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Banks and Marketplace Lenders Absorb a Blow

June 30, 2016

Authors

Dan Wheeler

Banks and Marketplace Lenders Absorb a Blow

June 30, 2016

by: Dan Wheeler

In a blow to banks and the marketplace lending industry, on June 27, 2016, the U.S. Supreme Court denied the petition by Midland Funding to hear the case Midland Funding, LLC v. Madden (No. 15-610).  That case involves a debt-collection firm that bought charged-off credit card debt from a national bank.  The borrower’s legal team argued that a buyer of the debt was subject to New York interest rate caps even though the seller of the debt, a national bank, was exempt from those state law rate caps due to preemption under Section 85 the National Bank Act.  The borrower won on this startling argument and the debt collector appealed to the Supreme Court.  The Office of the Comptroller of the Currency (the regulator for national banks), the U.S. Solicitor General and various stakeholders in the banking and lending industries vigorously argued that the 2nd Circuit’s decision contravened established law.  The

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Gift Card Issuers Beware: CFPB Finds Limited Preemption of Unclaimed Property Laws

May 1, 2013

Authors

Bryan Cave

Gift Card Issuers Beware: CFPB Finds Limited Preemption of Unclaimed Property Laws

May 1, 2013

by: Bryan Cave

CFPB Finds Limited Preemption; Gift Card Issuers Must Honor Cards Even After Funds Have Escheated to the State

The Consumer Financial Protection Bureau (“CFPB”) recently published a final determination regarding whether the unclaimed property laws of Maine and Tennessee relating to unredeemed gift cards (“Applicable State Law”) are inconsistent with and preempted by the gift card provisions of the  Electronic Fund Transfer Act and Regulation E (“Federal Law”).  The applicable laws of Maine and Tennessee are quite similar for the issues at hand.  In its ruling, the CFPB determined that Maine’s unclaimed property law as applied to gift cards is not inconsistent with Federal Law, and therefore no preemption was found.  However, with respect to Tennessee’s unclaimed property law, the CFPB ruled in favor of preemption but only with respect to the provision permitting issuers to choose whether to honor an unclaimed gift card after

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OCC Opines that Federal Preemption Still Exists, Despite Dodd-Frank

May 16, 2011

Authors

Bryan Cave

OCC Opines that Federal Preemption Still Exists, Despite Dodd-Frank

May 16, 2011

by: Bryan Cave

The OCC recently sent a letter to Sen. Tom Carper (D-Dela.) in response to his request for the OCC to clarify how it would interpret particular aspects of the preemption provisions of the Dodd-Frank Act.  Among other things, the letter states that federal preemption of state consumer protection laws would continue even under Dodd-Frank, in accordance with the “Barnett” standard. Of particular interest, the OCC letter noted that Dodd-Frank did not overrule or reverse any pre-existing judicial decisions that were based on the Barnett standard and which found that the state law conflicted with bank powers.

The Dodd-Frank Act restricts the ability of national banks and federal savings associations to assert preemption from state consumer protection laws.  For example, the ability to assert “field preemption” over an entire body of law (even if there is no conflict) no longer exists. However, contrary to some assertions, preemption is not “dead.” 

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