 mandate.
Kristen E. Larson and Ronald K. Vaske
Trustmark Redlining Consent Order Terminated
A federal district court recently granted the unopposed motion of the Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB) to terminate their October 2021 consent order with Trustmark National Bank (Trustmark) and to dismiss with prejudice the redlining case they brought that resulted in that consent order.
As previously reported, the agencies, along with the Comptroller of the Currency, announced the consent order at the same time that the DOJ announced its initiative to combat redlining.
By its terms, the consent order was scheduled to end in October 2026, unless Trustmark had not fully invested the loan subsidy fund provided for in the consent order, in which case it would have continued until three months after Trustmark fulfilled that obligation and submitted a confirming report to the DOJ and CFPB.
Supporting the request for the early termination, the unopposed motion provides that “Trustmark has demonstrated a commitment to remediation, and:
- Trustmark has fully disbursed the loan subsidy fund ($3,850,000) as required under the terms of the Consent Order;
- Trustmark paid a $5,000,000 civil money penalty as required under the terms of the Consent Order, of which $1,000,000 was paid to the Bureau and $4,000,000 was remitted after Trustmark paid that amount to the [OCC] as satisfaction of its obligation to pay that amount in penalties to the OCC for related conduct; and
- Trustmark is substantially in compliance with the other monetary and injunctive terms of the Consent Order.” (Citations omitted.)
The motion also indicates that the DOJ and CFPB conferred with counsel for Trustmark, and that Trustmark did not oppose the motion.
In what appears to be a related development, it was recently reported that the CFPB reduced the $2.025 million civil money penalty imposed on Wise, an international remittance company, in January 2025 to slightly less than $45,000.
As previously reported, the CFPB is also seeking to reverse the November 2024 consent order with Townstone Financial, a much more significant step than the early termination of the Trustmark consent order.
While the Townstone development seems to be unique, the actions regarding Trustmark and Wise are nevertheless a clear indication that the CFPB is reassessing various enforcement actions it took under the prior administration.
Richard J. Andreano, Jr. and John L. Culhane, Jr.
DeSantis Signs Bill Allowing Debt Collection Emails Between 9 PM and 8 AM
Florida Gov. Ron DeSantis recently signed legislation making it clear that debt collection emails sent between 9 p.m. and 8 a.m. do not violate Florida law.
Those are the hours that debt collectors are prohibited from communicating with debtors. Now, emails are excluded from that prohibition.
“The bill includes preamble clauses that acknowledge emails were not commonly used or explicitly contemplated when the Florida Legislature prohibited the practice of communicating with a consumer at night,” a Florida Legislature memo explaining the bill states. “The preamble clauses also identify the Legislative intent of the bill is to update the law and clarify that emails are not prohibited between such hours because they are less invasive and less disruptive” than telephone calls.
Before the law was enacted, a debtor could file a civil action against a consumer collection company or any person attempting to collect a debt during prohibited hours within two years of the date the alleged violation occurred.
“Without statutory clarification, Florida courts are open to litigation over debt collection emails received and read after 9 p.m. and before 8 a.m.,” the legislative memo states.
And people have sued under the old Florida statute.
The U.S. District Court for the Southern District of Florida recently interpreted what it means to communicate with a consumer under Florida law, according to the legislative memo. In that case, a consumer filed a class action against a debt collector for sending an email at 8:23 p.m., which was delivered at 10:14 p.m., but was not read until 11:44 a.m.
The plaintiff in the case argued that the communication violated Florida law. However, without legal precedent, Judge David S. Leibowitz of the Southern District of Florida, said “Simply put, if a debt collector ‘sends’ an email but the consumer never ‘receives’ it, the debt collector has not ‘shared information’ or ‘communicated with’ anyone.”
Judge Leibowitz ruled that the debt collector communicated with the consumer at 11:44 a.m.
“Thus, the uncontroverted record evidence is that [the debt collector] communicated with [the consumer] during hours that are presumptively allowed” under state and federal law.
However, the legislative memo points out that without the law, Florida courts or other federal courts could have adopted a different position.
The State Senator who sponsored the legislation said it properly takes into account newer technology.
“By clarifying that emails sent between 9 p.m. and 8 a.m. are permissible, SB 232 ensures that contact remains respectful, nonintrusive, and less disruptive than phone calls,” said Republican State Senator Ana Maria Rodriguez. “As communication evolves, our laws must, too—and this bill is a step toward making our statutes smarter and more in tune with modern life.”
Maryland Enacts Earned Wage Access Legislation
A new Maryland law deems certain earned wage access (EWA) services to be loans. It then subjects those EWA services to the Maryland Consumer Loan Law and other consumer credit provisions, restricts the acceptance of tips by certain lenders, requires licensing or registration of certain entities offering EWA services, regulates EWA service agreements, and limits the costs and fees associated with obtaining EWA services. The law is effective October 1, 2025.
In particular, Section 12-101 and 12-318 of the Maryland Commercial Code are amended to define “tip,” require consumer disclosures, and restrict misrepresentations that paying a tip will influence the lender’s willingness to provide a loan at any time or affect the credit terms of any loan offered by the lender. Additionally, the default tip must be set to zero.
A new Section 12-1501 is added to the Maryland Commercial Code to:
- Define terms related to EWA services, including defining “earned wage access” as the following:
- “Consumer–directed earned wage access” means delivery to a consumer of access to unpaid but earned wages:
- that is provided to a consumer by a third-party who does not have a relationship with the consumer’s employer;
- that is based on employment, income, or attendance data obtained directly from the consumer; and
- where the consumer does not pay the provider interest.
- “Employer–integrated earned wage access” means delivery of unpaid but earned wages:
- that are provided to a consumer directly by a person the employer has contracted to provide the service;
- that are determined based on employment, income, or attendance data obtained directly or indirectly from the consumer’s employer, including a payroll service provider; and
- where the consumer does not pay the provider interest.
- Exclude payroll service providers and employers from the definition of “Provider” of EWA services
- Require a Provider of EWA services to obtain a license
- Exclude EWA services from the laws regulating money transmission
- Exclude EWA services from compliance with state laws governing deductions from payroll, salary, wages, compensation, or other income or the purchase, sale, assignment, or order for unpaid but earned wages
- Implement policies and procedures to timely respond to consumer inquiries and complaints
- Offer consumers at least one reasonable option to obtain earned wage access at no cost and explain how to elect that option
- Provide certain disclosures for “tips”
- Comply with the EFTA for any electronic payments collected and reimburse consumers for any overdraft or nonsufficient fund fees that were caused by such payments within five business days of the consumer request
- Limit fees that may be charged for EWA services to $5 for any advance equal or less than $75 and $7.50 for any advance exceeding $75
- Prohibit certain activities including: sharing fees with employers, conditioning access on paying a tip, charging late fees or interest, reporting a consumer’s failure to pay to consumer reporting agencies, obtaining a consumer credit report in qualifying a consumer, and using third-party collection agencies, debt buyers or litigation to compel payment
Governor Wes Moore raised some objections to the law, but he allowed the legislation to become law without his signature. The Maryland Constitution, Article II, Section 17(c) states that “[a]ny Bill presented to the Governor within six days (Sundays excepted), prior to adjournment of any session of the General Assembly, or after such adjournment, shall become law without the Governor’s signature unless it is vetoed by the Governor within 30 days after its presentment.”
In a letter to House Speaker Adrienne Jones, Governor Moore said that while he supports the purpose of the bill, it does not provide adequate consumer protection.
“Depending on how the product is structured, consumers face risks of paying relatively high costs while they are already short on cash or drawing too much of their pay, unintentionally landing Marylanders in worse financial situations,” he wrote.
And in an obvious reference to the Trump administration’s management of the CFPB, he wrote, “In this time when federal protections are being eroded, it is more important than ever for states to step up and ensure that necessary protections are in place.”
He acknowledged that the bill defines EWA products as loans, sets fee caps, provides some limitations on solicitations for tips, requires lenders to offer a no-cost option to consumers, and prevents certain fees from accruing.
“These protections are a significant step in the right direction and should serve as a starting place for future efforts on this issue,” he wrote.
“While House Bill 1294 takes steps in the right direction, there is more to do and I look forward to engaging with partners in the legislature and stakeholders from across the state to chart a path forward,” he added.
The American Fintech Council applauded Moore’s decision to allow the bill to become law.
“This legislation provides a clear and responsible framework for Earned Wage Access, and we commend the state’s leadership for recognizing the importance of empowering consumers with modern financial tools,” Phil Goldfeder, CEO of the American Fintech Council said.
However, the AARP said it has serious reservations about the bill.
“While marketed as a modern financial convenience, this legislation undermines the very safeguards that have kept payday lenders out of Maryland for years,” Hank Greenberg, State Director of AARP Maryland said. “This bill creates a dangerous loophole, giving third-party providers permission to charge excessive fees to workers who can least afford it—including older adults living paycheck to paycheck.”
Several other states have adopted regulatory regimes governing EWA services. See our prior blog posts for California, South Carolina, Connecticut, Missouri, Montana, Nevada, and Arizona.
No Small Thing: Mini-WARN Act Comes to Washington State
Washington is the latest state to enact a “mini-WARN” Act that will require employers with 50 or more full-time employees to provide at least 60 days’ notice to the state as well as any union or employees affected by a business site closing or mass reduction in force. Although Washington’s WARN Act mirrors many federal WARN Act provisions, it has some notable distinctions. Read on to learn more.
On May 13, 2025, Governor Bob Ferguson signed Senate Bill (SB) 5525, or the “Securing Timely Notification and Benefits for Laid-Off Employees Act,” which provides employees with similar protections regarding business site closings or a “mass layoff” as the federal Worker Adjustment and Retraining Notification (WARN) Act. Washington’s Mini-WARN act will take effect on July 27, 2025. This is one of many new laws going into effect in Washington State. See here for Ballard Spahr’s legal alert on these laws.
- Definitions:
- Covered employers: Washington WARN Act applies to companies that employ 50 or more employees in the state, excluding part-time employees. This is a marked difference from the federal WARN Act, which applies to larger employers with 100 or more employees (excluding part-timers).
- Covered employees; part-time employees. As used in the statute, “employee” means a person employed in Washington State and includes part-time employees. Unless defined differently in an applicable collective bargaining agreement, a “part-time employee” is an employee who works an average of less than 20 hours per week or has been employed less than six of the 12 months preceding the date on which notice is required.
- Employment Loss: Like the federal law, Washington’s WARN Act defines “employment loss” as a termination, other than a discharge for cause, voluntary separation, or retirement; (ii) A layoff exceeding six months; or (iii) A reduction in hours of more than 50 percent of work of individual employees during each month of a six-month period.
- Triggering WARN Events:
- Business Closing: Washington WARN Act defines “business closing” as “the permanent or temporary shutdown of a single site of employment of one or more facilities or operating units that will result in an employment loss for 50 or more employees, excluding part-time employees.” Critically, unlike the federal WARN Act, the Washington WARN Act is not expressly limited to employment losses occurring within a 30-day or 90-day period. Employers conducting multiple smaller closures over a period of time should be aware of this key difference because these closures may be aggregated under this law.
- Mass Layoffs: Under the Washington WARN Act, a mass layoff are those workforce reductions that are not due to a business closing “and results in an employment loss during any 30-day period of 50 or more employees, excluding part-time employees.” Mass layoffs under the Washington WARN Act are not expressly limited to a single site of employment. It is possible that employers must consider statewide employment actions when assessing whether a mass layoff will occur. For example, if an employer laid off a total of 50 employees at various sites across the state within a 30-day period, the Washington WARN Act’s notice requirement might be triggered. Further, a mass layoff under the Washington WARN Act is not limited to layoffs that affect a minimum percentage of the workforce. Thus, a 50-person layoff could trigger notice obligations in Washington even if the layoff affects less than 33 percent of the countable workforce at any site of employment. However, the Washington WARN Act’s mass layoff trigger only looks at each 30-day period, unlike the federal WARN Act, which has a 90-day aggregation period.
- Short-Term Layoffs: Like the federal WARN Act, the Washington WARN Act defines an “employment loss” as including a layoff that exceeds six months. Under the federal WARN Act, courts have interpreted that language to allow layoffs of up to six months without counting toward federal WARN Act notice obligations. It remains to be seen if courts will interpret this language under the Washington WARN Act. However, the Washington law does add additional requirements at the three-month mark of a short-term layoff.
If short-term layoff extends beyond three months for reasons that reasonably were unforeseeable at the time, then employers must give specific notice when it becomes reasonably foreseeable that the extension is required.
- Sale of Businesses: The Washington statute includes a sale of business exception that recognizes exceptions for unforeseeable business circumstances, natural disasters, and faltering businesses, similar to the federal WARN.
- Notice: Notice must be given to unrepresented employees, unions, and the state’s Employment Security Department. All notices, including employee notices, must contain, among other information, the names of the employees holding affected jobs, and a statement about whether the layoff or closing results from, or will result in, the relocation or contracting out of the employer’s operation or the affected employees’ positions. Notice to the state must also include the addresses of the affected employees.
- Exceptions: An employer is not required to comply with the notice requirements of the statute if an exception applies, e.g., faltering business, unforeseeable business circumstances or natural disaster, as set forth in the statute. Notice is required under the Washington WARN Act if the exception applies for only part of the 60-day notice window. In these circumstances, notice is required when the exception no longer applies.
- Employees on Leave: Unless a specific exception applies, an employer may not include any employee on leave through Washington’s paid family or medical leave program in a mass layoff. This is a significant departure from the federal WARN Act, which permits including employees on leave in a layoff if they otherwise would have been included.
- Damages and Private Right of Action: Like the federal WARN Act, aggrieved employees who were entitled to timely notice under the Washington WARN Act that they did not receive may sue for 60 days of back pay, and the value and cost of any lost benefits, if they do so within the Washington WARN Act’s three-year statute of limitations. There is also a $500-per-day civil penalty owed to the state for each day of violation up to 60 days. However, an employer is not subject to the civil penalty if it pays the affected employees all the amounts that they are entitled to within three weeks from the date that the employer orders the mass layoff or business closing.
Ballard Spahr’s Labor and Employment Group routinely provides guidance to clients on developments in federal, state and local labor and employment laws, including legislative and regulatory developments in Washington. We regularly assist clients in updating their policies and practices to be compliant with recent developments.
Nalee Xiong and Priya B. Vivian
DAA Launches AI-Focused Review of Interest-Based Advertising Self-Regulatory Principles
On June 4, 2025, the Digital Advertising Alliance (DAA), the self-regulatory body that sets and enforces privacy standards for digital advertising, announced it is launching a process to determine if it is necessary to issue new guidance to address how the DAA’s Self-Regulatory Principles apply to the use of artificial intelligence systems and tools that leverage interest-based advertising (IBA) data.
The DAA intends to meet with relevant stakeholders, such as trade associations, advertisers, publishers, and ad tech over the coming weeks to consider the following issues:
- The appropriate industry participants;
- the current and anticipated use cases for IBA data by AI systems and tools;
- consumer expectations around the collection and use of such data; and
- the legal and regulatory gaps/overlaps with any such guidance.
While it is too early to tell what specific guidance will entail, the CEO of the DAA stated in the DAA’s announcement that the goal of the review is to “look at the steps companies can take to ensure they are providing appropriate information and control to consumers around the collection and use of IBA data by those [artificial intelligence] systems.”
Mo Pham-Khan and Gregory P. Szewczyk
Understanding State Attorneys General Triggers in Antitrust and Privacy Actions
A Ballard Spahr Webinar | July 9, 2025, 12 PM ET
Speakers: Mike Kilgarriff, Joseph J. Schuster, Gregory Szewczyk, and Christopher Wyant
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