To keep you informed of recent activities, below are several of the most significant federal and state events that have influenced the Consumer Financial Services industry over the past week.
Federal Activities
State Activities
Federal Activities:
On April 28, the Federal Trade Commission (FTC) issued a proposed order requiring Workado, LLC to cease advertising the accuracy of its AI Content Detector tool unless it can substantiate its claims with competent and reliable evidence. The FTC alleges that Workado’s assertion of 98% accuracy in detecting AI-generated text was misleading, as independent testing revealed an accuracy rate of only 53% for general-purpose content. This action aims to prevent Workado from engaging in deceptive advertising practices in the future. The proposed order mandates Workado to retain evidence supporting its claims, notify eligible consumers about the settlement, and submit compliance reports to the FTC. The settlement is open for public comment before becoming final, and violations of the order could result in significant civil penalties. For more information, click here.
On April 25, Paul S. Atkins, chairman of the U.S. Securities and Exchange Commission’s (SEC) Crypto Task Force, delivered remarks at the third roundtable in Washington, D.C., emphasizing the urgent need to address regulatory challenges surrounding digital assets and distributed ledger technologies. Atkins expressed gratitude to fellow commissioners and SEC staff for their support, particularly highlighting Commissioner Peirce’s dedication to advocating for sensible crypto policies, earning her the nickname “CryptoMom.” He underscored the transformative potential of blockchain technology in modernizing the financial system, advocating for clear regulatory guidelines to foster innovation and mitigate risks. The roundtable focused on the difficulties SEC registrants face in safely maintaining custody of crypto assets under federal securities laws, questioning whether existing frameworks like the Exchange Act or Advisers Act need adjustments to accommodate these technologies. Atkins called for collaboration with market participants, the Trump administration, and Congress to develop a rational regulatory framework, aiming to resolve the market and regulatory uncertainties that have hindered innovation. For more information, click here.
On April 25, the Federal Reserve Board announced the withdrawal of its guidance for banks concerning crypto-asset and dollar token activities, reflecting changes in its expectations for these activities. This decision aims to align the board’s expectations with evolving risks and to further support innovation within the banking system. The board rescinded its 2022 supervisory letter, which required state member banks to provide advance notification of crypto-asset activities, and its 2023 supervisory letter concerning the supervisory nonobjection process for dollar token activities. Additionally, the board, in collaboration with the Federal Deposit Insurance Corporation (FDIC), is withdrawing from two 2023 joint statements with federal bank regulatory agencies on crypto-asset activities and exposures. For more information, click here.
On April 24, Senators Elizabeth Warren (D-MA), Raphael Warnock (D-GA), Chris Van Hollen (D-MD), and Lisa Blunt Rochester (D-DE) addressed a letter to Acting Chairman Travis Hill of the Federal Deposit Insurance Corporation (FDIC), expressing concerns about the Department of Government Efficiency’s (DOGE) involvement at the FDIC. The letter highlights fears that DOGE’s history of dismantling government agencies could lead to increased bank failures by reducing the FDIC’s already limited staff, compromising the $137 billion Deposit Insurance Fund (DIF), and undermining the FDIC’s ability to manage the U.S. deposit insurance system effectively. The senators emphasize the critical role of federal deposit insurance in maintaining public confidence in the banking system and express alarm over DOGE’s potential access to sensitive information and systems. They request detailed information regarding DOGE’s access and activities at the FDIC, stressing the importance of safeguarding the agency’s integrity and operational capacity. For more information, click here.
On April 23, President Donald J. Trump issued an executive order titled “Restoring Equality of Opportunity and Meritocracy.” This order aims to eliminate the use of disparate impact liability in all contexts, emphasizing the importance of treating all citizens equally under the law and promoting a merit-based, colorblind society. The order mandates that the attorney general (AG) and chair of the Equal Employment Opportunity Commission conduct a review of all pending investigations, civil suits, and ongoing matters that rely on disparate impact liability under every federal civil rights law within their jurisdiction. It also mandates that the AG, secretary of Housing and Urban Development (HUD), director of the Consumer Financial Protection Bureau (CFPB), chair of the FTC, and other agency heads conduct a similar review with respect to the enforcement of the Equal Credit Opportunity Act, Fair Housing Act, and laws prohibiting unfair, deceptive, or abusive acts and practices. Appropriate actions must be taken within 45 days to align with the policy of the order. In addition, the AG is tasked with initiating actions to repeal or amend regulations implementing Title VI of the Civil Rights Act that contemplate disparate impact liability. Within 30 days, the AG, in coordination with other agency heads, must report on existing regulations, guidance, rules, orders, or other laws or decisions that involve disparate impact liability and provide steps to amend, repeal, or otherwise address any disparate impact concerns. For more information, click here.
On April 22, the U.S. District Court for the Southern District of California granted an ex parte motion for a temporary restraining order (TRO) filed by plaintiffs Novedades y Servicios, Inc. and Esperanza Gomez Escobar against the Financial Crimes Enforcement Network (FinCEN) and other defendants. The plaintiffs challenged the Geographic Targeting Order (GTO) issued by FinCEN, which imposed new recordkeeping and reporting requirements on money services businesses in specific zip codes in Texas and California. The court found that the plaintiffs demonstrated a substantial likelihood of success on their claims that the GTO was issued unlawfully without proper notice-and-comment procedures and deemed arbitrary and capricious. The court also recognized the immediate and irreparable harm faced by the plaintiffs, including potential business closure and loss of goodwill. Consequently, the court temporarily enjoined the enforcement of the GTO within the Southern District of California, maintaining the status quo while allowing the plaintiffs to pursue a preliminary injunction. The TRO is set to expire on May 20, with further proceedings scheduled for May 15. For more information, click here.
On April 22, the majority on the U.S. Senate Committee on Banking, Housing, and Urban Affairs released a fact sheet on the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, a significant legislative effort to bolster national security by establishing a regulatory framework for payment stablecoins. Led by Senator Bill Hagerty (R-TN) and co-sponsored by a bipartisan group of senators, the act passed the Senate Banking Committee with an 18-6 vote. The GENIUS Act classifies stablecoin issuers as financial institutions under the Bank Secrecy Act, requiring them to implement anti-money laundering and sanctions compliance programs, retain transaction records, and monitor suspicious activities. It also mandates technical capabilities for freezing and burning wallets to comply with lawful orders, enhancing the Treasury Department’s ability to enforce sanctions. This legislation aims to strengthen the U.S. dollar’s global position and prevent firms from moving offshore due to weaker regulatory oversight. Additionally, a fact sheet released on April 16 emphasized the GENIUS Act’s consumer protection measures, including reserve requirements and transparency standards for stablecoin issuers. For more information, click here and here.
On April 22, the SEC charged Ramil Palafox, founder of PGI Global, with orchestrating a fraudulent scheme that raised approximately $198 million from investors worldwide. The SEC’s complaint alleges that Palafox misappropriated over $57 million of investor funds for personal luxuries, including cars and luxury items, while falsely claiming PGI Global was a crypto asset and foreign exchange trading company. From January 2020 through October 2021, Palafox sold “membership” packages promising high returns and incentivized recruitment of new investors, operating a Ponzi-like scheme until its collapse. The SEC seeks permanent injunctive relief, disgorgement of ill-gotten gains, and civil penalties against Palafox and relief defendants. In a parallel action, Palafox faces criminal charges in the U.S. District Court for the Eastern District of Virginia. The SEC’s investigation continues, supported by the U.S. Attorney’s Office, FBI, and IRS, with resources available for investors to detect and avoid similar fraudulent schemes. For more information, click here.
On April 21, the U.S. Department of Education announced that its Office of Federal Student Aid (FSA) will resume collections on defaulted federal student loans starting Monday, May 5. This decision ends a collections pause that has been in place since March 2020. According to the announcement, the resumption of collections is intended to protect taxpayers from bearing the cost of federal student loans that borrowers undertook to finance their education. The collections pause was initially implemented to provide relief to borrowers during the COVID-19 pandemic. However, the Biden-Harris administration extended this pause beyond the congressional mandate that required repayments to resume in October 2023. According to U.S. Secretary of Education Linda McMahon, this extension created confusion and delayed necessary actions to address rising delinquency and default rates. For more information, click here.
On April 21, the Commodity Futures Trading Commission (CFTC) issued a request for comment to gather public input on the potential implications 24/7 trading in the derivatives markets it regulates. Acting Chairman Caroline D. Pham emphasized the importance of adopting a forward-looking approach to market structure changes to maintain vibrant and resilient markets while ensuring participant protection. The CFTC seeks feedback on the potential benefits, uses, and risks associated with continuous trading, including impacts on trading, clearing, and risk management, as well as concerns related to market integrity, customer protection, and retail trading. Comments will be accepted until May 21. For more information, click here.
On April 21, the SEC informed the U.S. District Court for the Eastern District of New York that it would not file an amended complaint against Richard Schueler, also known as Richard Heart, and his associated entities Hex, PulseChain, and PulseX. This decision follows the court’s dismissal of the SEC’s initial complaint, which alleged that Heart raised more than $1 billion through unregistered crypto asset securities offerings and misappropriated investor funds for personal luxury purchases. The court had previously granted Heart’s motion to dismiss, citing insufficient U.S. ties to establish jurisdiction. Judge Carol Bagley Amon found that Heart’s U.S. conference appearances and online promotions did not sufficiently target a U.S. audience, and the SEC failed to demonstrate that transactions occurred domestically. For more information, click here.
On April 17, Jeffrey B. Clark, acting administrator of the Office of Information and Regulatory Affairs (OIRA), issued a memorandum providing interim guidance for implementing Section 3 of Executive Order 14215, titled “Ensuring Accountability for All Agencies.” This guidance aims to integrate historically independent regulatory agencies into the centralized regulatory review process outlined in Executive Order 12866. The memorandum emphasizes the need for these agencies to submit all stages of regulatory actions to the OIRA for significance determination and potential review. It outlines the responsibilities of agencies, including designating regulatory policy officers and regulatory seconds, and sets deadlines for compliance, with full adherence required by April 21. The guidance seeks to enhance presidential supervision over the executive branch, ensuring that regulatory actions align with the president’s priorities and provide net benefits to the American people. For more information, click here.
On April 15, the CFPB and Townstone Financial, Inc. filed a joint brief in the U. S. District Court for the Northern District of Illinois responding to an amicus brief opposing their previously filed joint motion to vacate. The brief argues that Rule 60(b)(6) provides the court with the discretion to vacate the judgment due to extraordinary circumstances, as the CFPB’s post-judgment investigation revealed the case lacked evidentiary and legal foundation and was pursued due to disagreement with Townstone’s views. The brief criticizes the amicus brief filed by multiple nonprofits for misrepresenting the case as a mere leadership change. The brief underscores the importance of upholding First Amendment rights and argues that the public interest would be served by granting the motion, as the case involved no actual consumer complaints or evidence of discrimination. The parties assert that vacating the judgment would not affect precedent or judicial resources and aligns with the public interest in preventing constitutional violations. For more information, click here.
State Activities:
On April 22, Maryland passed Senate Bill 305, a significant piece of legislation concerning the registration and regulation of virtual currency kiosks within the state. The bill establishes comprehensive requirements for virtual currency kiosk operators, mandating registration with the commissioner of financial regulation before operation. The legislation empowers the commissioner to investigate compliance and enforce penalties for violations, ensuring that operators adhere to strict guidelines regarding transaction limits, user information collection, and fee structures. Additionally, the bill requires kiosks to display clear disclosures about the risks associated with virtual currency transactions and maintain customer support services. This regulatory framework aims to enhance consumer protection and ensure the responsible operation of virtual currency kiosks in Maryland, with the law set to take effect on July 1. For more information, click here.
On April 22, Maryland Governor Wes Moore signed House Bill 1516, known as the Maryland Secondary Market Stability Act of 2025, into law. This legislation exempts certain trusts that acquire or are assigned mortgage loans from the state’s licensing requirements for financial service providers. Additionally, it establishes the Maryland Licensing Workgroup to study and make recommendations on licensing requirements for individuals providing financial services in the state. The workgroup is tasked with reporting its findings to the governor and the General Assembly by December 31, 2025. For more information, click here.
On April 22, Moore signed the Fair Medical Debt Reporting Act into law. This legislation prohibits consumer reporting agencies from including adverse information related to medical debt in consumer reports. It also restricts the use of medical debt information from consumer reports for certain purposes and bars health care facilities, practitioners, and ambulance services from disclosing medical debt to consumer reporting agencies. The act aims to alleviate the financial burden and privacy concerns associated with medical debt, ensuring that such information does not negatively impact consumers’ credit profiles. The law is set to take effect on October 1. For more information, click here.
On April 22, Washington Governor Bob Ferguson signed Senate Bill 5480 into law, which aims to protect consumers from the negative impact of medical debt on their credit reports. Effective July 27, this legislation prohibits consumer reporting agencies from including medical debt information in credit reports, rendering any reported medical debt void and unenforceable. The bill defines “medical debt” as any debt owed by a consumer to a provider whose primary business is offering medical services, products, or devices, including related agents or assignees. This encompasses medical bills that are not past due or have been paid, excluding cosmetic surgery unless it is reconstructive following trauma, infection, or disease. For more information, click here.
On April 22, Ferguson signed Substitute Senate Bill 5493 into law, a significant measure aimed at enhancing hospital price transparency. Effective July 27, this legislation mandates that by July 1, 2027, hospitals must publish comprehensive data and adhere to federal rules concerning price transparency as outlined in 45 C.F.R. Part 180, subparts A and B. Hospitals are required to annually submit a machine-readable file listing all standard charges for hospital items and services, along with a consumer-friendly list of standard charges for a select set of shoppable services, to the relevant department. For more information, click here.
On April 18, Colorado Governor Jared Polis signed House Bill 25-1201 into law, enacting the “Money Transmission Modernization Act.” This legislation aims to update and streamline the regulation of money transmission services within the state. The act seeks to enhance coordination among states in regulation, licensing, and supervision, thereby reducing unnecessary regulatory burdens and optimizing the use of regulatory resources. It also focuses on protecting the public from financial crimes, standardizing licensing requirements, and modernizing safety and soundness measures to safeguard customer funds while fostering innovative and competitive business practices. For more information, click here.
On April 17, Montana’s Legislature passed Senate Bill 488, a significant revision to consumer protection laws. This legislation expands the definition of unfair competition and deceptive practices to include false or misleading consumer reviews or testimonials, aligning state law with federal standards. It also revises the statutes of limitations for filing actions related to unfair practices, providing specific timeframes for both the Department of Justice and individuals to bring actions. The bill amends several sections of the Montana Code Annotated to enhance enforcement and consumer protection measures, with an immediate effective date upon passage. For more information, click here.
