Consumer Finance Monitor

Today’s podcast, which repurposes a recent webinar, is the first in a two-part examination of the CFPB’s use of an interpretive rule, rather than a legislative rule, to expand regulatory requirements for buy-now, pay-later (BNPL) products. Part Two, which will be available next week, will focus on the CFPB’s use of a proposed interpretive rule to expand regulatory requirements for earned wage access (EWA) products. We open with an overview of what interpretive rules are and how they differ procedurally and substantively from legislative rules. The intended use of interpretive rules is to explain the meaning of an existing provision of law, while legislative rules, which require a more complicated and time-consuming procedure, including a notice and comment period under the Administrative Procedures Act, are intended to be used to expand or implement a provision of law. We also discuss why the CFPB chose to use an interpretive rule and why they decided to include a request for comments when that is not required for interpretive rules. We then discuss BNPL products, including how they work and some of the features that have made them popular with consumers and merchants. We point out that the interpretive rule seems to represent a change in the views of the CFPB with regard to BNPL. After providing an overview of the CFPB’s history with the product, including a report issued by the Bureau back in 2022, we delve into the details of the CFPB’s interpretive rule. We discuss how the CFPB seems to be expanding the definition of a “credit card” to include what the Bureau calls a “digital user account,” which is how consumers access their BNPL information. We conclude with thoughts about the implications of the CFPB’s interpretive rule and some of the difficulties that BNPL providers will have complying with the interpretive rule. This includes a discussion of the timing of billing statements and written notice requirements for billing error disputes and merchant disputes. Alan Kaplinsky, former Practice Leader and Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, moderates today’s episode, and is joined by John Culhane, Michael Guerrero, and Joseph Schuster, Partners in the Group. The webinar was recorded before the CFPB issued an FAQ, which purports to answer a number of open questions raised by the BNPL interpretive rule. We recommend that you review the FAQ after listening to this podcast.  

Our podcast today focuses on negative option consumer contracts, i.e., agreements that allow a seller to assume a customer’s silence is an acceptance of an offer. Such contracts are ubiquitous in today’s marketplace. Today’s guests are Kaitlin Caruso, a professor at the University of Maine Law School, and Prentiss Cox, a professor at the University of Minnesota Law School. They have written an article entitled, “Silence as Consumer Consent: Global Regulation of Negative Option Contracts.” The article is available on SSRN and will soon be published in the American University Law Review. The Professors first describe what they perceive to be some of the consumer harms resulting from the use of negative option contracts – consumers signing up for “free trial” offers that convert to term contracts requiring consumers to pay periodic fees after the free trial period has expired; credit card “add-on” products which are sold through telemarketing, like credit life and disability insurance; subscription contracts which make it difficult for consumers to cancel; subscription contracts for services, which are not used for lengthy periods of time while the consumer continues to pay periodic fees. The Professors then describe the existing federal and state statutes and FTC regulations and why they are inadequate to protect consumers. They point out that the current FTC negative option rule was promulgated decades before the development of the Internet and obviously does not begin to deal with online sales of goods and services. Instead, the FTC rule is intended to deal with mail order sales like the “Book-of-the-Month” club. While the FTC has proposed a new negative option rule which is a vast improvement over the existing FTC rule, it is unclear when or if a final rule will be promulgated. The Professors also describe the federal Restore Online Shoppers Confidence Act, and the FTC‘s Telemarketing Sales Rule which tangentially pertain to negative option contracts. Finally, the professors discuss a patchwork quilt of state laws (mostly part of state UDAP statutes) which deal with negative option contracts. After surveying the existing federal and state laws, as well as negative option laws enacted in many foreign countries, the Professors describe the core elements of what a negative option law (be it state or federal) should contain in order to protect consumers. The core elements are: 1.  A prohibition against converting a “free trial” offer into a term contract; 2. A prohibition against automatically converting a negative option contract into another term contract with the contract instead becoming a month-to- month contract.  Alternatively, the negative option contract could convert to a term contract, which could then be canceled during the first 90 days after the consumer sees a charge on a credit card statement. 3. If a subscription to services is not used by the consumer for at least one year, then the seller must notify the consumer of the dormancy, and if the service remains dormant for another three months thereafter, then the seller must cease charging the consumer for the service.  Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, hosts today’s episode.

In today’s podcast, which repurposes a recent webinar, we examine the impact, if any, of a landmark opinion rendered by Judge Daniel Domenico of the Federal District Court for the District of Colorado in a case challenging recently enacted Colorado legislation on interstate loans made from outside Colorado to Colorado residents. We also address the effects this decision and the outcome of this litigation may have on interstate rate exportation by state-chartered banks across the country. We open with a brief history of the interest rate exportation authority of national and state-chartered banks, and theories developed by opponents to attack those exportation powers. Next, we turn to a discussion of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA), the federal legislation adopted to create competitive equality between state-chartered banks and national banks by giving state banks the ability to export the interest rates and late fees allowed by the laws of the state where the bank is located, notwithstanding interest rate and late fee limitations imposed by the borrower’s state. We then focus on the “opt-out rights” conferred on states under Section 525 of DIDMCA, and states that have attempted to exercise (or broaden) this right, including Colorado’s recent adoption of an opt-out statute. We then delve into the details of the current court challenge to the Colorado opt-out statute, including a close examination of the statute itself, the state’s enforcement position, and the complaint filed by the plaintiff trade associations seeking to strike down the statute. We review the briefs filed and oral arguments made, including amicus briefs filed by the FDIC, supporting the state, and by the American Bankers Association and Consumer Bankers Association, supporting the plaintiffs (the latter of which was submitted on behalf of these amici by Ballard Spahr, LLP). We point out that the position taken by the FDIC in its amicus brief is the exact opposite of the position taken by the FDIC in 1991 in the Greenwood Trust Company v. Commonwealth of Massachusetts case in the 1st Circuit Court of Appeals regarding a Massachusetts opt-out statute. In that case, the FDIC agreed with Greenwood, a Delaware state-chartered bank, that the Massachusetts opt-out statute had no effect on the power of a state-chartered, FDIC-insured bank like Greenwood to charge Massachusetts credit card holders the “interest” permitted by Delaware law. The FDIC never acknowledged or explained this flip-flop in its amicus brief filed or during oral argument in the Colorado statute. We proceed with an in-depth discussion of the thorough and thoughtful opinion issued by Judge Domenico granting the plaintiffs’ motion for a preliminary injunction preventing Colorado from enforcing its opt-out statute against their members not located in Colorado who are making loans to Colorado residents from outside Colorado, pending the outcome of the litigation, holding that the plaintiffs are substantially likely to succeed on the merits. This order is currently on appeal in the Tenth Circuit and is in the process of being briefed. We then conclude with thoughts about the potential effect of the Colorado litigation on Iowa’s opt-out statute, in place since 1980, a survey of opt-out legislation pending in other states, and how the Colorado litigation might affect the future of opt-out laws in these and other states. Alan Kaplinsky, former Practice Leader and Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, moderates today’s episode, and is joined by Burt Rublin, Joseph Schuster, and Ron Vaske, Partners in the Group, and Kristen Larson, Of Counsel in the Group.

On July 25, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency (collectively, the agencies) issued a “Joint Statement on Banks’ Arrangements with Third Parties to Deliver Bank Deposit Products and Services” to “note potential risks related to arrangements between banks and third parties to deliver bank deposit products and services to end users”. On the same day, the agencies issued a “Request for Information on Bank-Fintech Arrangements Involving Banking Products and Services Distributed to Consumers and Businesses” (the RFI) The RFI “solicits input on the nature of bank-fintech arrangements, effective risk management practices regarding bank-fintech arrangements, and the implications of such arrangements, including whether enhancements to existing supervisory guidance may be helpful in addressing risks associated with these arrangements.” The comment period for this RFI has been extended through October 30, 2024. In today’s podcast episode, hosted by Alan Kaplinsky, former practice leader and current Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, and featuring Ballard Spahr Partners John Culhane, Jr. and Ronald Vaske, we explore the significance of these agency actions, what they may portend for banks and their non-bank partners, and the agencies’ likely next steps and future areas of scrutiny. We also discuss tactics banks may want to consider in response to these actions and in preparation for potential future developments. Topics addressed in this wide-ranging episode include the scope and coverage of the RFI; which banks and other entities are likely to provide information in response, and why; and the type of input that would be most valuable for banks to provide to the agencies. We review past agency pronouncements, enforcement, and other activity in connection with bank – service provider arrangements. We list and discuss in detail those risks to banks arising in connection with third-party relationships that cause regulators the greatest concerns. We further provide some practical thoughts as to approaches banks may wish to consider now if they are contemplating a new fintech relationship, as well as ways to shore up practices and procedures in connection with existing third-party arrangements. We then conclude with some thoughts about how fintechs and other bank service providers should react to these agency initiatives

On June 28, in Loper Bright v. Raimondo, et al., the Supreme Court overturned the Chevron deference doctrine, a long-standing tenet of administrative law established in 1984 in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. This doctrine directed courts to defer to a government agency’s interpretation of ambiguous statutory language as long as the interpretation was reasonable. However, legal scholars now express widely divergent views as to the scope and likely effects of Loper Bright’s overruling of the Chevron doctrine on the future course of regulatory agency interpretive and enforcement authority. In this two-part episode, which repurposes a recent webinar, a panel of experts delves into the Loper Bright decision, and its underpinnings, rationale, and likely fallout. Our podcast features moderator Alan Kaplinsky, Senior Counsel and former practice leader of Ballard Spahr’s Consumer Financial Services Group; Ballard Spahr Partners Richard Andreano, Jr. and John Culhane, Jr.; and special guests Craig Green, Charles Klein Professor of Law and Government at Temple University Beasley School of Law, and Kent Barnett, recently appointed Dean of the Moritz College of Law at The Ohio State University. Part II opens with an in-depth discussion of the major questions doctrine (which bars agencies from resolving questions of great economic and political significance without clear statutory authority), how it has evolved, and its interaction with Chevron deference. Our experts offer predictions as to the likely role of the major questions doctrine in post-Chevron jurisprudence, and touch on the non-delegation doctrine (which prevents Congress from delegating legislative power). We also refer to the effects of another recent Supreme Court decision, Corner Post, Inc. v Board of Governors of the Federal Reserve System, which expands the time during which entities new to an industry may challenge longstanding agency rules. We then consider the practical effects of the Loper Bright and Corner Post decisions on pending and future litigation. Partners Richard Andreano and John Culhane discuss concrete examples of cases currently progressing through the courts that already are evidencing the effects of Loper Bright, and ways in which arguments now are being articulated or might be articulated in litigation challenging a number of regulatory rules and interpretations in the absence of Chevron deference. We proceed to explore other significant topics including the validity of prior decisions of the Supreme Court and lower courts that were based exclusively on the Chevron doctrine. Our panel then opines on whether Loper Bright, both in its entirety and as to certain of its specific constituent elements, is “good” or “bad” for the consumer financial services industry and for regulated entities in general. In conclusion, Mr. Andreano cites concerns about how courts may apply alternative deference guidance that remains in place (including Skidmore deference, discussed in Part I of this podcast), and Mr. Culhane expresses hope that the outcome in Loper Bright might move agencies to engage in more thorough, thoughtful, and precise analysis in the rulemaking process.

On June 28, in Loper Bright v. Raimondo, et al., the Supreme Court overturned the Chevron deference doctrine, a long-standing tenet of administrative law established in 1984 in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. This doctrine directed courts to defer to a government agency’s interpretation of a statute if the statute was ambiguous regarding, or simply did not address, the issue before the court, as long as the interpretation was reasonable. However, legal scholars now express widely divergent views as to the scope and likely effects of Loper Bright’s overruling of the Chevron doctrine on the future course of regulatory agency interpretive and enforcement authority. In this two-part episode, which repurposes a recent webinar, a panel of experts delves into the Loper Bright decision, and its underpinnings, rationale, and likely fallout. Our podcast features moderator Alan Kaplinsky, Senior Counsel and former practice leader of Ballard Spahr’s Consumer Financial Services Group; Ballard Spahr Partners Richard Andreano, Jr. and John Culhane, Jr.; and special guests Craig Green, Charles Klein Professor of Law and Government at Temple University Beasley School of Law, and Kent Barnett, recently appointed Dean of the Moritz College of Law at The Ohio State University. In Part I, we first review the history of judicial deference to agency interpretations in American courts throughout the nineteenth and twentieth centuries, culminating in the advent of Chevron deference.  We then discuss post-Chevron developments, including shifts in judicial and political views of the role courts should play in interpretation of agency action. Then, we turn to an in-depth discussion of the majority opinion in Loper Bright, authored by Chief Justice Roberts, including its reliance on the Administrative Procedure Act to invalidate Chevron deference and the opinion’s numerous ambiguities that result in a “very, very fuzzy” outcome, leaving regulated industries facing uncertainty as to whether or not courts will uphold agency rules. We then explore other topics including the majority opinion’s endorsement of an approach courts should take to review agency actions as described in a 1940’s case, Skidmore v. Swift & Co.; what deference may or may not be given to agency policy-making and fact-finding in light of Loper Bright; and the divergent views of some legal scholars who suggest that many courts will continue to give broad deference to agency views notwithstanding Loper Bright.

On May 30, the Supreme Court issued its opinion in Cantero v. Bank of America, reversing and remanding the case to the Second Circuit. Rather than articulating a bright line test for preemption, the Supreme Court instructed the circuit court to conduct a “nuanced analysis” to determine whether the National Bank Act preempts a New York state law that requires the payment of 2% interest on mortgage escrow accounts. Per the Supreme Court, the Second Circuit must apply the preemption standard described in the Dodd-Frank Act, which provides that a state consumer financial law is preempted “only if” it discriminates against national banks in comparison with state banks; is preempted by another Federal law; or “prevents or significantly interferes with the exercise by the national bank of its powers,” as determined “in accordance with the legal standard for preemption in the decision of the Supreme Court of the United States” in Barnett Bank, N.A. v. Nelson. See 12 U.S.C. § 25b(b)(1). We open today’s podcast episode, which repurposes a recent webinar roundtable covering the Cantero decision, with a new preface by moderator Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group. This preface provides an update on an important post-Cantero development: a Ninth Circuit opinion issued on August 23 in another preemption case, Kivett v. Flagstar Bank. Alan explains why the Ninth Circuit’s new opinion in Kivett applies a standard that is totally inconsistent with the instructions provided by the Supreme Court in Cantero. Today’s episode then proceeds with a discussion featuring Alan Kaplinsky, Ballard Spahr Partner Joseph Schuster, and four attorneys who each filed an amicus brief in Cantero. These experts share their reactions and explore potential next steps and possible outcomes as the Second Circuit and other courts proceed with efforts to comply with the Supreme Court’s Cantero mandate.

The CFPB recently issued yet another final rule the agency says will help deter violations of consumer protection laws. This rule requires certain nonbank entities to register with the CFPB upon becoming subject to any order from local, state, or federal agencies or courts involving consumer protection law violations. The registry rule applies to any supervised or non-supervised nonbank that engages in offering or providing a consumer financial product or service and any of its service provider affiliates unless excluded. The CFPB will require the nonbank entities that are subject to the rule to register the specific terms and conditions on an annual basis. There will be public access to this database. We also address the CFPB’s recent circular in which the agency stated that certain terms in consumer financial product or service contracts may constitute violations of consumer protection law. Notably, the circular states that the use of prefatory language that often appears in consumer contracts—such as “subject to applicable law” or “to the extent permitted by law”—will not immunize contract language from being deceptive. We explain why practically every consumer contract in use today technically violates the CFPB circular. We also explain how we are helping several clients review and revise their consumer contracts to comply with the circular. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, leads the discussion, and is joined by John Culhane, Richard Andreano, Joseph Schuster, and Reid Herlihy, partners in the Group.

A great number of fintechs are contemplating owning a bank or obtaining a banking charter—either a national bank charter, a state bank charter or a special purpose charter. In this episode, we are joined by our special guest Michele Alt, co-founder and partner of Klaros Group, an investment and advisory firm, and Scott Coleman, a partner in our Consumer Financial Services Group who leads our banking practice. Both Michele and Scott help banks and fintechs navigate the complicated regulatory issues that are critical to their growth and sustainability. We discuss the reasons why fintechs might want to become banks, and why regulators are reluctant to grant them charters. Alt says that a bank charter provides a fintech with low-cost funding in the form of FDIC-insured deposits and it eliminates the applicability of myriad state licensing requirements. On the other hand, she says, there are onerous capital requirements and regulators often are reluctant to embrace innovation. We discuss how some regulators fear that fintechs are fueled by growth over profits and how it could lead to lax management practices. Regulators have reason to be concerned about those risks, and if you charter a bank, you are responsible for it. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, leads the conversation.

The CFPB and state regulators and legislators have medical debt in their crosshairs. In this episode, we’re joined by Chris Eastman, CEO of the Pendrick Group, a Cerberus portfolio company that specializes in financial services solutions for healthcare companies. We discuss the differences between medical debt and other types of debt, as well as how states have been regulating medical debt including the collection of medical debt. Mr. Eastman discusses his company’s efforts to provide cash flows into hospitals and other healthcare providers that are operating at razor-thin margins. We also discuss the CFPB’s assertion that medical debt is less predictive than other sources of debt in determining the creditworthiness of a consumer. Mr. Eastman discusses how medical debt may be a valuable indicator when assessing the financial stress of a consumer. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, leads the conversation, and is joined by Joseph Schuster, a Partner in the group.

Rewards programs drive consumer choice and activity in connection with credit cards and other financial services. The CFPB has reported the most important element by far that influences a consumer’s decision to apply for a specific credit card is the rewards program associated with the card. Further, rewards can affect the consumer's choice at the point of sale as to which card to use. In this podcast episode, which repurposes a recent webinar, we explore recent trends in scrutiny of credit card rewards programs and other rewards programs by state and federal regulators and lawmakers. We also address laws and regulations, enforcement, emerging pitfalls, and best practices applicable to rewards programs. We open with a review of how rewards have been treated in the CFPB's reports on the credit card market since 2013, and the significance of and learnings from these reports. We then focus on complaints and federal regulators’ enforcement activity relating to rewards programs. Next, we turn to state law developments affecting rewards programs, including laws that specifically apply to rewards programs as well as contract, interchange, and UDAP / UDAAP laws. We then delve into other topics including the current focus on airline – credit card rewards programs by the Department of Transportation and the CFPB; the CFPB’s May 2024 report about credit card rewards; and important elements card issuers should keep in mind in the context of co-brand credit card rewards programs. We then conclude with a discussion on best practices to consider in mitigating risks and maximizing the benefits of rewards programs. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, moderates today’s episode, and is joined by Michael Guerrero and Joseph Schuster, Partners in the Group, and Kristen Larson, Of Counsel in the Group.

Special guest Professor Alan Trammell of Washington and Lee University School of Law joins us today for a deep dive into universal injunctions and the related topics of associational standing and judicial forum shopping, and how these elements come into play in litigation challenging regulations and other government policies and actions. Recent developments in litigation critical to the consumer financial services industry have brought universal injunctions into the spotlight. We begin today’s episode by providing a working definition of a universal injunction, some historical background, and examples that illustrate the benefits, effects and power of this sweeping remedy. We then turn to an in-depth discussion of objections raised by detractors; real-world concerns that may flow from universal injunctions, including a “one and done problem” cited by Professor Trammell; and various circumstances where Professor Trammell argues universal injunctions are and are not appropriate. We also cover associational standing and its interaction with universal injunction: whether and when a trade association should have standing to bring an action seeking relief for its members, and how and when the outcome of the action might expand into a universal injunction that also would benefit non-members. Our next areas of focus are forum shopping and judge shopping, particularly in the context of such litigation brought by an association. We then turn to speculation as to whether and how the U.S. Supreme Court may proceed to bring some uniformity to how the courts are dealing with these issues. Our episode concludes with comments on recent input on these topics from sources such as Congress and the Judicial Conference of the United States. Alan Kaplinsky, former practice leader and current Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, hosts this week’s episode.

“Buy Now, Pay Later” (BNPL) products emerged relatively recently as a new approach enabling consumers to enjoy the ability to make a purchase and then pay for it over time. Today’s episode, during which we explore the evolution of BNPL products and important recent developments in BNPL regulation, is hosted by Alan Kaplinsky, former practice leader and current Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, and features Ballard Spahr Partners Michael Guerrero and Joseph Schuster. We first discuss the structure and mechanics of BNPL products, and the benefits they afford to consumers, merchants, and creditors. Next, we turn to a discussion of regulators’ reactions to BNPL, specifically the activities of the CFPB leading up to its new interpretive rule, effective July 30th, which equates BNPL products with credit cards and characterizes BNPL providers as card issuers or creditors, thus subjecting them to the constraints and requirements of the Truth in Lending Act (TILA) and Regulation Z. We then explore the CFPB’s BNPL interpretive rule in detail, including an analysis of the concerns raised by the CFPB in connection with BNPL offerings; the CFPB’s introduction of the “digital user account” concept and other theories to bring BNPL into the purview of TILA and Regulation Z; and the complexities and uncertainties now faced by BNPL providers as they struggle to comply. We conclude with a look at the possibilities of a legal challenge to the CFPB’s BNPL interpretive rule, given recent Supreme Court decisions, and state law considerations for BNPL providers.

The 1978 landmark opinion in Marquette National Bank v. First of Omaha Service Corp held that under the National Bank Act, a national bank has the right to export the interest rate authorized by the state where the bank is located to borrowers located elsewhere. Section 521 of the Depository Institutions Deregulation and Monetary Control Act of 1980 ("DIDMCA") conferred equivalent rate exportation powers on state-chartered, FDIC-insured banks. These interest rate exportation powers (which also extend to certain fees), coupled with technological advances in recent years and the advent of “bank-model” and “banking as a service” (BaaS) programs, have created a robust, competitive smorgasbord of credit products for consumers. However, rate exportation, and the programs it enables, increasingly are subject to challenges from a variety of sources. In this two-part episode, which repurposes portions of a recent webinar, we describe the nature of these attacks, the defenses being deployed by the industry, and who is winning these contests so far, and address what the future may hold for rate exportation. We start Part II with a discussion of states that have adopted, or are considering, “true lender” statutes that aim to recharacterize fintechs and other bank service providers as lenders, thus defeating the originating bank’s ability to export rates and fees. We then discuss “true lender” enforcement actions and efforts by state attorneys general, and “true lender” litigation developments including cases where arbitration clauses have been upheld, causing arbitration to be ordered in putative class actions. Next, we talk about attacks on the “valid when made” doctrine (which provides that a loan that was non-usurious when it was made doesn't become usurious after it is transferred to a third party), and “valid when made” regulations adopted by both the OCC and FDIC. We proceed with some tips on how prevailing industry plaintiffs who seek to overturn statutes inimical to rate exportation might recover attorney’s fees. We then conclude with a review of recent and pending Supreme Court cases whose outcomes have the potential to affect rate exportation powers and related regulations.   Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, moderates episode, joined by John Culhane, Joseph Schuster, and Ronald Vaske, Partners in the Group, and Mindy Harris and Kristen Larson, Of Counsel in the Group.

The 1978 landmark opinion in Marquette National Bank v. First of Omaha Service Corp held that under the National Bank Act, a national bank has the right to export the interest rate authorized by the state where the bank is located to borrowers located elsewhere. Section 521 of the Depository Institutions Deregulation and Monetary Control Act of 1980 ("DIDMCA") conferred equivalent rate exportation powers on state-chartered, FDIC-insured banks. These interest rate exportation powers (which also extend to certain fees), coupled with technological advances in recent years and the advent of “bank-model” and “banking as a service” (BaaS) programs, have created a robust, competitive smorgasbord of credit products for consumers. However, rate exportation, and the programs it enables, increasingly are subject to challenges from a variety of sources. In this two-part episode, which repurposes portions of a recent webinar, we describe the nature of these attacks, the defenses being deployed by the industry, and who is winning these contests so far, and address what the future may hold for rate exportation. In Part I, we first review a brief history of rate exportation, and explore the three primary theories used to attack rate exportation. We then focus on current and pending state laws and bills seeking to “opt out” of DIDMCA’s rate exportation authority. Next, we turn to the current court battle being waged in Colorado, where three trade groups recently won a preliminary injunction against enforcement of Colorado’s recently adopted opt-out legislation, and discuss the decision and its ramifications, including potential impacts on existing and pending opt-out legislation in other states, implications for nonmembers of the three trade group plaintiffs, and the prospects for enforcement in Colorado and other opt-out states by the FDIC based on the position (contrary to the preliminary injunction) advocated in its amicus brief. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, moderates episode, joined by Ronald Vaske, a Partner in the Group, and Mindy Harris, Of Counsel in the Group.