California Expands Scope of Rosenthal Act to Cover Commercial Financial Transactions

Regulatory Developments

California Expands Scope of Rosenthal Act to Cover Commercial Financial Transactions
On September 24, a bill signed by California Governor Gavin Newsom expanded the scope of California’s Rosenthal Act to cover certain commercial financial transactions. Currently, the Rosenthal Act prohibits debt collectors from engaging in unfair or deceptive acts or practices when collecting on consumer debt. Senate Bill 1826 broadens this requirement to extend to most commercial debt where the total amount owed by the same debtor to the same lender is no more than $500,000. The law specifies that provisions of the Rosenthal Act apply to covered commercial debt entered into, renewed, sold, or assigned after July 1, 2025, including:

• A prohibition on engaging in unfair or deceptive acts and practices when collecting on debt.
• The requirement for a debt collector to provide a statement to a debtor containing a description of the debt and the debtor’s rights prior to attempting to collect on their debt. 
• A prohibition on collecting on debt via a judicial proceeding in a county outside of the one where the debt was incurred.
• A prohibition on collecting on covered commercial debt once an alleged debtor provides the collector with evidence they were a victim of identity theft.

FTC Announces Final “Click-to-Cancel” Rule for Ending Recurring Subscriptions and Memberships
On October 16, as part of the FTC’s ongoing review of its 1973 Negative Option Rule, the FTC announced its final “click-to-cancel” rule. The rule applies to almost all negative option programs and requires sellers to provide a simple mechanism for consumers to cancel the negative option feature and immediately halt charges. The rule also prohibits sellers from misrepresenting material facts in negative option marketing and requires sellers to provide important information before obtaining consumers’ billing information or charging them, and to obtain consumers’ informed consent to the negative option features before charging them. The final rule dropped a proposed requirement that sellers provide annual reminders to consumers of the negative option feature, and a prohibition on sellers telling consumers seeking cancellation about plan modifications or reasons to keep to their existing agreement without first asking if the consumer wants to hear about them. The final rule goes into effect 180 days after its publication in the Federal Register, except for provisions related to misrepresentations and other procedural requirements which take effect 60 days after publication of the final rule.

FinCEN Renews Real Estate GTOs
On October 15, FinCEN announced the renewal of GTOs requiring US title insurance companies to identify the natural persons behind shell companies involved in non-financed purchases of residential real estate properties. These GTOs, which are effective from October 16, 2024 through April 14, 2025, apply to certain counties and major US metropolitan areas in California, Colorado, Connecticut, Florida, Hawaii, Illinois, Maryland, Massachusetts, Nevada, New York, Texas, Washington, Virginia, and the District of Columbia. Early this year, FinCEN issued a final rule requiring reporting of non-financed transfers of residential real estate to a legal entity or trust. The reporting requirements established by the final rule will replace the GTOs, effective December 1, 2025.

FDIC Extends Comment Period of RFI on Deposits
On October 8, the FDIC announced an extension of the comment period for the agency’s RFI on deposit data not currently reported in the Call Report or other regulatory reports, including for uninsured deposits. Previously, on August 6, 2024, the FDIC issued an RFI to the public soliciting comments related to the characteristics and value of different types of deposits and whether more frequent or different reporting should be required for deposits. The RFI was issued in response to the bank failures that occurred in March 2023 and is intended to assist the FDIC in determining whether to modify reporting for deposits. The original comment period for the RFI closed on October 7, 2024; however, the FDIC’s announcement extends the comment period to December 6, 2024.

CFPB Announces Beta Release of HDMA Platform
On October 15, the CFPB announced the beta release of the HMDA platform (the Beta Platform) for data that will be collected in 2025. Each year, the CFPB requires certain financial institutions to provide mortgage loan data to the public by filing this information through an online platform (the HMDA Platform). The Beta Platform allows financial institutions to prepare, review, correct, and submit data in a non-production system designed to test if the data filed complies with HMDA reporting requirements prior to the official filing. The data submitted through the Beta Platform is not retained and can be tested and retested as often as needed. The HMDA Platform will open for the submission of 2024 data in January 2025.

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