Consumer Financial Services

Sullivan & Cromwell's Consumer Financial Services Group represents clients in the full array of regulatory, compliance, supervisory, enforcement and litigation matters that may arise in providing financial products and services to consumers—whether those products and services involve traditional offerings, such as deposit-taking and mortgage, auto, credit card and other lending, or less traditional offerings through alternative payment, deposit and lending platforms.

Consumer protection laws and regulations and agency priorities have been evolving at an historically unparalleled pace, and it has become increasingly challenging for institutions to keep up with the shifting regulatory, supervisory and enforcement regime. Consumer financial services providers now face an unprecedented level of scrutiny of their practices as well as a marked uptick in investigations and enforcement actions by regulatory and law enforcement agencies, including the Consumer Financial Protection Bureau (CFPB), the federal banking agencies, the Department of Justice (DOJ), the Federal Trade Commission (for non-banks) and state regulatory and law enforcement authorities. Clients trust S&C to guide them through this increasingly complex regulatory landscape.

S&C has a long history of successfully helping clients navigate complex regulatory regimes and related litigation and an established track record of representing financial institutions in regulatory, compliance and enforcement matters before the CFPB, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), the FTC, the DOJ, and state bank regulatory and law enforcement agencies. Our lawyers work to develop a deep understanding of clients' operations, advise them in responding to financial services reforms, and represent them in civil litigation, arbitrations and mediations concerning consumer financial products and services, including class actions and other private lawsuits in state and federal courts throughout the nation.

S&C's Consumer Financial Services group is well-positioned to serve clients in these challenging times. The lawyers in our practice group, which include former federal and state prosecutors, former bank regulatory and enforcement counsel, and other leading practitioners, coordinate efforts with colleagues across the Firm's practice areas to meet our clients' needs:

The diverse backgrounds of our consumer financial protection team enable S&C to analyze issues from the perspectives of the client financial institution, the regulatory or law enforcement agencies involved, and the consumer to provide a more sophisticated strategy for avoiding regulatory issues, and, if issues arise, addressing them in an appropriate fashion to minimize or eliminate negative effects on the client's standing with its customers and regulators.

S&C's recent consumer financial services experience includes:

Unfair, Deceptive or Abusive Acts or Practices
The Firm has broad experience in a wide variety of matters alleging unfair, deceptive or abusive practices prohibited by the Consumer Financial Protection Act and the Federal Trade Commission Act, the foundational consumer financial protection statutes.

Fair Lending

In addition to representing banking organizations in redlining and other fair lending investigations and enforcement matters, the Firm assists banks in taking proactive steps to forestall redlining and other fair lending issues by, among other things, providing advice concerning fair lending compliance programs and recommending steps that would help demonstrate a financial services provider's commitment to diversity and inclusion in its lending and other banking activities. As an example, S&C has worked with clients to develop Special Purpose Credit Programs that meet the requirements of the Equal Credit Opportunity Act and the Fair Housing Act.

S&C also provides advice and representation before agencies on adherence to the technical requirements of the fair lending laws, including the Home Mortgage Disclosure Act, Equal Credit Opportunity Act, the Fair Housing Act, the Real Estate Settlement Practices Act, the Servicemembers Civil Relief Act, and state law analogues.

As part of S&C's financial services merger and acquisition practice, we evaluate the fair lending programs and risks of both acquirers and targets in connection with the assessment of whether a proposed corporate transaction will raise issues with regulators or community groups. S&C has a long history of successfully interacting with community groups in connection with community benefits agreements developed in connection with corporate transactions.

Multiple clients ask the Firm for assistance in navigating their Community Reinvestment Act (CRA) obligations for particular examinations, longer term planning, and in developing and reacting to proposed policy and regulatory changes in the administration of the CRA. These engagements have included assistance to banks in preparing submissions to assist CRA examiners, ascertain whether particular loans and investments qualify for CRA credit under existing and proposed regulations, the impact of geographic market expansion on CRA obligations, and the effect on CRA ratings of findings of illegal credit practices.

Deposit Accounts and Payment Systems

S&C regularly advises on compliance with the Truth in Savings Act (Regulation DD), the Electronic Funds Transfer Act (Regulation E), and the Expedited Funds Availability Act (Regulation CC).

The Firm has frequently evaluated compliance issues arising from partnerships between banks and FinTech companies regarding consumer deposit accounts and payment systems, including advice concerning direct and oversight obligations of banks for the activities of partner organizations, as well as the obligations of FinTechs for primary compliance.

Truth in Lending/Fair Credit Reporting Act/Fair Debt Collection Practices Act

The Firm provides advice on numerous aspects of the Truth in Lending Act and implementing Regulation Z, as well as the Fair Credit Reporting Act, and the Fair Debt Collection Practices Act.

Privacy

S&C provides advice on the privacy obligations arising under the Gramm-Leach-Bliley Act, as well as applicable state law privacy laws.

SELECTED REPRESENTATIONS

Wells Fargo in its 2018 and 2022 settlements with the CFPB, and in its 2018 and 2021 settlements with the OCC, all of which involved multiple theories of unfair or deceptive practices concerning overdraft practices, deposit account “hold” practices, auto lending servicing, mortgage lending origination practices and mortgage loss mitigation.
Fiserv and its First Data subsidiary in the 2020 resolution of a Federal Trade Commission investigation involving First Data’s allegedly unfair practice of processing credit card transactions for certain merchants who had engaged in fraudulent conduct.
Several banks in redlining examinations and investigations conducted by the banking agencies and the Department of Justice. In two cases, the Department of Justice has closed redlining investigations without taking action against banks represented by S&C.
Higher One, formerly a FinTech that provided bank accounts to student loan recipients, in resolving major enforcement actions based on unfair and deceptive practices brought by the Federal Reserve and the FDIC.
Home Street Bank in the resolution of an FDIC investigation involving co-marketing arrangements that raised issues the Real Estate Settlement Practices Act.
U.S. Bank which has intervened in a CFBP enforcement action against a series of student loan securitization trusts for allegedly engaging in unfair collection litigation practices through default servicers. U.S. Bank, which is not alleged to have engaged in misconduct, intervened because of its contractual obligations with respect to these trusts as Indenture Trustee and Successor Special Servicer.
Multiple “add-on” product enforcement actions against banks involving identity theft protection products and payment protection products before the CFPB and the banking agencies.
Multiple banks in investigations conducted by the Department of Justice and CFPB of the clients’ relationships with third party payment processors and other third parties involving ACH payments, remotely created checks, and other payment systems channels.

Regional banks in the resolution of allegations of violations of the National Flood Insurance Act.
Multiple clients for advice regarding such recent regulatory and enforcement priorities as garnishment practices, CARES Act and other COVID-related compliance issues.
Assistance to banking organizations required to develop acceptable remediation and consumer redress action plans to address regulator or law enforcement agency requirements.