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In this episode of the Consumer Finance Monitor Podcast, host Alan Kaplinsky (founder, former chair for 25 years and now Senior Counsel) had the pleasure of speaking with Sam Levine, Commissioner of the New York City Department of Consumer and Worker Protection (DCWP), about the agency's evolving role as one of the most active local consumer protection regulators in the country. Important note: This podcast was recorded prior to DCWP's April 8, 2026 release of its proposed "click-to-cancel" rule addressing subscription practices. Alan recorded a description of the proposed rule which is at the end of the recording. We also wrote a separate blog about that significant development. A Local Regulator with National Influence From the outset, Commissioner Levine emphasized that DCWP is not simply a municipal agency focused on traditional licensing and enforcement, but rather a modern regulator tackling complex consumer protection issues that increasingly mirror those addressed at the federal level. "Local enforcement can be incredibly impactful—we're often closest to consumers and can move quickly to address emerging harms." He noted that New York City's scale and diversity make it a uniquely important testing ground for innovative consumer protection strategies. Executive Orders Driving Enforcement Priorities A key backdrop to DCWP's current activity is a pair of mayoral directives—Executive Order 9 and Executive Order 10—issued by New York City Mayor Zohran Mamdani on January 5, 2026 (shortly after he took office) which we have discussed in a prior blog post. These Executive Orders signal a clear policy direction to fulfill his campaign promise to make life more affordable for everyday New Yorkers: an intensified focus on consumer protection, particularly in areas involving deceptive practices, hidden or "junk" fees, and recurring payment models. Executive Order 10, in particular, directs DCWP to prioritize enforcement against "subscription traps" and misleading recurring charge practices—laying the groundwork for the Department's subsequent proposed "click-to-cancel" rule published on April 8, 2026. Commissioner Levine made clear that these directives are not merely aspirational, but are actively shaping the agency's enforcement and rulemaking agenda: "We're aligning our work with the Mayor's directive to go after practices that frustrate consumers and undermine fair competition." Enforcement Priorities: Targeting Deceptive Practices A central theme of our discussion was DCWP's aggressive focus on deceptive and unconscionable trade practices, particularly in areas where consumers are most vulnerable. Commissioner Levine highlighted the agency's work in combatting: 1.     Hidden fees and misleading pricing practices 2.     Predatory lending and financial services abuses 3.     Worker exploitation in the gig economy 4.     Emerging digital marketplace risks "We're focused on conduct that distorts consumer choice—where people think they're getting one thing but end up locked into something very different." He underscored that transparency and fairness are guiding principles behind DCWP's enforcement agenda. Final Debt Collection Rules: A Significant Regulatory Development We also discussed DCWP's recently finalized debt collection regulations, which we have analyzed in prior blog coverage. These rules represent one of the most significant updates to New York City's debt collection framework in years. Commissioner Levine emphasized that the rules are designed to modernize existing requirements and address evolving industry practices, including the increased use of digital communications. "The goal is to ensure that debt collection practices keep pace with how consumers actually communicate today, while maintaining strong protections against harassment and abuse." Among other things, the rules clarify permissible communications, reinforce substantiation and disclosure requirements, and strengthen consumer protections in line with broader trends seen at the federal level. These rules, which go effective later this year, apply not only to third-party collectors and buyers of consumer debt, but also to creditors of consumers whenever the debtor resides or is located in New York City. Collaboration with Federal and State Regulators Drawing on his prior experience at the Federal Trade Commission as Director of the Bureau of Consumer Protection, Levine discussed the importance of coordination across jurisdictions. "There's a real opportunity for federal, state, and local regulators to work together and reinforce one another's efforts." He explained that DCWP frequently collaborates with the FTC, the New York State Attorney General's Office, and other enforcement bodies, particularly in cases involving multi-state or national conduct. At the same time, he made clear that local regulators can lead: "We don't have to wait. If we see harm affecting New Yorkers, we're going to act." Rulemaking as a Strategic Tool In addition to enforcement, Levine emphasized DCWP's increasing use of rulemaking to shape market behavior proactively. "Rules give clarity to businesses and protections to consumers—they're an important complement to case-by-case enforcement." He noted that clear rules can help level the playing field for companies that are already trying to do the right thing. Focus on Financial Services and Marketplace Innovation The conversation also explored DCWP's interest in financial services, particularly as new products and delivery models emerge. Levine pointed to risks associated with: 1.     Fintech innovations that may outpace regulatory frameworks 2.     Online platforms that obscure key terms or pricing 3.     Products that rely heavily on consumer inertia or behavioral biases "Innovation can be a good thing—but it can't come at the expense of transparency or fairness." Practical Takeaways for Industry For companies operating in or serving New York City, the message from DCWP is clear: 1.     Expect active enforcement of deceptive practices 2.     Monitor local regulatory developments, including mayoral directives and rulemaking initiatives 3.     Prioritize clear disclosures and consumer-friendly processes 4.     Anticipate continued focus on digital and subscription-based business models "Our goal is straightforward: markets should work for consumers, not against them." Looking Ahead Although our discussion did not cover it because it happened after our podcast was recorded, DCWP has since proposed a significant new rule targeting subscription practices—further underscoring the agency's commitment to addressing modern consumer risks and reflecting the policy direction set by Executive Order 10. Given Commissioner Levine's leadership and experience, including his prior role at the FTC, DCWP is likely to remain at the forefront of consumer protection innovation. Consumer Finance Monitor is hosted by Alan Kaplinsky, Senior Counsel at Ballard Spahr, and the founder and former chair of the firm's Consumer Financial Services Group. We encourage listeners to subscribe to the podcast on their preferred platform for weekly insights into developments in the consumer finance industry.

In Episode 4 of our Debt Sales 101 mini-series, we focus on the current regulatory landscape governing debt sales and how recent developments are shaping the market. We discuss how oversight has become more fragmented, more active, and increasingly driven by state regulators and attorneys general, and how that shift is affecting both buyers and sellers.    A central theme in this episode is that regulation is no longer a background consideration. It is a primary driver of pricing, deal structure, and buyer participation. We walk through key regulatory themes, including the importance of documentation and chain of title, increased product-specific scrutiny, and the growing focus on consumer outcomes and potential UDAAP risk. Regulators are increasingly looking upstream at sellers and their diligence, documentation, and oversight practices, rather than focusing solely on collectors.    We also discuss how these regulatory developments are affecting the economics of debt sales. Changes at the state level, as well as evolving rules in areas such as medical debt and student loans, have introduced additional compliance complexity and, in some cases, reduced pricing or limited buyer participation. At the same time, emerging product areas continue to evolve as buyers assess regulatory risk and opportunity.  The key takeaway from this episode is that understanding the regulatory environment upfront is critical to executing a successful debt sale. A well-structured process, supported by strong diligence, documentation, and contractual protections, is essential to managing risk and achieving expected value.

The latest episode of the Consumer Finance Monitor Podcast being released today tackles one of the most consequential developments in bank–fintech litigation in recent years: the Los Angeles Superior Court's tentative decision in Opportunity Financial, LLC v. Hewlett (read more here). This case squarely addresses the long-debated "true lender" doctrine which has for decades bedeviled banks and Fintechs and "bricks and mortar" non-banks that have entered into joint ventures with one another to engage in interstate lending programs which take advantage of interest rate exportation rights afforded to banks. After applying application California and federal law, the Court granted summary judgment to OppFi and against the California Department of Financial Protection and Innovation (DFPI) which unsuccessfully maintained that OppFi is the true lender and not OppFi's partner, FinWise Bank. In this episode, host Alan Kaplinsky, founder and former chair of the Consumer Financial Services Group and now Senior Counsel, is joined by two leading voices with sharply contrasting perspectives: Professor Emeritus Arthur Wilmarth, a prominent critic of bank–fintech partnerships, and Ballard Spahr Senior Counsel Ron Vaske, who regularly advises banks and fintech companies on structuring such programs. Their discussion offers a deep and balanced exploration of the court's reasoning and its broader implications.   A Tentative Decision with Significant Implications At the center of the case is a partnership between OppFi, a fintech platform, and FinWise Bank, a Utah-chartered, FDIC-insured institution. The program allowed FinWise to originate consumer loans at interest rates permissible under Utah law and export those rates nationwide under Section 27 of the Federal Deposit Insurance Act. The DFPI challenged the arrangement, arguing that OppFi—not FinWise—was the "true lender," which would subject the loans to California's 36% interest rate cap. In a tentative ruling, the court rejected the DFPI's position and granted summary judgment in favor of OppFi. The court emphasized traditional indicia of lending authority, including: •           FinWise's role in funding the loans •           Its control over underwriting criteria •           Its retention of a 5% ownership interest •           Its ongoing oversight of compliance and marketing Critically, the court also relied on the longstanding California law principle that usury is determined at the inception of the loan. (See the discussion below.) Because FinWise originated the loans, the court concluded they were not rendered unlawful by OppFi's subsequent purchase of a 95% participation interest giving which gave it a predominant economic interest.   Competing Views on "True Lender" The podcast highlights a fundamental divide in how courts and commentators approach the true lender doctrine. Professor Wilmarth argues that the court failed to meaningfully engage with the "predominant economic interest" test, which focuses on who bears the majority of the economic risk and reward. In his view, OppFi's 95% participation interest suggests that it—not the bank—is the real lender in substance. He also raises broader concerns about whether such arrangements undermine state usury laws and expose consumers to excessively high-cost credit. Ron Vaske, by contrast, emphasizes the legal and structural realities of the transaction. He underscores that FinWise is the named lender, funds the loans, and remains legally responsible to borrowers. From this perspective, the allocation of economic interests after origination should not redefine the identity of the lender or override federal law permitting rate exportation.   The Role of "Valid When Made" Another key related theme explored in the episode is the "valid when made" doctrine—the principle that a loan that is lawful at origination remains lawful after assignment. The court's reliance on this concept reinforces the importance of determining lender status at the moment the loan is made, rather than based on subsequent transfers or participations. The discussion also touches on the interplay between state and federal law, as well as the continuing relevance of regulatory interpretations following the Supreme Court's decision in Loper Bright, which curtailed Chevron deference.   What Comes Next? It is important to note that the court's ruling is still tentative. In accordance with California procedure, OppFi must submit a proposed final opinion and order to the Court. If adopted, an appeal by the DFPI appears likely—potentially setting the stage for further appellate guidance on the true lender doctrine in California and beyond.   Why This Matters This case is part of a broader and ongoing policy debate: ·                 Supporters of bank–fintech partnerships argue they expand access to credit and operate within well-established federal banking frameworks. ·                 Critics contend they can be used to circumvent state consumer protection laws, particularly interest rate caps. As the regulatory and judicial landscape continues to evolve, OppFi v. Hewlett represents a significant—and closely watched—development. It may be significant to note that, unlike several other states, California does not have a statute stating that the holding of a "predominant economic interest" in a loan makes the holder the true lender  Be sure to listen to the full podcast episode for a deeper dive into the case and the competing legal and policy perspectives shaping the future of bank–fintech partnerships. Consumer Finance Monitor is hosted by Alan Kaplinsky, Senior Counsel at Ballard Spahr, and the founder and former chair of the firm's Consumer Financial Services Group. We encourage listeners to subscribe to the podcast on their preferred platform for weekly insights into developments in the consumer finance industry.

In Episode 3 of our Debt Sales 101 mini-series, we discuss who buys charged-off debt and how debt sale transactions are typically structured. We explain how different buyers specialize in different asset classes and how buyers evaluate portfolios from legal, regulatory, and commercial perspectives.    From a buyer's perspective, purchasing debt is not just a credit decision. Buyers are underwriting legal and regulatory risk as much as they are underwriting expected recoveries. In this episode, we discuss the key factors buyers consider, including transferability and chain of title, collectability and applicable statutes of limitation, licensing requirements, and the broader regulatory environment that affects how accounts can be collected. These factors often drive pricing and determine whether certain buyers will participate in a particular sale process.    We also discuss how sellers identify the right buyer and why working with well-capitalized and experienced buyers can have a significant impact on execution and pricing. From there, we walk through the primary transaction structures used in the market, including spot sales and forward flow arrangements, and discuss how risk allocation, repricing risk, and portfolio segmentation are addressed in these structures.    The key takeaway from this episode is that debt sales are not one-size-fits-all transactions. The identity of the buyer, the structure of the deal, and the allocation of regulatory and commercial risk all directly affect pricing, execution, and long-term success of a debt sale program. In the next episode, we turn to the regulatory landscape and discuss how recent regulatory developments are shaping the debt sale market.

In this episode of the Consumer Finance Monitor Podcast, host Alan Kaplinsky is joined by colleagues Pilar French and Burt Rublin to unpack a rapidly evolving issue at the intersection of bank–FinTech partnerships and interstate lending: the renewed exercise of state opt-out authority under Section 525 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA). Colorado enacted an opt-out statute in 2023 that is the subject of ongoing litigation before the entire Tenth Circuit Court of Appeals, and very recently the Oregon Legislature passed an opt-out bill as well. The Podcast discussion highlights how a little-used statutory provision is now at the center of a major legal and policy debate—one that could reshape the landscape for state-chartered banks and the broader consumer finance industry. The Foundation: Interest Rate Exportation Under DIDMCA For decades, state-chartered, FDIC-insured banks have relied on Section 27 of the Federal Deposit Insurance Act—enacted through DIDMCA—to "export" interest rates permitted in their home states to borrowers nationwide. This authority mirrors the power granted to national banks under the National Bank Act and has been a cornerstone of interstate lending. However, DIDMCA also includes a lesser-known provision—Section 525—that allows states to opt out of this federal framework for state banks with respect to "loans made in such state." For years, this provision attracted little attention. That is now changing. Oregon's House Bill 4116: A New Wave of Opt-Out Activity Oregon's recently passed House Bill 4116 represents one of the most significant modern uses of the DIDMCA opt-out provision. If signed into law, it would: 1.     Reimpose Oregon's interest rate caps (generally 36%) on certain loans made to Oregon residents; 2.     Apply broadly to consumer finance loans of $50,000 or less; 3.     Expand the definition of where a loan is "made" to include the borrower's location—such as where the consumer resides or enters into the loan agreement. Surprisingly, the law applies to state-chartered banks but excludes credit unions. The legislation appears driven by concerns over high-interest, short-term lending, though testimony suggested that such loans represent only a small portion of the market. Critics argue that the bill oversimplifies complex lending structures—particularly bank–FinTech partnerships—through politically appealing but potentially misleading narratives. The Core Legal Dispute: Where Is a Loan "Made"? At the heart of both the Oregon legislation and ongoing litigation in the Tenth Circuit concerning the Colorado opt-out statute is a fundamental interpretive question: where is a loan "made" for purposes of Section 525 of DIDMCA? 1.     Industry Position: A loan is "made" where the bank is located, because the bank is the entity that extends credit. Therefore, an opt-out by a state only enables it to impose its own usury laws on loans made by its own state banks  and eliminates their ability to charge interest pursuant to Section 27 of the Federal Deposit Insurance Act. 2.     Opt-out State/Consumer Advocate Position: A loan is "made" both where the bank is located and where the borrower resides. This means that an opt-out state can apply its own usury laws to interstate loans made to its citizens by state banks located in other states. This distinction is critical. If the broader interpretation prevails, states that opt out of DIDMCA could effectively regulate interest rates charged by out-of-state banks to their residents—significantly curtailing interstate lending. The Colorado Litigation: A Pivotal Case Colorado's opt-out statute has become the testing ground for this issue, as it raises an issue that all sides agree is one of first impression. 1.     A federal district court sided with industry plaintiffs, granting a preliminary injunction against enforcement of the opt-out statute and holding that only the bank's location determines where a loan is made. 2.     A divided panel of the Tenth Circuit reversed that decision, adopting Colorado's argument that a loan is made in both the borrower's location and where the bank is located. 3.     In a significant and very unusual development, last week the Tenth Circuit granted rehearing en banc, vacating the panel decision and ordering additional briefing for consideration by the entire Court. The case has attracted substantial attention, including numerous amicus briefs on both sides from bank trade associations, consumer organizations, numerous Red and Blue State attorneys general, and federal bank regulators. Federal Bank Regulators Weigh in With Amicus Briefs Supporting Rehearing En Banc Both the FDIC and the Office of the Comptroller of the Currency have criticized the broader interpretation of DIDMCA's opt-out provision adopted in the now-vacated majority panel opinion by the Tenth Circuit. 1.     The FDIC originally supported Colorado during the Biden Administration but then shifted its support to the banks' position during the second Trump Administration and filed an amicus brief that supported rehearing en banc and aligned with the industry view. 2.     The OCC emphasized that the panel decision could undermine the goal of Section 521 of DIDMCA to create parity between state and national banks and would undermine the dual banking system and introduce significant uncertainty into the lending market. These positions underscore the potential systemic impact of the case. Practical Implications for State Banks Engaged in Interstate Lending As a result of the enactment of the Oregon law and if additional states enact similar legislation, out-of-state banks lending to residents of a state which has enacted an opt-out statute may face difficult choices: 1.     Comply with state-specific rate caps; 2.     Exit certain markets altogether; 3.     File a declaratory judgment action seeking injunctive relief against the state agency charged with enforcing the opt-out statute based on Federal preemption of such statute under Section 27 of the Federal Deposit Insurance Act. The uncertainty extends beyond origination. Secondary market participants may face increased due diligence burdens, as determining where a loan is "made" becomes more complex—especially in an era of digital lending and mobile consumers. Broader Industry Impact The implications could be far-reaching: 1.     Reduced interstate lending by state-chartered banks; 2.     Migration to national bank charters to preserve rate exportation authority; 3.     Fragmentation of the regulatory landscape, with a patchwork of state rules; 4.     Increased compliance complexity for bank–FinTech partnerships and loan purchasers. In short, the dual banking system could face renewed pressure if state-chartered banks cannot export their home state interest rates when making interstate loans to borrowers in opt-out states, which would deprive them of competitive parity with national banks. What Comes Next? Several developments will be critical to watch: 1.     The outcome of the Tenth Circuit's en banc review; 2.     Whether additional states follow Oregon's lead; 3.     The potential for U.S. Supreme Court review; 4.     Federal legislative proposals that could eliminate the opt-out provision altogether (though prospects for passage appear uncertain). Key Takeaways 1.     The DIDMCA opt-out provision, long dormant, is reemerging as a potential tool for states to regulate interest rates charged to their citizens by out-of-state state banks. 2.     The determination of where a loan is "made" for purposes of Section 525 of DIDMCA is now a central legal battleground. 3.     The forthcoming Tenth Circuit en banc decision will set an important precedent with nationwide implications. 4.     A growing patchwork of state laws could significantly complicate interstate lending. 5.     The future of bank–FinTech partnerships and the dual banking system may hinge on how these issues are resolved. As these developments continue to unfold, financial institutions, regulators, and policymakers alike will need to navigate an increasingly complex and uncertain legal environment—one that may redefine the rules of interstate lending in the United States.

In Episode 2 of our Debt Sales 101 mini-series, we move from the "why" behind debt sales to the "what." Specifically, we discuss what types of debt can be sold, how portfolios are typically composed, and the legal and regulatory considerations that determine whether debt is appropriate for sale.   Not all debt is equally marketable, and not all accounts within a portfolio carry the same legal, regulatory, or operational risk. In this episode, we discuss the types of consumer and small business debt that are commonly sold, the types of specialty accounts that buyers may still be willing to purchase, and the categories of accounts that often raise diligence concerns, including accounts involving fraud, deceased consumers, pending legal matters, or other issues that can affect collectability or compliance.   We also discuss how buyers evaluate portfolios from both a business and regulatory perspective, including the importance of documentation, data quality, servicing history, and chain of title. Buyers are not just underwriting credit risk. They are underwriting legal and regulatory risk, and that evaluation directly affects pricing, deal structure, and whether certain accounts can be included in a sale at all.   A key theme in this episode is that portfolio composition is not just a business issue. It is a compliance and risk management issue as well. The types of accounts included in a sale, how those accounts were serviced prior to sale, and the documentation that supports them all play a significant role in determining how a portfolio is valued and how a transaction is structured.   This episode builds on the foundation from Episode 1 and sets up the next stage of the process. In Episode 3, we discuss who buys debt and how debt sale transactions are typically structured, including spot sales, forward flow arrangements, and how risk allocation and pricing are negotiated in those structures.

We're pleased to announce that our latest episode of the Consumer Finance Monitor Podcast is now live and it's one you won't want to miss. In this episode, our host Alan Kaplinsky, founder, Chair for 25 years, and now Senior Counsel of our Consumer Financial Services Group, is joined by Max Dubin, Chief of Staff to the Acting Superintendent of Banking at the New York Department of Financial Services (DFS). As a senior leader at one of the most influential state financial regulators in the country, Max offers a rare and insightful look into how DFS is approaching some of the most important issues facing the consumer financial services industry today. A central focus of the conversation is the Department's proposed framework for regulating the rapidly evolving "buy-now, pay-later" (BNPL) market (read more about BNPL on our Consumer Finance Monitor blog here.) Max provides valuable context on what DFS is aiming to accomplish and how it is thinking about balancing innovation with consumer protection. Among other points, he explains that the DFS is seeking to craft a regulatory approach that reflects how BNPL products actually function in today's marketplace, while also ensuring that consumers receive clear disclosures and are adequately protected from potential risks. We also cover a wide range of additional "hot" topics at DFS, including DFS regulatory, supervisory and enforcement priorities, emerging consumer protection concerns, the DFS' approach to fintech innovation and partnerships, crypto licensure and regulation, New York Governor Hochul's budget priorities, which includes reforms of the insurance industry to make it more affordable, coordination with other state and federal regulators, and what industry participants should expect from DFS in the months ahead. This episode offers practical insights for banks, nonbanks, fintech companies, and their counsel, particularly those focused on compliance, product development, and regulatory strategy. Max's candid and thoughtful perspectives provide a valuable window into the thinking of DFS at a time when state-level regulation is playing an increasingly prominent role. We hope you enjoy the conversation.  This is the second of our 3-part series focused on agencies in New York City and State which have a major impact on banks and non-banks who do business with New York City and State residents. On February 12, we released a podcast show, hosted by Alan Kaplinsky, featuring Jane Azia, Chief of the Bureau of Consumer Frauds and Protection and Alec Webley, Assistant Attorney General of the New York Attorney General's Office. Among other things, Jane and Alec discussed the New York FAIR Business Practices Act which expanded the scope of New York's consumer protection law to cover unfair and abusive acts and practices as well as deceptive acts and practices. Very soon, we will be releasing Part 3 of the series which will be a conversation between Alan and Commissioner Sam Levine, the head of the New York City Department of Consumer and Worker Protection.   Consumer Finance Monitor is hosted by Alan Kaplinsky, Senior Counsel at Ballard Spahr, and the founder and former chair of the firm's Consumer Financial Services Group. We encourage listeners to subscribe to the podcast on their preferred platform for weekly insights into developments in the consumer finance industry.

We are pleased to release Episode 1 of our new podcast mini-series, Debt Sales 101. In this first episode, we start with the fundamentals and discuss what a debt sale is, how these transactions are structured, and why companies choose to sell debt. Debt sales are often discussed in simple terms, but in practice they sit at the intersection of business strategy, legal structure, and regulatory compliance. In this episode, we explain that a debt sale is fundamentally the sale of charged-off accounts where the seller transfers title and the right to collect to a debt buyer in exchange for an upfront payment. This is different from placing accounts with a collection agency or outsourcing collections. In a true debt sale, ownership of the account is transferred, and that distinction has important legal and operational consequences. We also discuss several of the primary reasons companies sell debt. First, a debt sale allows a company to accelerate revenue and recognize recoveries immediately rather than over many years through traditional recovery strategies. Second, a debt sale generates immediate cash flow that companies can reinvest into their business. Third, for many companies, a debt sale is operationally simpler than building and maintaining an in-house recovery strategy or managing a large agency and legal network. Finally, in some cases, debt sales are used as a tool to exit a line of business in an orderly and efficient way. From a legal perspective, we also introduce several concepts that are critical to a successful debt sale, including chain of title, documentation, data integrity, and the purchase and sale agreement. Buyers need to be able to trace ownership of the account, verify the underlying documentation, and rely on accurate data in order to collect on the accounts they purchase. These legal and documentation issues often determine whether a debt sale is successful and how a portfolio will be priced. One of the key themes of this episode, and the series as a whole, is that debt sales are fundamentally a business decision, but one that lives or dies on legal execution and regulatory compliance. Companies that prepare properly, maintain strong documentation and data, and structure transactions carefully are far more likely to execute successful debt sale programs. In our next episode, we will build on this foundation and discuss what types of debt can be sold, how portfolios are typically structured, and where the legal and practical boundaries begin to matter.

In today's episode of the Consumer Finance Monitor Podcast Show, our host, Ballard Spahr's Alan Kaplinsky, was joined by colleagues Steven Burt and Melanie Vartabedian to explore a rapidly evolving and increasingly complex area of consumer financial services: residential solar finance. Building on prior discussions of the broader solar finance landscape, this episode zeroes in on the regulatory and litigation developments that are reshaping the residential solar market in real time. The discussion highlights how an industry that experienced explosive growth over the past decade is now facing heightened scrutiny from regulators, enforcement agencies, and private litigants alike. From Rapid Growth to Market Headwinds As Steven explained, the residential solar industry expanded dramatically between 2015 and 2022, driven by: Federal and state tax incentives Declining equipment costs Innovative financing models Aggressive direct-to-consumer sales strategies Growth peaked around 2023, but the market began to slow in 2024 and beyond due to several converging factors: Changes to net energy metering policies (particularly in California) Rising interest rates impacting financing affordability Supply chain constraints Increased emphasis on battery storage solutions Federal policy shifts, including reduced support for renewable energy and changes to tax credits These developments have forced industry participants to adapt quickly—often while still operating under legacy business models that are now attracting scrutiny. A Surge in Government Investigations and Enforcement One of the most significant themes discussed in the podcast is the sharp rise in government scrutiny. State attorneys general and consumer protection agencies across the country have launched investigations and enforcement actions targeting: Direct-to-consumer sales practices Marketing representations about energy savings and tax benefits Long-term financing structures, particularly loan-related fees A notable inflection point came in 2024, when the Consumer Financial Protection Bureau (CFPB) issued a spotlight on solar financing, identifying risks such as: Alleged "hidden" dealer or platform fees Misleading claims regarding tax credits Misrepresentations about system performance and savings Since then, enforcement activity has expanded across numerous states, with additional investigations ongoing. Notably, even local regulators—such as New York City's Department of Consumer and Worker Protection—have begun to assert jurisdiction, signaling a broader and more aggressive enforcement landscape. Private Litigation: Class Actions and the "Dealer Fee" Controversy Parallel to government activity, private litigation has surged. Melanie Vartabedian highlighted two major waves of litigation: 1. Earlier Cases: Sales Practices Initial lawsuits focused on: Unauthorized credit checks (FCRA claims) High-pressure or deceptive sales tactics Misrepresentations about tax savings and energy production 2. Current Wave: Financing Structures More recent cases center on dealer fees (also called platform or financing fees), with plaintiffs alleging that: ·        These fees are effectively hidden finance charges ·        They should be disclosed under the Truth in Lending Act (TILA) Courts in Minnesota have allowed these claims to proceed past motions to dismiss, rejecting arguments—at least at the early stage—that such fees are merely "seller's points" exempt from disclosure. While these rulings are preliminary, they have: ·        Opened the door to costly discovery ·        Encouraged additional class actions and enforcement cases ·        Created significant uncertainty regarding how courts will ultimately resolve the issue The Expanding Role of the FTC Holder Rule Another important litigation risk involves the FTC Holder Rule, which allows consumers to assert claims against loan holders that they could assert against installers. This creates potential exposure for: ·        Lenders ·        Secondary market participants ·        Securitization investors Although liability is generally capped at the amount of the loan, the rule can still create substantial risk, especially where plaintiffs seek rescission of contracts. Practical Guidance for Industry Participants The speakers emphasized that companies operating in the residential solar space must take proactive steps to manage risk. Key recommendations include: 1. Strengthen Compliance and Oversight Conduct comprehensive reviews of sales and marketing practices Ensure clear, accurate, and compliant disclosures Align legal and compliance teams with customer service functions to identify emerging issues early 2. Enhance Dealer and Partner Management Perform rigorous upfront diligence on third-party installers and sales organizations Implement ongoing monitoring and auditing Act quickly to address complaints or misconduct 3. Improve Transactional Transparency Reassess how pricing and fees—particularly dealer fees—are structured and disclosed Evaluate potential exposure under TILA and state consumer protection laws 4. Conduct Portfolio-Level Risk Assessments Carefully diligence solar loan portfolios prior to acquisition Consider litigation and regulatory risks embedded in originated assets 5. Stay Ahead of Policy and Enforcement Trends Monitor federal, state, and local regulatory developments Engage with industry groups and legal advisors Anticipate—not react to—regulatory changes What Lies Ahead: The Next 18–24 Months Looking forward, the panelists expect: Continued and expanding enforcement activity, particularly at the state level More class actions and private litigation, fueled by early court rulings Greater clarity regarding dealer fee treatment, as courts begin to rule on the merits Increased scrutiny of sales practices, especially those involving third-party dealers Importantly, the regulatory and litigation environment is unlikely to ease in the near term. Instead, companies should expect more investigations converting into enforcement actions and greater coordination among regulators. Key Takeaways As Alan Kaplinsky summarized, the message for industry participants is clear: ·        The residential solar market is entering a more challenging and regulated phase ·        Government scrutiny and private litigation are rising in tandem ·        Compliance, transparency, and oversight are no longer optional, they are essential Companies that proactively adapt to this new environment will be far better positioned than those that wait to respond under the pressure of an investigation or lawsuit. Consumer Finance Monitor is hosted by Alan Kaplinsky, Senior Counsel at Ballard Spahr, and the founder and former chair of the firm's Consumer Financial Services Group. We encourage listeners to subscribe to the podcast on their preferred platform for weekly insights into developments in the consumer finance industry.  

On today's episode of the Consumer Finance Monitor Podcast our host, Alan Kaplinsky, discusses the rapidly evolving landscape of federal financial supervision with Sherra Brown, Head of Regulatory Research and Analysis for the Americas at Vixio Regulatory Intelligence. Our conversation focuses on what may be a fundamental shift in supervisory practices at the Consumer Financial Protection Bureau and the implications of parallel changes at the federal banking agencies. Recent reports suggest that the CFPB may dramatically scale back its supervisory program—potentially reducing the number of examinations from roughly 600 annually to about 70, conducting examinations entirely virtually, narrowing the scope of reviews, and even Introducing a so-called "humility pledge" for examiners. If implemented, these developments would represent a significant departure from the Bureau's prior supervisory posture. At the same time, the federal prudential banking regulators—the Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, and Federal Reserve Board—are moving toward a more risk-focused examination model, eliminating "reputation risk" as a supervisory category and signaling a broader effort to reduce regulatory burden. Below are several key themes from our discussion. Possible Structural Changes to CFPB Supervision Sherra and Alan discussed reports that the CFPB could significantly reduce the scope and frequency of its supervisory examinations. The Bureau may move toward a model involving: 1.     Fully virtual examinations 2.     A dramatically smaller number of exams each year 3.     Narrower, risk-focused review areas 4.     Greater reliance on institutions' internal compliance testing The shift could also reflect staffing reductions and broader policy priorities under the current administration. While virtual examinations are not new, as they were widely used during the COVID-19 pandemic, the potential reduction in exam scope and volume would mark a major change. As Sherra noted, a narrower supervisory footprint raises an important question: is the Bureau fundamentally redesigning its supervisory model or simply doing the minimum necessary while its future remains uncertain? What a Virtual Examination Looks Like For institutions that have not experienced a virtual exam, the process is procedurally similar to traditional on-site supervision. Institutions typically receive a document request list and must provide materials electronically. Interviews and meetings with examiners occur via videoconference. However, the key difference is relational. Virtual supervision makes it harder for examiners and institutions to build the working relationships that often facilitate dialogue and clarification during an on-site review. Data integrity, document accessibility, and centralized record management become even more important in a virtual environment. Likely Areas of CFPB Focus Although the Bureau has not yet clearly identified which institutions will be examined, Sherra suggested that the focus will likely be on large banks rather than non-bank entities. She also noted that several areas historically emphasized by the CFPB appear unlikely to receive the same attention going forward. For example, the Bureau has backed away from certain fair-lending theories such as disparate impact. One area that appears likely to remain a priority is protections for service members, including compliance with the Military Lending Act. Prudential Regulators: A Parallel Shift While the CFPB's future direction remains uncertain, the prudential regulators have continued their examination programs. One of the most notable developments is the elimination of "reputation risk" as a supervisory category. The OCC has already removed it from examination practices, and both the FDIC and Federal Reserve have indicated similar intentions. Historically, reputation risk sometimes served as a catch-all category allowing regulators to pressure institutions even when no specific legal violation was identified. Its removal is part of a broader effort to focus supervision on clearly defined financial, operational, and compliance risks. At the same time, regulators appear to be tailoring examination intensity more carefully based on institutional size and risk profile, potentially reducing the burden on community banks. Compliance Should Not Be Relaxed Despite the apparent reduction in federal supervisory activity, Sherra emphasized that institutions should not weaken their compliance management systems. Several factors make continued vigilance essential: 1.     State attorneys general remain active in consumer protection enforcement. 2.     Private litigation risk persists. 3.     Future administrations could revive aggressive federal supervision, potentially accompanied by look-back reviews. Strong documentation, robust complaint management processes, and clear audit trails remain essential. The Growing Role of States Another important theme from our discussion is the expanding role of state enforcement. Several states, including New York, California, and Massachusetts, have signaled their intention to fill any perceived gaps left by reduced federal oversight. State regulators and attorneys general continue to focus on issues such as fair lending, consumer protection violations, and deceptive practices. Accordingly, institutions operating nationally must consider not only federal expectations but also evolving state regulatory priorities. Five Practical Takeaways Five key takeaways for financial institutions navigating this changing supervisory environment are: 1.     Fewer examinations do not mean less regulatory risk. 2.     Complaint management and data analytics will become increasingly important. 3.     Documentation discipline is even more critical in a virtual examination environment. 4.     Institutions should not weaken their compliance management systems. 5.     Board and senior management oversight remain essential. In short, while federal supervision may be evolving, the fundamental expectations for sound compliance and risk management remain unchanged. Listeners can access the full discussion on the Consumer Finance Monitor Podcast, where Sherra Brown provides valuable insight into what may be one of the most significant shifts in federal financial supervision in recent years. Consumer Finance Monitor is hosted by Alan Kaplinsky, Senior Counsel at Ballard Spahr, and the founder and former chair of the firm's Consumer Financial Services Group. We encourage listeners to subscribe to the podcast on their preferred platform for weekly insights into developments in the consumer finance industry.

Artificial intelligence is rapidly transforming the consumer financial services industry. From underwriting and fraud detection to customer engagement and collections, financial institutions are increasingly deploying advanced AI tools to automate processes, personalize services, and improve operational efficiency. We are releasing today, on our Consumer Finance Monitor Podcast show, a discussion of what may be the next major technological shift for the industry: Agentic AI in Consumer Financial Services — AI systems capable of acting autonomously, making decisions, and interacting directly with consumers. The discussion featured Professor Oren Bar-Gill of New York University School of Law, along with Ballard Spahr partners Joseph Schuster and Adam Maarec.  The discussion was hosted by Alan Kaplinsky, the founder and practice group leader for 25 years of the Consumer Financial Services Group and now Senior Counsel. The panel examined how agentic AI differs from earlier forms of automation, the benefits it offers financial institutions and consumers, and the significant legal and regulatory risks it may create. Below are the key takeaways from the discussion. What Is Agentic AI? Agentic AI refers to AI systems that can independently take actions on behalf of users or organizations. Unlike traditional automation, which performs predefined tasks, or generative AI, which primarily produces content, agentic AI systems can: ·                 Make autonomous decisions ·                 Interact directly with consumers ·                 Initiate actions such as transactions or communications ·                 Learn from prior interactions In financial services, these systems may soon conduct customer service interactions, initiate collections calls, execute payments, or manage purchasing tasks for consumers. While these capabilities promise major efficiencies, they also raise complex legal questions regarding accountability, fairness, and consumer protection. Understanding AI-Driven Consumer Harm Professor Bar-Gill framed the discussion by examining potential consumer harms associated with AI-powered decision-making. Drawing on his recent book with Cass Sunstein, Algorithmic Harm: Protecting People in the Age of Artificial Intelligence, he explained that the impact of AI depends largely on the type of market in which it operates.  The book is available on Amazon here. Sophisticated vs. Unsophisticated Markets Bar-Gill distinguishes between: ·                 Sophisticated markets, where consumers are generally able to make informed decisions ·                 Unsophisticated markets, where consumers are more likely to misunderstand complex products In sophisticated markets, AI-driven personalization, such as individualized pricing, can increase efficiency and expand access to products by offering lower prices to consumers with lower willingness to pay. In contrast, in markets involving complex financial products, such as credit cards, mortgages, or insurance, AI-powered personalization may harm consumers who misjudge product costs or benefits. For example, if a consumer mistakenly overestimates the value of a financial product, an AI system may set the price just below that mistaken valuation, leading the consumer to pay more than the product is actually worth. Algorithmic Price Discrimination One area of growing concern is AI-enabled price discrimination, where algorithms tailor prices to each consumer's willingness to pay. Examples cited during the discussion included: ·                 Airlines experimenting with AI-based pricing strategies ·                 Online retail platforms offering individualized prices for identical products ·                 Insurance companies using algorithms to optimize premiums While pricing based on individual risk, such as in insurance underwriting, is widely accepted, pricing based on willingness to pay raises significant consumer protection concerns. As these practices expand, they are likely to attract increased attention from regulators and lawmakers, particularly at the state level. AI Use Cases in Consumer Finance The panel also highlighted several areas where AI is already being deployed across the consumer financial services lifecycle. Marketing and Customer Acquisition Financial institutions are using AI to analyze large data sets and create highly personalized marketing campaigns. Large language models can generate customized messaging tailored to specific demographic groups or individual consumers. While this personalization improves targeting and engagement, it also creates compliance challenges related to: ·                 Misleading advertising ·                 Disclosure requirements ·                 Potential discriminatory targeting Underwriting and Credit Decisions AI-driven underwriting tools allow lenders to analyze alternative data, such as cash-flow information, to assess creditworthiness. These tools may expand access to credit for consumers who previously lacked traditional credit histories. However, they also raise fair lending concerns under laws such as the Equal Credit Opportunity Act and its implementing regulation, Regulation B. Because many AI models operate as "black boxes," institutions may struggle to explain how decisions are made, an issue that can complicate discrimination analyses and regulatory oversight. Fraud Detection AI is particularly powerful in fraud detection, where pattern recognition is essential. Advanced models can analyze transaction behavior in real time to identify suspicious activity while minimizing unnecessary transaction declines. These tools also allow financial institutions to communicate with customers instantly, confirming transactions or investigating suspicious activity through automated interactions. Servicing and Collections Agentic AI may soon conduct both inbound and outbound customer interactions, including: ·                 Customer service conversations ·                 Dispute resolution ·                 Collections calls In some cases, AI-driven voice systems can conduct conversations that are indistinguishable from human interactions. While this technology may improve efficiency and reduce costs, it raises legal concerns about consumer deception, harassment, and compliance with debt collection laws. Core Legal Risks Despite the novelty of the technology, many of the key legal risks arise from existing laws, not new AI-specific statutes. Liability for AI Actions As Joseph Schuster emphasized, AI is a tool, not a liability shield. Institutions remain responsible for the actions of AI systems just as they would for the actions of employees or third-party vendors. Traditional legal doctrines, including agency law, vicarious liability, and unfair or deceptive acts or practices, continue to apply. UDAP Risks AI systems interacting with consumers may create risks under federal and state UDAP laws if they: ·                 Provide inaccurate information ("hallucinations") ·                 Fail to deliver required disclosures ·                 Exhibit overconfidence in uncertain responses ·                 Engage in manipulative behavioral targeting. Fair Lending and Discrimination AI models can unintentionally produce discriminatory outcomes, even when protected characteristics are not used as inputs. As Professor Bar-Gill noted, future litigation may increasingly focus on disparate impact analysis, which examines whether outcomes disproportionately affect protected classes regardless of the model's internal logic. Governance and Risk Management Given these risks, institutions are increasingly adopting governance frameworks for AI deployment. Common practices include: ·                 AI governance committees with cross-functional participation ·                 Model inventories and risk-tiering systems ·                 Vendor due diligence for AI providers ·                 Data mapping and validation processes ·                 Continuous monitoring of AI outputs. Financial regulators are already asking supervised institutions detailed questions about how AI is being used. Institutions that implement structured governance processes are better positioned to respond to these inquiries. The Rise of Agentic Commerce One emerging application of agentic AI involves autonomous purchasing. For example, a consumer might instruct an AI assistant to plan and purchase supplies for a birthday party. The AI would then select vendors, place orders, and initiate payments using the consumer's stored payment credentials. But what happens if AI makes a mistake, such as ordering supplies for 1,000 guests instead of 10? Such scenarios raise difficult questions involving: ·                 consumer authorization ·                 merchant liability ·                 payment network rules ·                 dispute resolution These issues are only beginning to receive attention from regulators and industry participants. Key Takeaways for Financial Institutions The panel concluded with several recommendations for institutions exploring AI deployment. First, distinguish beneficial uses from harmful ones. AI can deliver significant consumer benefits, but firms must remain vigilant about potential misuse or unintended harm. Second, prioritize governance. Robust policies, oversight structures, and risk management processes are essential. Th

We are releasing today on our Consumer Finance Monitor podcast our host Alan Kaplinsky's discussion with Marisa Calderon, President and CEO of Prosperity Now, about two high-profile policy proposals raised or embraced by President Trump as part of a broader populist affordability agenda: 1.         A nationwide 10% cap on credit card interest rates for one year. 2.         The Credit Card Competition Act (CCCA), long championed by Senator Dick Durbin which would require large credit card issuers to enable at least two unaffiliated payment networks (only one of which could be MasterCard or VISA) on their cards. Each proposal is framed as pro-consumer. Each has generated significant pushback from banks, card issuers, and trade associations. However, even consumer advocacy groups have raised serious questions about the wisdom of such initiatives. Prosperity Now is a non-profit organization dedicated to advancing economic mobility, with a focus on those facing economic barriers. Each raises fundamental questions about how to balance affordability and access in the consumer credit market. Our discussion focused on a central theme: affordability is a real and pressing concern, but policy design matters enormously. Credit Card APRs: A Real Affordability Pressure As Calderon emphasized, policymakers are not wrong to focus on credit card interest rates. Average credit card APRs now hover around 22%, up sharply from roughly 13% a decade ago. Approximately half of cardholders carry a balance, and many rely on credit cards not for discretionary spending, but as liquidity bridges, covering emergency medical bills, car repairs, groceries, and other essentials. For lower and moderate-income households, credit cards are often the only readily available, regulated source of short-term liquidity. That makes rising APRs particularly painful. Calderon's formulation is apt: policymakers have identified the right problem. The harder question is whether they have identified the right solution. The 10% Interest Rate Cap: Lessons from History The proposal to impose a flat 10% nationwide cap on credit card interest rates for one year would represent an unprecedented federal intervention into unsecured revolving credit markets. Credit cards are unsecured and priced for risk. Interest margins help issuers cover expected charge-offs, volatility, and operational costs. If pricing flexibility is removed, lenders cannot simply absorb the loss, they adjust. Historically, those adjustments take predictable forms: •                 Tighter underwriting standards •                 Higher minimum credit scores •                 Lower credit limits •                 Reduced rewards programs •                 Increased non-interest fees •                 Exit from higher-risk market segments The likely result, as Calderon noted, is credit contraction, particularly affecting marginal and lower-income borrowers. The most relevant historical example may be the 1980 credit controls imposed during the Carter Administration, which were rescinded within months after causing severe market disruption. A more targeted example is the 36% APR cap under the Military Lending Act, which illustrates both the importance of bipartisan legislative design and the reality that even well-intentioned caps can reduce access at the margins. Recent Federal Reserve research on state usury caps reinforces this concern: when interest rate ceilings are imposed, credit to higher-risk borrowers contracts, credit to lower-risk borrowers expands, and delinquency rates do not meaningfully improve. In other words, credit is reallocated, not necessarily improved. Even a "temporary" cap may have durable consequences. Issuers that exit certain segments or reduce credit lines are not obligated, and may not be economically inclined, to restore them once the cap expires. Credit score impacts and reduced access can linger well beyond the formal life of the policy. As Calderon put it, blunt price controls are a chainsaw when what is needed is a scalpel. Affordability in Context: What Drives Household Budgets? An additional consideration is scale. Research recently highlighted by the Consumer Bankers Association shows that the fastest-growing household expenses from 2013–2024 were healthcare, shelter, food, and vehicles. Credit card interest represents a relatively small share of average household expenditures. This does not minimize the pain of high APRs, especially for households carrying persistent balances, but it does raise an important structural question: can credit card rate caps meaningfully solve broader affordability challenges rooted in housing, medical costs, food inflation, and transportation? Credit cards are often the mechanism households use to cope with those rising costs. Constraining access to that liquidity may exacerbate, rather than relieve, financial stress. The Credit Card Competition Act: Structural Reform or Indirect Price Control? The second proposal we discussed, the Credit Card Competition Act (the "CCCA"), takes a different approach. Rather than capping interest rates, the CCCA would require large issuers to offer merchants at least two unaffiliated network routing options (only one of which could be Visa or Mastercard). The theory is that routing competition would reduce interchange fees ("swipe fees"), lowering merchant costs and ultimately consumer prices. Merchants have generally supported the proposal. Banks and card issuers have strongly opposed it. The consumer-facing promise is straightforward: lower merchant fees should translate into lower retail prices, but history complicates that assumption. The Durbin Amendment to the Dodd-Frank Act imposed caps on debit card interchange fees for large issuers and included routing requirements. While interchange revenue declined, Calderon pointed out that empirical evidence suggests that cost savings were not consistently passed through to consumers in the form of lower prices. At the same time, banks offset lost revenue through higher account fees and reduced benefits. A similar dynamic could unfold in the credit card market. Interchange revenue helps fund: •           Rewards programs •           Fraud detection and prevention •           Customer service infrastructure •           Risk management If that revenue is compressed, issuers may respond with tighter underwriting, reduced rewards, or new fee structures. As Calderon observed, although the CCCA operates through indirect price pressure rather than a direct APR ceiling, downstream effects could look similar. Distinguishing Populist Framing From Durable Reform Both the rate cap and the CCCA are framed as pro-consumer, populist reforms. The political appeal is clear, but distinguishing headline appeal from durable consumer benefit requires careful analysis. Calderon suggested several guideposts policymakers should consider: •                 Access – Does the reform preserve or expand access for low- and moderate-income borrowers? •                 Incidence – Who actually captures the gains? Consumers, merchants, intermediaries, or some combination? •                 Substitution effects – Does the policy push consumers toward higher-cost, less-regulated alternatives such as payday or fringe products? •                 Durability – What happens after implementation? Do markets rebound, or do credit line reductions and underwriting changes persist? These questions are not ideological. They are structural. Affordability and access are not opposing values. The policy challenge is designing reforms that alleviate financial strain without narrowing the regulated credit tools families rely on when emergencies arise. The Bottom Line Affordability concerns are real. Rising APRs are real. Financial stress among many households is real. But blunt price caps may reduce rates on paper while reducing access in practice. Structural competition mandates may promise savings that do not materialize at the checkout counter. Durable consumer protection requires careful calibration — the scalpel, not the chainsaw. For industry participants, policymakers, and advocates alike, the takeaway is straightforward: evidence and market mechanics matter. Populist framing may win headlines, but long-term financial stability depends on policy design that accounts for how credit markets actually function. As always, we will continue to monitor these proposals and their evolution in Congress and the Administration.  It may be noteworthy that President Trump did not mention either proposal during his almost two-hour State of the Union Address on January 24th. Consumer Finance Monitor is hosted by Alan Kaplinsky, Senior Counsel at Ballard Spahr, and the founder and former chair of the firm's Consumer Financial Services Group. We encourage listeners to subscribe to the podcast on their preferred platform for weekly insights into developments in the consumer finance industry.

In a recent episode of the award-winning Consumer Finance Monitor podcast, Alan Kaplinsky was joined by Nick Bourke, Kate Griffin, and Ballard Spahr partner Joseph Schuster to discuss a groundbreaking new report from the Aspen Institute Financial Security Program: United We Stand: A National Strategy to Prevent Scams. The episode builds on Nick and Kate's prior appearance on the podcast last July, when the report was still in development. Now finalized, the report offers one of the most comprehensive frameworks to date for addressing what has become a systemic threat to American households and the broader financial system. The Scope of the Problem: A Systemic Threat Frauds and scams are no longer isolated consumer protection issues. According to the report, U.S. households are losing an estimated $196 billion annually to scams — roughly $1 billion every couple of days. One in five American adults reports having lost money to an online scam. As Nick Bourke explained, today's scams are: ·                 Technology-enabled ·                 Highly organized and industrialized ·                 Often operated by transnational criminal organizations ·                 Accelerating due to AI and faster payment systems The so-called scam "lifecycle" includes four stages: 1.     Lead – Hooking the victim 2.     Deceive – Building trust (often through impersonation or relationship-building) 3.     Bleed – Extracting funds 4.     Clean – Laundering proceeds, often through cryptocurrency or offshore channels Different sectors see only fragments of this lifecycle; social media platforms may see the "lead," financial institutions the "bleed," and law enforcement the "clean." That fragmentation allows criminals to scale operations while defenders remain siloed. Why Scams Are Rising Despite Heavy Investment As Kate Griffin noted, industry and government are investing heavily in prevention. Yet scams continue to grow. Why? ·                 Fragmentation across sectors: No single actor sees the entire attack sequence. ·                 Outdated reporting infrastructure: Federal systems at agencies like the FBI and FTC remain manual and technologically antiquated. ·                 Regulatory uncertainty: Financial institutions and technology platforms face unclear expectations about what data they can use and share. ·                 Speed of modern payments: Faster money movement means faster losses. Joseph Schuster emphasized that many financial institutions are strongly incentivized to prevent fraud as they often bear reputational and financial risk when scams succeed. But legal ambiguity, especially under statutes like the Fair Credit Reporting Act, can chill data-sharing and innovation. Core Recommendations from the Aspen Report The report outlines both high-level national reforms and granular operational improvements with more than 180 specific ideas. 1. Elevate Scam Prevention to a National Priority The report calls for: ·                 A designated federal lead (or "czar") to coordinate strategy ·                 A whole-of-government approach ·                 Clear national goals and metrics Without centralized leadership, enforcement and regulatory actions remain fragmented.  2. Modernize Law Enforcement Reporting Systems Federal reporting portals, including Suspicious Activity Reports (SARs), the FBI's complaint systems, and the FTC's databases, require modernization. The report recommends: ·                 Streamlined, automated reporting ·                 Backend data interoperability across agencies ·                 Advanced analytics and AI tools for enforcement 3. Establish Clear Duties to Act Paired with Safe Harbors One of the most important themes discussed was the need for: ·                 Clear expectations for banks, telecom companies, and digital platforms ·                 Safe harbors that protect companies when sharing scam intelligence in good faith Countries like Australia have already codified such frameworks. The U.S. has yet to establish similarly coordinated standards. 4. Build a Cross-Sector Information-Sharing Ecosystem Effective scam prevention requires: ·                 Exchange of scam indicators (malicious URLs, compromised phone numbers, device patterns) ·                 Interoperable information-sharing platforms ·                 Privacy-preserving architecture ·                 Legal clarity to mitigate antitrust and consumer reporting concerns Joseph noted that industry appetite for collaboration is strong but clarity and guardrails are essential. 5. Consider a U.S. National Anti-Scam Center The report explores the idea of a centralized "front door", potentially something like stopscams.gov, that would: ·                 Serve as a national reporting hub ·                 Provide victim resources ·                 Facilitate coordination among law enforcement ·                 Support public education campaigns Social Media and Platform Responsibility The discussion also addressed the evolving role of digital platforms. Scam activity frequently originates through: ·                 Paid advertisements ·                 Dating applications ·                 Direct messaging ·                 Fake investment websites Compared to banks, social media companies operate within a less clearly defined regulatory structure. Courts are increasingly developing theories of "platform liability," but statutory clarity is lacking. The report urges policymakers to define reasonable expectations for platforms — paired with safe harbors and practical tools that empower prevention rather than merely assign blame. What Happens Next? The key question: who implements this strategy? Kate Griffin emphasized that this is a whole-of-society problem requiring coordinated action by: ·                 Federal leadership ·                 Congress ·                 Financial institutions ·                 Telecom and digital platforms ·                 Law enforcement ·                 Civil society There have been encouraging developments, including: ·                 Treasury and State Department sanctions targeting transnational scam networks ·                 A joint DOJ–FBI–Secret Service initiative targeting Southeast Asian scam operations o   But much more remains to be done. Nick Bourke suggested that, one year from now, real success would include: ·                 A designated federal anti-scam lead ·                 A congressional commission ·                 Measurable national prevention goals ·                 Corporate adoption of formalized anti-scam strategies Joseph Schuster added that industry innovation is ongoing, particularly in artificial intelligence, biometrics, and authentication, but warned that fragmented state-level regulation could complicate progress. Key Takeaways Alan Kaplinsky closed the episode with several important observations: ·                 Fraud and scams are now a systemic threat, not a niche compliance issue. ·                 Prevention, not just reimbursement, must be the organizing principle. ·                 Coordination matters as much as authority. ·                 Good-faith companies need regulatory clarity, not just enforcement pressure. ·                 Reducing scams strengthens trust in the U.S. financial system and digital economy. The Aspen report reframes the debate. Rather than assigning blame, it calls for aligned incentives, shared responsibility, and coordinated national action. If the title of the report, United We Stand, becomes reality, the United States may finally begin to bend the curve on one of the most costly and fast-growing threats facing consumers today. For more insights on consumer financial services developments, visit Ballard Spahr's Consumer Finance Monitor blog and explore the full Aspen Institute report here. Consumer Finance Monitor is hosted by Alan Kaplinsky, Senior Counsel at Ballard Spahr, and the founder and former chair of the firm's Consumer Financial Services Group. We encourage listeners to subscribe to the podcast on their preferred platform for weekly insights into developments in the consumer finance industry.

On today's Consumer Finance Monitor podcast, we are releasing an episode about a timely and wide-ranging discussion on one of the most significant and fastest-evolving developments in commercial finance: the rapid "consumerization" of small business lending law. In this episode, host Alan Kaplinsky welcomes Louis Caditz-Peck, Executive Director of the Responsible Business Lending Coalition (RBLC), for an in-depth conversation about the proliferation of state small business lending protection statutes, the policy debates driving them, and what they mean for lenders, fintechs, banks, and small business borrowers. From Self-Regulation to State Law: How We Got Here For decades, commercial lending operated under a fundamentally different regulatory framework than consumer credit. The prevailing assumption was that business borrowers were sophisticated, negotiated their transactions, and did not need standardized disclosures or suitability-type protections. That assumption has eroded. As Louis explains, since the financial crisis, and particularly with the growth of online and fintech lending, small business financing has changed dramatically. Community banks have pulled back. Non-bank online platforms have expanded. New products, including merchant cash advances and other revenue-based financing arrangements, have proliferated. At the same time, concerns have grown about: Opaque pricing structures Misleading "interest rate" representations Broker incentives that steer borrowers into higher-cost products Repeated refinancing of unaffordable obligations These concerns led to the development of the Small Business Borrower's Bill of Rights, a set of industry standards first launched in 2015 at the Aspen Institute by a coalition of lenders, small business groups, and nonprofit advocates. What began as a voluntary, self-regulatory effort quickly became a blueprint for legislation. California's SB 1235 in 2018 marked the first major small business truth-in-lending law. Since then, according to Louis, 19 small business financial protection laws have been enacted across multiple states, with California and New York leading the way. The "Consumerization" of Small Business Lending A central theme of the episode is whether we are witnessing the "consumerization" of small business lending. Many of the new state laws borrow heavily from consumer credit concepts, including: APR-style cost disclosures Total cost of financing disclosures Payment schedule requirements Prepayment and fee transparency Restrictions on certain contractual provisions Some states have layered on licensing or registration requirements for small business finance providers. Others incorporate or supplement state UDAP (unfair and deceptive acts and practices) standards, which may apply to certain business-to-business transactions as well as consumer transactions. The policy rationale is straightforward: many "Main Street" businesses are effectively sole proprietorships or closely-held operations without in-house finance or legal teams. Legislators increasingly view these borrowers as closer to consumers than to large corporations with treasury departments and inside or outside counsel. As Alan and Louis discuss, the regulatory shift raises serious operational and compliance challenges, particularly given the state-by-state patchwork of requirements. The Compliance Conundrum: Patchwork and Harmonization A recurring concern is whether the proliferation of state laws imposes disproportionate burdens on smaller lenders and startups, especially compared to large institutions with robust legal and compliance infrastructures. Louis emphasizes that RBLC has actively worked to promote interstate harmonization, particularly between California and New York. For example: Advocating for standardized disclosure forms that can be used in multiple states Aligning definitions and disclosure triggers Encouraging estimated APR calculations for revenue-based financing However, not all states have followed a harmonized approach. Some laws, particularly those focused narrowly on merchant cash advances, have created divergent requirements, complicating multi-state compliance. As Alan notes, the trend presents both risk and opportunity for lenders and their counsel. The regulatory environment is no longer static. Companies offering small business financing must assume that: Cost disclosures will likely be required in more states Registration or licensing may apply Enforcement risk—particularly under state UDAP statutes—will increase Section 1071 and Federal Uncertainty The episode also explores the role of the CFPB under Section 1071 of the Dodd-Frank Act, which requires data collection on small business lending to: 1.     Identify potential discrimination, and 2.     Assess whether certain markets are underserved. The CFPB finalized its 1071 rule in 2023 under then Director Rohit Chopra. Multiple legal challenges followed. Under the current administration, a notice of proposed rulemaking has sought to scale back and slow implementation. At the same time, the Federal Trade Commission has signaled an interest in using its enforcement authority to address unfair or deceptive acts or practices affecting small businesses—underscoring an intriguing tension within federal regulatory policy. As Louis observes, the debate is not simply about reducing or expanding government. It is about how government authority will be used and whether transparency and enforcement will be advanced through rulemaking, litigation, or state initiatives. Merchant Cash Advances and Revenue-Based Financing A particularly nuanced part of the discussion focuses on merchant cash advances (MCAs) and other sales-based financing products. These arrangements typically involve: An advance of funds in exchange for a fixed repayment amount Payments tied to a percentage of daily or periodic sales Variable duration depending on business performance RBLC's position, as Louis explains, is product neutral. The coalition does not advocate banning product categories or imposing rate caps. Instead, it focuses on responsible practices, including transparent pricing and assessment of ability to repay. Importantly, none of the major state lending protection laws impose interest rate caps. The emphasis is on disclosure and market transparency rather than price regulation. Who Is Covered—and Who Is Not? Most state small business truth-in-lending statutes apply to financing of $500,000 or less (with some variation, such as New York's $2.5 million threshold following gubernatorial revision). Coverage often includes: Closed-end loans Open-end lines of credit Sales-based financing/MCAs Factoring (in some states) Banks are generally exempt from these statutes, though non-bank "providers" presenting the offer of credit may still have disclosure obligations even in bank partnership models. As Alan highlights, this raises interesting competitive and policy questions about level playing fields across banks and non-banks. Looking Ahead to 2026 Both speakers agree: this trend is not going away. With significant percentages of small business owners reporting difficulty accessing affordable capital—and a substantial minority reporting harm from predatory practices—state legislators remain motivated to act. The key policy question is not whether regulation will expand, but how. Well-designed transparency frameworks can: Promote price competition Reward responsible innovation Improve borrower decision-making Poorly harmonized or overly rigid frameworks, however, risk increasing compliance costs and reducing credit availability. As Alan notes in his closing remarks, small business finance regulation is becoming a core area of growth for law firms and compliance professionals historically focused on consumer financial services. The line between consumer and commercial finance continues to blur.  Alan noted that the Consumer Financial Services Group which he founded and chaired for 25 years has counseled and represented small business lenders for decades. For lenders, fintechs, banks, and their advisors, understanding these developments is no longer optional—it is essential. Consumer Finance Monitor is hosted by Alan Kaplinsky, Senior Counsel at Ballard Spahr, and the founder and former chair of the firm's Consumer Financial Services Group. We encourage listeners to subscribe to the podcast on their preferred platform for weekly insights into developments in the consumer finance industry.

In the episode of the Consumer Finance Monitor podcast we are releasing today, we examine what may be the most consequential development in New York consumer protection law in nearly half a century: the enactment of the New York State Fair Business Practices Act (the FAIR Act). Signed into law in December 2025 and taking effect on February 17, 2026, the FAIR Act represents the first comprehensive overhaul of New York General Business Law § 349 in almost 50 years. Long focused primarily on deceptive acts and practices, Section 349 has now been expanded to expressly prohibit unfair and abusive business practices as well—bringing New York law far closer to the federal UDAAP framework under the Consumer Financial Protection Act. To explore what changed, why it matters, and how the law will be enforced in practice, Alan Kaplinsky (founder and former leader of the Consumer Financial Services Group at Ballard Spahr LLP and now Senior Counsel and host of Consumer Finance Monitor) is joined by two senior officials from the New York Attorney General's Bureau of Consumer Frauds and Protection who were directly involved in shaping and implementing the statute: ·        Jane Azia, Chief of the Bureau of Consumer Frauds and Protection ·        Alec Webley, Assistant Attorney General and one of the attorneys who helped shepherd the FAIR Act through the legislative process What followed was a wide-ranging and unusually candid discussion of the statute's origins, scope, enforcement implications, and practical lessons for businesses operating in, or affecting, New York. From Deception to Unfairness and Abusiveness For decades, New York's consumer protection regime lagged behind most other states and federal regulators by focusing almost exclusively on deception. As Jane Azia explained, deception alone often fails to capture conduct that is plainly harmful to consumers, particularly where disclosures technically exist but are obscured, consumers are subjected to high-pressure tactics, or businesses exploit significant informational or power asymmetries. The FAIR Act closes those gaps by expressly prohibiting: ·        Unfair practices, modeled closely on the FTC's longstanding unfairness framework ·        Abusive practices, drawing heavily on more than a decade of CFPB enforcement experience Importantly, while the statute borrows from federal concepts of unfairness and abusiveness, New York is not bound to follow future CFPB reinterpretations. As Alec Webley emphasized, the legislature carefully chose its language, expressly incorporating only certain federal elements (such as the FTC's "substantial injury" concept) while deliberately declining to tether New York law to future federal regulatory shifts. Broader Scope Than Federal Law One of the most significant differences between the FAIR Act and federal consumer protection law is scope. Jane Azia pointed out that unlike the federal Consumer Financial Protection Act, which applies primarily to financial services, the FAIR Act applies to all business activity occurring in, or affecting consumers in, New York. That means unfair or abusive conduct by non-financial businesses now squarely falls within the Attorney General's enforcement authority. The statute also avoids many of the preemption constraints that can limit state enforcement against national banks under federal law, because it is a law of general application rather than a banking regulation. No Rulemaking—But Clear Signals The FAIR Act does not grant the Attorney General rulemaking authority, and the AG's office does not currently plan to issue formal regulations or written guidance. Instead, businesses should expect the meaning of "unfair" and "abusive" to be fleshed out through enforcement actions, settlements, and existing federal precedent. That said, the Attorney General has already identified categories of conduct likely to draw scrutiny, including: ·        Steering borrowers into unnecessarily costly repayment options ·        High-pressure sales tactics ·        Obscured or misleading pricing ·        Exploitation of consumers with limited English proficiency ·        Misleading marketing in health care, auto sales, and emerging financial products Several examples discussed on the podcast, including enforcement actions involving e-cigarettes, earned wage access products, and savings account practices, illustrate how the AG's office has already been applying unfairness and abusiveness theories under existing authority, and how the FAIR Act now allows those claims to be brought directly under state law. Remedies and Enforcement Tools The FAIR Act does not dramatically alter the remedies available to the Attorney General, but it reinforces a powerful enforcement arsenal, including: ·        Injunctive relief ·        Restitution ·        Civil penalties ·        Disgorgement ·        Expedited "special proceedings" that can allow the AG to move quickly in court to halt unlawful conduct As a reminder, recent amendments to Article 22-a of the general business law also significantly increased civil penalties for violations of section 349 occurring during disasters or abnormal market disruptions, an issue businesses should not overlook. Extraterritorial Reach and Coordination with Other Regulators The discussion also addresses a recurring compliance question: when New York law applies beyond New York's borders. In general, the statute applies where conduct occurs in New York or where New York consumers are harmed. It can also apply to out-of-state consumers harmed by New York-based businesses. By contrast, purely out-of-state conduct with no meaningful New York nexus typically falls outside the statute's reach. The episode also explores how the Attorney General coordinates with: ·        Other state attorneys general in multi-state investigations, ·        The New York Department of Financial Services, ·        The New York City Department of Consumer and Worker Protection, and ·        Federal agencies such as the FTC. Even as federal consumer protection enforcement ebbs and flows, the states, and New York in particular, remain active and increasingly influential. Practical Takeaways for Businesses A central theme of the discussion was that the FAIR Act is not a reason to relax compliance efforts—quite the opposite. As Alec Webley noted, statutes like this create an opportunity for companies and their counsel to step back, reassess business practices, and ask hard questions: ·        Are consumers complaining about this practice? ·        Is it genuinely necessary to the business? ·        Does it obscure costs or risks? ·        Would the company be comfortable seeing it described on the front page of a major newspaper? Practices that may have survived under a narrow deception standard could now pose real enforcement risk under broader unfairness and abusiveness principles. Looking Ahead Both guests emphasize that the FAIR Act was drafted with care and restraint, and that early enforcement actions are likely to fall squarely within the statute's text and intent. At the same time, emerging technologies, particularly digital marketing, fine-print disclosures on mobile devices, and the use of AI, are clearly on the Attorney General's radar. The bottom line is clear: the FAIR Act marks a fundamental shift in New York consumer protection law. With its February 17, 2026 effective date now here, businesses operating in or affecting New York should be taking this development seriously by reviewing practices, strengthening compliance frameworks, and preparing for a more expansive and assertive enforcement environment. We will continue to track developments under the FAIR Act and report on key enforcement actions and interpretations as they unfold. Consumer Finance Monitor is hosted by Alan Kaplinsky, Senior Counsel at Ballard Spahr, and the founder and former chair of the firm's Consumer Financial Services Group. We encourage listeners to subscribe to the podcast on their preferred platform for weekly insights into developments in the consumer finance industry.