Tag Archives: Jehan A. Patterson

National Association of Attorneys General’s 2023 Consumer Protection Spring Conference

by Courtney M. Dankworth, Avi Gesser, Paul D. Rubin, Jehan A. Patterson, Sam Allaman, and Melissa Muse

Photos of the authors

From top left to right: Courtney M. Dankworth, Avi Gesser, and Paul D. Rubin.
From bottom left to right: Jehan A. Patterson, Sam Allaman, and Melissa Muse.
(Photos courtesy of Debevoise & Plimpton)

On May 10−12, 2023, the National Association of Attorneys General (the “NAAG”) held its Spring 2023 Consumer Protection Conference to discuss the intersection of consumer protection issues and technology. During the portion of the conference that was open to the public, panels featuring federal and state regulators, private legal practitioners, and industry experts discussed potential legal liabilities and consumer risks related to artificial intelligence (“AI”), online lending, and targeted advertising.

In this Debevoise Update, we recap some of the panels and remarks, which emphasized regulators’ increased scrutiny of the intersection of consumer protection and emerging technologies, focusing on the leading themes from the conference: transparency, fairness, and privacy.

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CFPB Advisory on Placement Practices May Have Broader Market Implications

by Courtney M. Dankworth, Avi Gesser, Alexandra N. Mogul, Paul D. Rubin, and Jehan A. Patterson

Photos of the authors

From left to right: Courtney M. Dankworth, Avi Gesser, Paul D. Rubin, Alexandra N. Mogul, and Jehan A. Patterson (photos courtesy of Debevoise & Plimpton LLP)

On February 7, 2023, the Consumer Financial Protection Bureau (the “CFPB”) issued an advisory opinion (the “Advisory Opinion”)[1] on certain digital placement practices, which may have broader market implications. The Advisory Opinion provides that the prohibition on referral fees under section 8 of the Real Estate Settlement Procedures Act (“RESPA”) in real estate transactions that involve federally related mortgage loans extends to operators of websites that allow consumers to compare mortgages and other real estate settlement services.[2] Specifically, if a comparison-shopping website ranks lenders or settlement service providers (or utilizes certain design choices intended to steer consumers’ choices of providers) based on compensation received by the website operator rather than on neutral criteria, that compensation may be considered an unlawful referral fee in the CFPB’s view.

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Regulators Should Treat AI Like Employees to Avoid Stifling Innovation

by Avi Gesser, Jehan A. Patterson, Tricia Bozyk Sherno, Frank Colleluori, and Anna R. Gressel

We recently wrote about how rights-based regulatory regimes for artificial intelligence (as opposed to risk-based frameworks) can lead to a misallocation of resources because compliance will require too much effort on low-risk AI (e.g., spam filters, graphics generation for games, inventory management, etc.) and not enough effort on AI that can actually pose a high risk of harm to consumers or the public (e.g., hiring, lending, underwriting, etc.). In this follow-up blog post, we discuss why regulators should view AI risk the same way as employee risk for large companies, and accordingly adopt risk-based regulatory frameworks for AI.

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CFPB’s Report on Buy Now, Pay Later

by Courtney M. Dankworth, Alexandra N. Mogul, Gregory J. Lyons, Courtney Bradford Pike, Zila Reyes Acosta-Grimes, and Jehan A. Patterson

On Thursday, September 16, 2022, the Consumer Financial Protection Bureau (“CFPB” or the “Bureau”) published a report (the “Report”) detailing the regulatory risks of Buy Now, Pay Later (“BNPL”) products in response to last December’s market monitoring orders to five BNPL companies.

BNPL generally refers to a credit product offered by a third-party institution that enables consumers to split the payment for a retail transaction into four equal installments: the first payment is a down payment due at checkout, and the remaining payments are made in two-week intervals over the next six weeks. BNPL lenders do not charge interest; rather, they incur revenue in the form of late fees and, in some instances, transaction fees.

This blog post first provides a brief overview of some of the unique qualities of the BNPL industry, which has been experiencing significant growth over the past few years. It then outlines the key risks to consumers posed by the BNPL industry as highlighted in the Report as well as the Bureau’s stated next steps for increasing its oversight of the industry. At least in the near term, it appears that the Bureau intends to exercise its jurisdiction over BNPL lenders through supervisory examinations and the issuance of interpretive rules or similar guidance to provide consumers with protections similar to those in the traditional credit card space. This blog post outlines steps that BNPL lenders may wish to consider taking to mitigate the potential risks to consumers that the Report identifies.

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