When Richard Cordray resigned as director of the Bureau of Consumer Financial Protection last November, there were many who warned that with someone who was a less aggressive enforcer of consumer protection laws at the helm of the agency, the ARM industry should be worried about states picking up the enforcement slack.
It appears as though Maryland is looking to do just that. The attorney general of Maryland, for example, was one of 14 state AGs to reach out to the BCFP with a request to maintain public access to the agency’s consumer complaint database.
Joining other states, like Pennsylvania and New Jersey which have launched their own state-run consumer protection units, Maryland is now gearing up to do the same, according to a published report. A newly enacted state law provides “stricter oversight” of the financial services industry by making sweeping changes to laws and regulations.
One important change is that the newly enacted law adds the word “abusive” to existing laws that prohibit “unfair or deceptive” acts or practices. The extra “A” in UDAAP puts Maryland in line with other states and the BCFP, by expanding the scope under which a potential violation can be identified and prosecuted. The law also makes it clear that it applies not just to entities that are licensed by the state but that it applies “regardless of whether the person is actually licensed.” This gives regulators in Maryland the opportunity to go after any company doing business in the state, even those that might have chosen not to license themselves in the state in an attempt to evade state laws.
Under the new law, violations that are deemed to be unfair, deceptive, or abusive are now subject to fines as high as $10,000, a huge jump from the previous limit of $1,000 per violation.
The law also creates the position of a student loan ombudsman, directs the state’s Commissioner of Financial Regulation to determine whether it should regulate FinTech companies, directs the state to further study the topics of arbitration, and prohibits credit bureaus from charging consumers who place freezes on their credit reports.