Consumer Law Changes Taking Effect in 2020

This article lists federal and state consumer law changes that already are scheduled to go into effect in 2020. The article also lists several changes that were effective in December of 2019. Of course, other consumer law changes will be enacted later this year and go into effect this year; this article lists those changes whose effective dates have already been scheduled for this year.

December 1, 2019 Effective Date

Bankruptcy rules and forms: Rule 4001(c) concerning obtaining post-petition credit no longer applies in chapter 13 cases; Rule 6007(b) provides more detail on how a debtor seeks an order requiring the trustee to abandon property to the debtor; Rule 9036 allowing notice and service by electronic means, and Rule 9037(h) sets out procedures for redaction of previously filed documents. For more detail, see Bankruptcy News: Added Veterans’ Protections, New Rules; Student Loan Dischargeability.

Federal Lifeline Program: the program phases out monthly support for voice-only in favor of broadband support, lowering the voice-only support to $7.25. See NCLC’s Access to Utility Service § 11.3.3.

January 1, 2020 Effective Date

Federal title and odometer disclosures: NHTSA rules are changed to exempt only vehicles over 20 years old (formerly exempting vehicles over 10 years old) from the disclosure requirements of the Motor Vehicle Information and Cost Savings Act (sometimes called the federal odometer act). 2009 model year and older vehicles are grandfathered as exempt. See 84 Fed. Reg. 52,664 (Oct. 2, 2019), amending 49 C.F.R. § 580.17(a). See also Federal Remedies for Used Car Fraud Just Got Even More Powerful.

Truth in Lending Act coverage: the statute now applies to credit transactions where the amount financed is under $58,300. See 84 Fed. Reg. 58,020 (Oct. 30, 2019). See also NCLC’s Truth in Lending § 13.2.2.1. (TILA continues to cover home-secured and certain other credit even where the amount financed is greater than $58,300).

Truth in Lending Act escrow requirements: if other Regulation Z requirements are met, institutions with assets under $2.202 billion (formerly $2.167 billion) need not establish escrow accounts for higher-priced mortgage loans. 84 Fed. Reg. 70,410 (Dec. 23, 2019).

Consumer Leasing Act coverage: the statute now applies to leases where the total contractual obligation is under $58,300. See 84 Fed. Reg. 58,017 (Oct. 30, 2019). See also NCLC’s Truth in Lending § 2.4.4.2.

CFPB Regulation C on HMDA: amends Regulation C to set out requirements for institutions extending fewer than 100 open-end lines of credit and other changes to Regulation C. See 82 Fed. Reg. at 43,088, 43,145 (Sept. 13, 2017). The exemption threshold for HMDA requirements are also increased for bank asset levels from $46 million to $47 million. See 84 Fed. Reg. 69,993 (Dec. 20, 2019).

California statute regarding waiver of arbitration requirement: a California statute provides significant rights to consumers and employees, including proceeding in court instead of arbitration when the business that they are in arbitration with fails to pay initial arbitration fees or other costs assessed on the business during the arbitration. Cal. Civ. Proc. Code § 1281.97 (West). A federal judge has just issued a temporary stay to the statute's effective date. See U.S. Chamber of Commerce v. Becerra (E.D. Cal. Dec. 30, 2019).

California consumer privacy statute: a California statute allows consumers to know—free of charge—all data collected by a business on the consumer; the right to say to say no to the sale of information; a private right of action for data breaches; the right to delete data; and other rights. See Cal. Civ. Code § 1798.100 (West).

California usury statute: extensive changes for loans under $10,000, including applying usury caps to formerly deregulated loans over $2500, requiring most of those loans be repayable over at least 12 months. However, these limits do not apply to loans of $5000 or more that are secured by real property. Also prohibits prepayment penalties. See Cal. Fin. Code §§ 222250, 22307.5, 22334 (West).

Illinois post-judgment interest rate: HB 0088 (2019) reduces the rate of post-judgment interest to 5% on debts under $25,000. See 735 Ill. Comp. Stat. 5/1-106.

Nevada sandbox statute: 2019 Nev. Stat. Ch. 611 (S.B. 160) allows providers to apply for approval to test an “innovative” product or service that does not have to meet otherwise applicable licensing or authorization requirements, and need not comply with certain specified laws. Nev. Rev. Stat. §§ 675.035, 675.070, 675.300.

New Mexico credit insurance statute: creditor may charge only for the actual cost of credit insurance and may not require that insurance be through a particular agent, broker, or insurer. N.M. Stat. Ann. § 58-15-16.

Oregon medical debt statute: Oregon HB 3076 (2019) requires nonprofit hospitals and their nonprofit affiliated clinics to establish financial assistance policies meeting specified criteria, including reducing charges to low-income patients. See Or. Rev. Stat. §§ 442.200, 646.639.

Wyoming sandbox statute: Financial Technology Sandbox Act allows “innovative” financial products or services—including consumer credit—to apply to the state banking commissioner for a waiver of specified requirements of statutes or rules. Wyo. Stat. Ann. §§ 40-28-101 to 40-28-109.

January 14, 2020 Effective Date

New York foreclosure law: new requirements concerning pre-foreclosure notices that lender must send to the borrower. See 2019 NY A.B. 8457, amending N.Y. Real Prop. Acts. Law § 1304.

February 1, 2020 Effective Date

Mortgage loan applications: Applications for all GSE loans must be on the new Uniform Residential Loan Application (URLA) form that includes the applicant’s preferred language and other changes. See NCLC’s Mortgage Lending § 2.3.1.

February 20, 2020 Effective Date

Bankruptcy provisions for small businesses: The Small Business Reorganization Act, Pub. Law No. 116-54 (Aug. 23, 2019) added a new Subpart V to Bankruptcy Code Chapter 11. The Act authorizes for small business chapter 11 bankruptcies: streamlined procedures, a greater trustee role, and modification of non-purchase-money mortgages on residential properties if the loan proceeds were used primarily in connection with the business.

March 10, 2020 Effective Date

Credit union interest rates: Unless the higher rate is renewed, credit union loans must revert back from the current 18% usury cap to a 15% cap. The maximum rate on certain short-term loans (“payday alternative loans” or PALs) will drop from 18% to 15%. But it is expected the higher rates will be renewed.

April 1, 2020 Effective Date

Home mortgage escrow requirements: Truth in Lending Act requires higher priced mortgage loans to include escrow accounts, with a number of exemptions including where the lender’s assets are under a certain amount. A grace period for an asset amount exemption expires on April 1. See NCLC’s Truth in Lending § 9.5.4.5.2.

July 1, 2020 Effective Date

Department of Education student loan rules: A number of current Department of Education rules are amended, effective July 1, although potential litigation may seek to stay that effective date:

• Generally weakening or rolling back current rules designed to protect and provide a pathway to relief for students on borrower defense federal student loan discharges in case of school misconduct, closed school federal student loan discharges, and school use of arbitration agreements. See 84 Fed. Reg. 49788 (Sept. 23, 2019). See also NCLC’s Student Loan Law Chapter 10 and Chapter 13 for the current rules.
• Amending the rules for postsecondary school accreditation and state authorization of online education providers. See 84 Fed. Reg. 58,834 (Nov. 1, 2019). See also NCLC’s Student Loan Law Chapter 13 for the current rules.
• Repealing the “gainful employment" rule, a rule which requires career education programs to meet certain graduate debt-to-earnings ratios demonstrating the program does not set up graduates to fail with unaffordable debt in order to participate in the federal student loan program. See 84 Fed. Reg. 31,392 (July 1, 2019). See also NCLC’s Student Loan Law Chapter 13 for the current rules.

Minnesota documentary fees: The maximum charge for documentary fees in motor vehicle retain installment sales increases from $100 to $125. See Minn. Stat. § 128.27(31).

Mississippi mortgage servicing: Sunset of prohibition on improper refusal to issue satisfaction, requirement that servicer respond within three days to written requests for payoff amounts, and also to account for escrow amounts. See Miss. Code Ann. §§ 81-18-27(1)(n), 81-18-1, et al. (S.A.F.E. Mortgage Act).

Washington state identity theft: The financial fraud and identity theft crimes and investigation and prosecution program is set to sunset. See Wash. Rev. Code § 43.330.300.

July 21, 2020 Effective Date

Regulation E on remittances: Until this date, institutions in certain circumstances can use estimates when disclosing fees, the total amount of a transfer, the exchange rate, and certain other information. Effective this date estimates are no longer allowed. See 12 C.F.R. § 1005.32(a)(2).

August 1, 2020 Effective Date

Oklahoma small loan law: new statute replacing the Deferred Deposit Lending Act, requiring licensure, setting unsecured loan terms from 60 days to 12 months, with substantially equal payments, with $1500 maximum loan amount, with maximum rate of 204% per year, and limits on payment by EFT. See Okla. Stat. tit. 59, § 3150 to 3150.27 (Small Lenders Act).

October 1, 2020 Effective Date

Electronic benefit transfer cards: States are required to use electronic benefit transfer (EBT) cards to distribute SNAP benefits. As of this date, states are also required to distribute the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) benefits on EBT cards as well. See NCLC’s Consumer Banking and Payment Law § 8.1.1.

November 19, 2020

CFPB payday loan rule: The CFPB has announced that the compliance date for most parts of the rule relating to payday, vehicle title and high-cost installment loans is delayed until November 19, 2020. 84 Fed. Reg. 27,907 (June 17, 2019). At the same time the CFPB has proposed eliminating these provisions. See 84 Fed. Reg. 4298 (Feb. 14, 2019). In addition, a federal court has stayed the whole rule including the provisions that the CFPB is not seeking to undo, having to do with payment transfers. Between the federal court stay and the CFPB’s intention to repeal most parts of the rule, there is a likelihood those parts of the rule will not go into effect in November, 2020.

December 1, 2020 Effective Date

Bankruptcy rules and forms: Amendments to Rule 2002 will require giving notice of the entry of a chapter 13 confirmation order and limit the need to provide notice to creditors that do not file timely proofs of claim in chapter 12 and chapter 13 cases. Amendments to Rule 2004 will refer specifically to electronically stored information and also harmonize the rule’s subpoena provisions with the current provisions of Civil Rule 45. The Advisory Committee rejected a proposal to reference proportionality explicitly in the rule. Other changes will be made to rules 8012, 8013, 8015, and 8021 concerning appellate practice.

Federal Rules of Procedure on discovery: Although extensive changes to Fed. R. Civ. P. 30(b)(6) governing the deposition of corporate representatives were originally proposed, the only change now going into effect in December, 2020, will be that the parties confer in advance regarding the number and identity of topics and identify the corporate designees implicated by a Rule 30(b)(6) deposition notice.

Federal Lifeline Program: the program phases out monthly support for voice only in favor of broadband support, lowering the voice only support to $5.25. See NCLC’s Access to Utility Service § 11.3.3.