Digest 04.02.2020: Potential Zoom Vulnerability | Unemployment Benefits for Gig Workers | Postponed Regulatory Reporting for Financial Institutions


Attorneys General Move to Limit Debt Collection in Response to COVID-19 Pandemic

  • AGs across the country are taking action to limit or cease debt collection during the COVID-19 pandemic.
  • Massachusetts AG Maura Healey issued emergency regulations placing new limits on debt collection activities, including prohibiting creditors and debt collectors from engaging in activities that would require people to leave their houses or interact with others in person, like filing new lawsuits, repossessing cars, or visiting debtors at their homes or work places, and also prohibiting debt collection agencies and debt buyers from making unsolicited debt collection telephone calls to consumers.
  • North Carolina AG Josh Stein temporarily suspended debt collection efforts by the state’s Department of Justice. He also sent a letter to local and municipal utilities urging them not to disconnect residents with unpaid utility bills from essential services such as water, electricity, and gas, and to suspend late fees for nonpayment of utility bills.
  • As previously reported, New York AG Letitia James announced the temporary suspension of the collection of medical and student debt owed to the state and referred to the AG’s office for collection. The accrual of interest and the collection of fees on these debts will also be automatically suspended.

2020 AG Elections

Third Republican Enters Race for Washington Attorney General

  • Mike Vaska, a Seattle attorney in private practice, announced his bid for the Republican nomination for Washington AG.
  • Mr. Vaska is the third Republican to enter the race to unseat incumbent democratic AG Bob Ferguson, joining former Pierce County Deputy Prosecutor Matt Larkin and former Seattle police officer and attorney Brett Rogers.
  • The top two finishers in the state’s primary, regardless of party, will advance to the general election.

Consumer Financial Protection Bureau

CFPB Temporarily Postpones Reporting for Financial Institutions in Response to COVID-19 Pandemic

  • The Consumer Financial Protection Bureau (“CFPB”) announced a temporary relaxation of certain regulatory requirements so that financial companies can better assist their customers in response to the COVID-19 pandemic.
  • The CFPB temporarily will “not expect” quarterly reporting by mortgage lenders required under the Home Mortgage Disclosure Act and Regulation C, and reporting of information relating to credit card and prepaid accounts under the Truth in Lending Act, Regulation Z, and Regulation E. The CFPB also announced a postponement of a survey of financial institutions seeking information on the cost of compliance with the Dodd-Frank Act, and a postponement of a survey of firms providing Property Assessed Clean Energy financing to consumers.
  • In addition, the CFPB will work with financial institutions to schedule examinations and other supervisory activities to minimize disruption and burden and in consideration of the circumstances that financial entities may face as a result of the COVID-19 pandemic.

Consumer Protection

Student Loan Debt Relief Offer with Steep Upfront Fees? That’s a Red Flag

  • The Federal Trade Commission (“FTC”) reached a settlement with student loan debt relief companies SLAC, Inc., Navloan, Inc., and Student Loan Assistance Center, LLC and their owner (collectively “SLAC”) to resolve allegations that they engaged in deceptive or abusive marketing by falsely promising to lower or eliminate consumers’ student loans in return for illegal fees, and by using misleading consumer testimonials, in violation of the FTC Act and the Telemarketing Sales Rule.
  • The FTC’s complaint alleged, among other things, that SLAC promised to lower or eliminate consumers’ student loans in exchange for an upfront fee of $699 and a monthly fee of $39 even though student loan payments could change every year and loan forgiveness cannot be guaranteed. The complaint also alleged that SLAC paid consumers for positive Better Business Bureau reviews without disclosing the monetary incentive in the review.
  • Under the terms of the stipulated final order, the defendants are banned from providing debt relief services. The order also includes a $23.9 million judgement, which will be suspended upon SLAC’s forfeiture of $470,000 in assets.

Data Privacy & Security

“Who Just Joined?” New York Attorney General Questions Sufficiency of Zoom’s Security

  • New York AG Letitia James sent a letter to videoconferencing company Zoom, Inc., seeking information regarding the security measures Zoom has put in place to handle surging traffic resulting from the COVID-19 pandemic and the increased activity of hackers on its platform.
  • According to reports, in the letter AG James expresses concern that Zoom’s “existing security practices might not be sufficient to adapt to the recent and sudden surge in both the volume and sensitivity of data being passed through its network.”
  • In part, the AG’s concerns relate to increasing acts of sabotage by internet trolls who hijack meetings and post offensive messages and images, a practice known as “Zoombombing.”

Labor & Employment

New York Court of Appeals Delivers Win to Attorney General, Gig Worker Over Unemployment Benefits

  • New York AG Letitia James obtained a favorable ruling from the New York State Court of Appeals against the food-delivery company Postmates, Inc., holding that workers for the company are considered employees for the purposes of unemployment benefits.
  • A terminated Postmates courier applied for unemployment benefits and New York’s Unemployment Insurance Appeal Board found the courier was an employee and thus entitled to receive unemployment benefits. Postmates appealed, arguing that its couriers were independent contractors and that it did not exercise sufficient control over their work to create an employer-employee relationship.
  • In its decision, the Court of Appeals found that Postmates exercised sufficient control because it controlled all aspects of pricing, payment, and delivery timing and destination.