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InfoBytes
CONSUMER FINANCE HEADLINES & DEADLINES FOR OUR CLIENTS AND FRIENDS
Topics – Covered This Week (Click to View)
FEDERAL ISSUES
Freddie Mac and Fannie Mae Adopt Non-Traditional Mortgage Guidance. Today, the government sponsored enterprises (GSEs), Freddie Mac and Fannie Mae, announced that they will require all nontraditional mortgage loans with an application date on or after September 13, 2007 to comply with the federal banking agencies’ Interagency Guidance on Nontraditional Mortgage Product Risk (reported in the September 29, 2006 issue of InfoBytes). Both Freddie Mac’s and Fannie Mae’s announcements specifically state that they had been “directed” by the Office of Federal Housing Enterprise Oversight (OFHEO) to adopt the requirements. In a separate announcement also released today, James Lockhart, Director of OFHEO, said that “OFHEO made this guidance applicable to Fannie Mae and Freddie Mac.” Both of the GSEs also announced today that they intend to implement a program for subprime mortgages, following the recent issuance of final guidance on subprime mortgage lending (reported in the June 29th issue of InfoBytes). For the official OFHEO release, please see http://www.ofheo.gov/media/pdf/NTM.pdf.
HUD Creates New Division to Focus on Fair Lending. On July 11, the Department of Housing and Urban Development (HUD) announced it would create a new Fair Lending Division that will primarily investigate discriminatory lending claims under the Fair Housing Act. The Division, which would be under HUD’s Office of Fair Housing and Equal Opportunity, has already retained a “senior-level” economist, and intends to hire five “fair lending specialists.” This follows a significant increase in settlements between lenders and HUD over discriminatory lending patterns (most recently reported in the June 22nd issue of InfoBytes). The Division will also conduct oversight of Fannie Mae and Freddie Mac to ensure “their underwriting policies and practices comply with fair lending laws.” The official HUD press release can be found at http://www.hud.gov/news/release.cfm?content=pr07-103.cfm.
OCC Proposes Rule to Reduce Regulatory Burden. On July 3, the Office of the Comptroller of the Currency (OCC) published in the federal register a proposed rule that would make a large number of technical and substantive amendments “in order to reduce unnecessary regulatory burden.” Some of the proposed amendments would (i) grant national banks additional flexibility with regard to permitted pooled investments, (ii) allow national banks greater latitude in selecting the indices used for adjustable rate mortgage interest rates, and (iii) reduce and clarify requirements surrounding operating subsidiary creation and activities. Comments are due by September 4, 2007. On July 12, the OCC issued a bulletin to all national banks informing them of the proposed rule, which can be found at http://www.occ.treas.gov/ftp/bulletin/2007-23.html.
New and Revised CRA Questions and Answers Proposed. On July 11, the federal banking and thrift regulatory agencies (FRB, FDIC, OCC, and OTS) made available for public comment nine new questions and answers to be added to the Interagency Questions and Answers Regarding Community Reinvestment. The new questions and answers address, among other things, investments in minority- or women-owned financial institutions and low-income credit unions, small business loans secured by a one-to-four family residence, and refinanced or renewed community development loans. Revisions to published questions and answers were also made available for public comment. Comments are due by September 10, 2007. To view the joint press release, which provides a link to the Federal Register notice, please see http://www.federalreserve.gov/boarddocs/press/bcreg/2007/20070711/default.htm.
SEC Adopts Rule on Fraud by Hedge Fund Advisers of Pooled Investment Vehicles. On July 11, the Securities and Exchange Commission (SEC) voted unanimously to adopt a new antifraud rule under Section 206 of the 1940 Investment Advisers Act that applies to all investment advisers, regardless of whether the adviser is registered under the Advisers Act, and does not distinguish among types of pooled investment vehicles. Rule 206(4)-8 prohibits advisers from making false or misleading statements to investors or prospective investors in pooled investment vehicles, and renders such statements a fraudulent, deceptive or manipulative act, practice or course of business for the investment adviser, thus giving the SEC the ability to bring enforcement action under the Advisers Act. The SEC proposed the Rule in December 2006, subsequent to the decision in Goldstein v. SEC, 451 F.3d 873 (D.C. Cir. 2006), which vacated a rule adopted by the SEC in 2004 requiring certain hedge fund advisers to register under the Advisers Act. Prior to 2004, investments in pooled investment vehicles were subject only to antifraud provisions of the Securities Act of 1933 and Securities Exchange Act of 1934 under Rule 10b-5 because the antifraud provisions under the Advisers Act operated only with respect to "clients" [the fund] and not the individual investors in the fund. Pursuant to Rule 206(4)-8, investors in hedge funds, private equity funds, venture capital funds and mutual funds, will now be protected against any fraudulent activity of the adviser. The new rule will take effect 30 days after its publication in the Federal Register. The full text of the release will be posted on the SEC website as soon as possible. To view the press release, go to http://www.sec.gov/news/press/2007/2007-133.htm.
OCC and Puerto Rico Agree to Exchange Consumer Complaint Information. On July 10, the OCC and Puerto Rico’s Office of the Commissioner of Financial Institutions (OCFI) announced they had signed a Memorandum of Understanding (MoU) to establish a process of sharing consumer complaints. Puerto Rico is the twentieth jurisdiction to announce a MoU with the OCC since the OCC and the Conference of State Bank Supervisors agreed to a template late last year (see the December 1, 2006 issue of InfoBytes). For the OCC press release, and a list of states that have signed MoU’s, please see http://www.occ.treas.gov/ftp/release/2007-69.htm.
GAO Study Finds Weak Link Between Breaches and ID Theft. The Government Accountability Office (GAO) recently released a report on data security breaches entitled Personal Information: Data Breaches Are Frequent, but Evidence of Resulting Identity Theft Is Limited; However, the Full Extent is Unknown. The GAO studied several high-profile data security breaches and interviewed law enforcement representatives, industry representatives and others. The GAO did not find evidence that financial identity theft commonly occurred as a result of data security breaches. In addition, the GAO stated that a risk-based notification standard for data breaches would be appropriate. To access the report, see http://www.gao.gov/new.items/d07737.pdf.
STATE ISSUES
Rhode Island Passes Loan Originator Licensing Bill. On June 23, Rhode Island’s legislature passed S.B. 104, a bill establishing rules and procedures for the licensure of loan originators. The bill, which became law on July 5 without the governor’s signature, initially requires that all loan originators register with the Department of Business Regulation by March, 31, 2008. On January 1, 2009, this registration requirement becomes a full licensing requirement. In addition, by March 31, 2010 all loan originators must complete a 24 credit hour training course. Every year after that time, loan originators must complete an 8 hour continuing education course. The bill also gives the Director of the Department of Business Regulation the authority to issue rules and regulations governing licensees. Finally, the bill increases the bond requirements for loan brokers and lenders to $20,000 and $50,000 respectively. Text of the bill can be found at http://www.rilin.state.ri.us//BillText07/SenateText07/S0104.pdf.
Connecticut Signs on to Participate in National Mortgage Licensing System. On June 25, the Governor of Connecticut signed into law H.B. 7116 which will take effect September 30, 2008, and requires all mortgage lenders, brokers, and originators, making first or secondary mortgage loans, to pursue licensure under the national mortgage licensing system (NMLS). The NMLS (previously reported in the October 13, 2006 issue of InfoBytes) is a uniform licensing system created jointly by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators to aid the state regulators in the processing of applications. We note that in adopting the NMLS, the Commissioner may now conduct a criminal record check and require the applicant to submit fingerprints to be evaluated by the national mortgage licensing system and the FBI. The law amends Connecticut General Statutes, Title 36a, Chapter 668, Part 1, et. seq., which required mortgage brokers, lenders, and originators to apply for licensing directly from the State Banking Commissioner. The full text of the act may be found at http://www.cga.ct.gov/2007/ACT/PA/2007PA-00156-R00HB-07116-PA.htm.
Vermont Attorney General Furnishes SSN Protection Guidance. On June 29, Vermont’s Attorney General Issued guidance intended to help businesses and government entities comply with newly enacted Vermont restrictions on the use of Social Security Numbers (SSNs). These restrictions are contained in Vermont’s Social Security Number Protection Act, located at 9 Vt. Stat. Ann., tit. 9, § 2440. The Attorney General’s guidance provides seven principles, each with more detailed explanations, to comply with the Act: (i) reduce the collection of SSNs, (ii) Inform individuals of policies and procedures affecting SSNs when collecting this information, (iii) Eliminate the public display of SSNs, (iv) Control access to SSNs, (v) Develop internal security safeguard procedures to protect SSNs, (vi) Make your organization accountable for protecting SSNs, and (vii) institute practices to safely destroy SSNs and other personal information. To view the Attorney General’s guidance, go to http://www.atg.state.vt.us/upload/1183130595_SSN_Guidance.pdf.
Florida Passes Law Permitting Electronic Notarization. On June 28, Florida Governor Charlie Crist signed CS/H.B. 1305 authorizing and outlining the procedures and requirements for use of notary public seal with electronic signatures. The electronic signature of the notary public must contain the following: (i) the full name of the notary public; (ii) the words “Notary Public State of Florida;” (iii) the date of expiration of the commission of the notary public; and (iv) the notary public’s commission number. This law will take effect on January 1, 2008. Full text of the bill may be found at http://www.myfloridahouse.gov/Sections/Documents/loaddoc.aspx? FileName=_h1305er.doc&DocumentType=Bill&BillNumber=1305&Session=2007.
COURTS
Service Providers Settle Credit Repair Class Action. On June 12, a federal district court in Georgia approved a class action settlement between consumers and Equifax Consumer Services, Inc., Fair Isaac Corporation, and myFICO Consumer Services, Inc. See Hillis v. Equifax Consumer Services, Inc., No. 104-CV-3400-TCB, 107-CV-314-TCB, 2007 WL 1953464 (N.D. Ga. June 12, 2007). The settlement, which involved two consolidated cases with similar claims, arose from the consumers’ purchase of the defendants’ credit-related services, such as a FICO score simulator that allows consumers to see how certain actions may affect their credit scores over time. See Hillis v. Equifax Consumer Services, Inc., 237 F.R.D. 491 (N.D. Ga. 2006) and Slack v. Fair Isaac Corp., 390 F. Supp. 2d 906 (N.D. Cal. 2005). The consumers, whose credit scores allegedly did not improve when they made the suggested changes, claimed that the defendants were credit repair organizations under the federal Credit Repair Organizations Act (CROA) and California’s Credit Services Act. Although the district court in the Hillis case had denied both class certification and the plaintiffs’ motion for partial summary judgment on the issue of whether the defendants were “credit repair organizations” under CROA, the parties eventually reached a class-wide settlement. The final settlement order requires the defendants to, among other things, maintain prominent disclaimers stating that they are not credit repair organizations and do not provide credit repair advice. The defendants have also agreed to pay attorneys’ fees and costs of up to $4 million and provide putative class members free credit-related services, which, according to the order, are potentially worth at least $100 million. For a copy of the relevant opinions or the final settlement order, please contact .
Illinois Court Allows Private Right of Action under Federal “Junk Fax” Law. An Illinois appellate court has found that a plaintiff may pursue a private right of action in state court under the federal Telephone Consumer Protection Act, better known as the “junk fax” law. First Capital Mortgage Corp. v. Union Federal Bank of Indianapolis, No. 1-06-0459 (Ill. App. Ct., June 29, 2007). In this case, the plaintiff alleged that Union Federal sent it hundreds of unsolicited faxes. First Capital Mortgage sued for damages under the junk fax law, and for conversion. The trial court dismissed the federal law claim, and First Capital Mortgage appealed. The appellate court noted that the Act provides that a “person or entity may, if otherwise permitted by the laws or rules of a court of a State, bring in an appropriate court of that State . . . an action to recover . . . $500 damages for each . . . violation.” The court said that the “if otherwise permitted” language would bar the private right of action only if a “neutral rule of judicial administration” precluded the court from having jurisdiction over the claim. The court found that there were no jurisdictional or other “neutral” rules that would bar the federal-law claim from being heard in state court, so the court remanded the claim to the trial court for further proceedings. For a copy of the opinion, please contact .
Freddie Mac and Fannie Mae Adopt Non-Traditional Mortgage Guidance. Today, the government sponsored enterprises (GSEs), Freddie Mac and Fannie Mae, announced that they will require all nontraditional mortgage loans with an application date on or after September 13, 2007 to comply with the federal banking agencies’ Interagency Guidance on Nontraditional Mortgage Product Risk (reported in the September 29, 2006 issue of InfoBytes). Both Freddie Mac’s and Fannie Mae’s announcements specifically state that they had been “directed” by the Office of Federal Housing Enterprise Oversight (OFHEO) to adopt the requirements. In a separate announcement also released today, James Lockhart, Director of OFHEO, said that “OFHEO made this guidance applicable to Fannie Mae and Freddie Mac.” Both of the GSEs also announced today that they intend to implement a program for subprime mortgages, following the recent issuance of final guidance on subprime mortgage lending (reported in the June 29th issue of InfoBytes). For the official OFHEO release, please see http://www.ofheo.gov/media/pdf/NTM.pdf.
HUD Creates New Division to Focus on Fair Lending. On July 11, the Department of Housing and Urban Development (HUD) announced it would create a new Fair Lending Division that will primarily investigate discriminatory lending claims under the Fair Housing Act. The Division, which would be under HUD’s Office of Fair Housing and Equal Opportunity, has already retained a “senior-level” economist, and intends to hire five “fair lending specialists.” This follows a significant increase in settlements between lenders and HUD over discriminatory lending patterns (most recently reported in the June 22nd issue of InfoBytes). The Division will also conduct oversight of Fannie Mae and Freddie Mac to ensure “their underwriting policies and practices comply with fair lending laws.” The official HUD press release can be found at http://www.hud.gov/news/release.cfm?content=pr07-103.cfm.
Rhode Island Passes Loan Originator Licensing Bill. On June 23, Rhode Island’s legislature passed S.B. 104, a bill establishing rules and procedures for the licensure of loan originators. The bill, which became law on July 5 without the governor’s signature, initially requires that all loan originators register with the Department of Business Regulation by March, 31, 2008. On January 1, 2009, this registration requirement becomes a full licensing requirement. In addition, by March 31, 2010 all loan originators must complete a 24 credit hour training course. Every year after that time, loan originators must complete an 8 hour continuing education course. The bill also gives the Director of the Department of Business Regulation the authority to issue rules and regulations governing licensees. Finally, the bill increases the bond requirements for loan brokers and lenders to $20,000 and $50,000 respectively. Text of the bill can be found at http://www.rilin.state.ri.us//BillText07/SenateText07/S0104.pdf.
Connecticut Signs on to Participate in National Mortgage Licensing System. On June 25, the Governor of Connecticut signed into law H.B. 7116 which will take effect September 30, 2008, and requires all mortgage lenders, brokers, and originators, making first or secondary mortgage loans, to pursue licensure under the national mortgage licensing system (NMLS). The NMLS (previously reported in the October 13, 2006 issue of InfoBytes) is a uniform licensing system created jointly by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators to aid the state regulators in the processing of applications. We note that in adopting the NMLS, the Commissioner may now conduct a criminal record check and require the applicant to submit fingerprints to be evaluated by the national mortgage licensing system and the FBI. The law amends Connecticut General Statutes, Title 36a, Chapter 668, Part 1, et. seq., which required mortgage brokers, lenders, and originators to apply for licensing directly from the State Banking Commissioner. The full text of the act may be found at http://www.cga.ct.gov/2007/ACT/PA/2007PA-00156-R00HB-07116-PA.htm.
OCC Proposes Rule to Reduce Regulatory Burden. On July 3, the Office of the Comptroller of the Currency (OCC) published in the federal register a proposed rule that would make a large number of technical and substantive amendments “in order to reduce unnecessary regulatory burden.” Some of the proposed amendments would (i) grant national banks additional flexibility with regard to permitted pooled investments, (ii) allow national banks greater latitude in selecting the indices used for adjustable rate mortgage interest rates, and (iii) reduce and clarify requirements surrounding operating subsidiary creation and activities. Comments are due by September 4, 2007. On July 12, the OCC issued a bulletin to all national banks informing them of the proposed rule, which can be found at http://www.occ.treas.gov/ftp/bulletin/2007-23.html.
New and Revised CRA Questions and Answers Proposed. On July 11, the federal banking and thrift regulatory agencies (FRB, FDIC, OCC, and OTS) made available for public comment nine new questions and answers to be added to the Interagency Questions and Answers Regarding Community Reinvestment. The new questions and answers address, among other things, investments in minority- or women-owned financial institutions and low-income credit unions, small business loans secured by a one-to-four family residence, and refinanced or renewed community development loans. Revisions to published questions and answers were also made available for public comment. Comments are due by September 10, 2007. To view the joint press release, which provides a link to the Federal Register notice, please see http://www.federalreserve.gov/boarddocs/press/bcreg/2007/20070711/default.htm.
HUD Creates New Division to Focus on Fair Lending. On July 11, the Department of Housing and Urban Development (HUD) announced it would create a new Fair Lending Division that will primarily investigate discriminatory lending claims under the Fair Housing Act. The Division, which would be under HUD’s Office of Fair Housing and Equal Opportunity, has already retained a “senior-level” economist, and intends to hire five “fair lending specialists.” This follows a significant increase in settlements between lenders and HUD over discriminatory lending patterns (most recently reported in the June 22nd issue of InfoBytes). The Division will also conduct oversight of Fannie Mae and Freddie Mac to ensure “their underwriting policies and practices comply with fair lending laws.” The official HUD press release can be found at http://www.hud.gov/news/release.cfm?content=pr07-103.cfm.
OCC and Puerto Rico Agree to Exchange Consumer Complaint Information. On July 10, the OCC and Puerto Rico’s Office of the Commissioner of Financial Institutions (OCFI) announced they had signed a Memorandum of Understanding (MoU) to establish a process of sharing consumer complaints. Puerto Rico is the twentieth jurisdiction to announce a MoU with the OCC since the OCC and the Conference of State Bank Supervisors agreed to a template late last year (see the December 1, 2006 issue of InfoBytes). For the OCC press release, and a list of states that have signed MoU’s, please see http://www.occ.treas.gov/ftp/release/2007-69.htm.
Service Providers Settle Credit Repair Class Action. On June 12, a federal district court in Georgia approved a class action settlement between consumers and Equifax Consumer Services, Inc., Fair Isaac Corporation, and myFICO Consumer Services, Inc. See Hillis v. Equifax Consumer Services, Inc., No. 104-CV-3400-TCB, 107-CV-314-TCB, 2007 WL 1953464 (N.D. Ga. June 12, 2007). The settlement, which involved two consolidated cases with similar claims, arose from the consumers’ purchase of the defendants’ credit-related services, such as a FICO score simulator that allows consumers to see how certain actions may affect their credit scores over time. See Hillis v. Equifax Consumer Services, Inc., 237 F.R.D. 491 (N.D. Ga. 2006) and Slack v. Fair Isaac Corp., 390 F. Supp. 2d 906 (N.D. Cal. 2005). The consumers, whose credit scores allegedly did not improve when they made the suggested changes, claimed that the defendants were credit repair organizations under the federal Credit Repair Organizations Act (CROA) and California’s Credit Services Act. Although the district court in the Hillis case had denied both class certification and the plaintiffs’ motion for partial summary judgment on the issue of whether the defendants were “credit repair organizations” under CROA, the parties eventually reached a class-wide settlement. The final settlement order requires the defendants to, among other things, maintain prominent disclaimers stating that they are not credit repair organizations and do not provide credit repair advice. The defendants have also agreed to pay attorneys’ fees and costs of up to $4 million and provide putative class members free credit-related services, which, according to the order, are potentially worth at least $100 million. For a copy of the relevant opinions or the final settlement order, please contact .
SEC Adopts Rule on Fraud by Hedge Fund Advisers of Pooled Investment Vehicles. On July 11, the Securities and Exchange Commission (SEC) voted unanimously to adopt a new antifraud rule under Section 206 of the 1940 Investment Advisers Act that applies to all investment advisers, regardless of whether the adviser is registered under the Advisers Act, and does not distinguish among types of pooled investment vehicles. Rule 206(4)-8 prohibits advisers from making false or misleading statements to investors or prospective investors in pooled investment vehicles, and renders such statements a fraudulent, deceptive or manipulative act, practice or course of business for the investment adviser, thus giving the SEC the ability to bring enforcement action under the Advisers Act. The SEC proposed the Rule in December 2006, subsequent to the decision in Goldstein v. SEC, 451 F.3d 873 (D.C. Cir. 2006), which vacated a rule adopted by the SEC in 2004 requiring certain hedge fund advisers to register under the Advisers Act. Prior to 2004, investments in pooled investment vehicles were subject only to antifraud provisions of the Securities Act of 1933 and Securities Exchange Act of 1934 under Rule 10b-5 because the antifraud provisions under the Advisers Act operated only with respect to "clients" [the fund] and not the individual investors in the fund. Pursuant to Rule 206(4)-8, investors in hedge funds, private equity funds, venture capital funds and mutual funds, will now be protected against any fraudulent activity of the adviser. The new rule will take effect 30 days after its publication in the Federal Register. The full text of the release will be posted on the SEC website as soon as possible. To view the press release, go to http://www.sec.gov/news/press/2007/2007-133.htm.
Service Providers Settle Credit Repair Class Action. On June 12, a federal district court in Georgia approved a class action settlement between consumers and Equifax Consumer Services, Inc., Fair Isaac Corporation, and myFICO Consumer Services, Inc. See Hillis v. Equifax Consumer Services, Inc., No. 104-CV-3400-TCB, 107-CV-314-TCB, 2007 WL 1953464 (N.D. Ga. June 12, 2007). The settlement, which involved two consolidated cases with similar claims, arose from the consumers’ purchase of the defendants’ credit-related services, such as a FICO score simulator that allows consumers to see how certain actions may affect their credit scores over time. See Hillis v. Equifax Consumer Services, Inc., 237 F.R.D. 491 (N.D. Ga. 2006) and Slack v. Fair Isaac Corp., 390 F. Supp. 2d 906 (N.D. Cal. 2005). The consumers, whose credit scores allegedly did not improve when they made the suggested changes, claimed that the defendants were credit repair organizations under the federal Credit Repair Organizations Act (CROA) and California’s Credit Services Act. Although the district court in the Hillis case had denied both class certification and the plaintiffs’ motion for partial summary judgment on the issue of whether the defendants were “credit repair organizations” under CROA, the parties eventually reached a class-wide settlement. The final settlement order requires the defendants to, among other things, maintain prominent disclaimers stating that they are not credit repair organizations and do not provide credit repair advice. The defendants have also agreed to pay attorneys’ fees and costs of up to $4 million and provide putative class members free credit-related services, which, according to the order, are potentially worth at least $100 million. For a copy of the relevant opinions or the final settlement order, please contact .
Illinois Court Allows Private Right of Action under Federal “Junk Fax” Law. An Illinois appellate court has found that a plaintiff may pursue a private right of action in state court under the federal Telephone Consumer Protection Act, better known as the “junk fax” law. First Capital Mortgage Corp. v. Union Federal Bank of Indianapolis, No. 1-06-0459 (Ill. App. Ct., June 29, 2007). In this case, the plaintiff alleged that Union Federal sent it hundreds of unsolicited faxes. First Capital Mortgage sued for damages under the junk fax law, and for conversion. The trial court dismissed the federal law claim, and First Capital Mortgage appealed. The appellate court noted that the Act provides that a “person or entity may, if otherwise permitted by the laws or rules of a court of a State, bring in an appropriate court of that State . . . an action to recover . . . $500 damages for each . . . violation.” The court said that the “if otherwise permitted” language would bar the private right of action only if a “neutral rule of judicial administration” precluded the court from having jurisdiction over the claim. The court found that there were no jurisdictional or other “neutral” rules that would bar the federal-law claim from being heard in state court, so the court remanded the claim to the trial court for further proceedings. For a copy of the opinion, please contact .
Illinois Court Allows Private Right of Action under Federal “Junk Fax” Law. An Illinois appellate court has found that a plaintiff may pursue a private right of action in state court under the federal Telephone Consumer Protection Act, better known as the “junk fax” law. First Capital Mortgage Corp. v. Union Federal Bank of Indianapolis, No. 1-06-0459 (Ill. App. Ct., June 29, 2007). In this case, the plaintiff alleged that Union Federal sent it hundreds of unsolicited faxes. First Capital Mortgage sued for damages under the junk fax law, and for conversion. The trial court dismissed the federal law claim, and First Capital Mortgage appealed. The appellate court noted that the Act provides that a “person or entity may, if otherwise permitted by the laws or rules of a court of a State, bring in an appropriate court of that State . . . an action to recover . . . $500 damages for each . . . violation.” The court said that the “if otherwise permitted” language would bar the private right of action only if a “neutral rule of judicial administration” precluded the court from having jurisdiction over the claim. The court found that there were no jurisdictional or other “neutral” rules that would bar the federal-law claim from being heard in state court, so the court remanded the claim to the trial court for further proceedings. For a copy of the opinion, please contact .
Florida Passes Law Permitting Electronic Notarization. On June 28, Florida Governor Charlie Crist signed CS/H.B. 1305 authorizing and outlining the procedures and requirements for use of notary public seal with electronic signatures. The electronic signature of the notary public must contain the following: (i) the full name of the notary public; (ii) the words “Notary Public State of Florida;” (iii) the date of expiration of the commission of the notary public; and (iv) the notary public’s commission number. This law will take effect on January 1, 2008. Full text of the bill may be found at http://www.myfloridahouse.gov/Sections/Documents/loaddoc.aspx? FileName=_h1305er.doc&DocumentType=Bill&BillNumber=1305&Session=2007.
GAO Study Finds Weak Link Between Breaches and ID Theft. The Government Accountability Office (GAO) recently released a report on data security breaches entitled Personal Information: Data Breaches Are Frequent, but Evidence of Resulting Identity Theft Is Limited; However, the Full Extent is Unknown. The GAO studied several high-profile data security breaches and interviewed law enforcement representatives, industry representatives and others. The GAO did not find evidence that financial identity theft commonly occurred as a result of data security breaches. In addition, the GAO stated that a risk-based notification standard for data breaches would be appropriate. To access the report, see http://www.gao.gov/new.items/d07737.pdf.
Vermont Attorney General Furnishes SSN Protection Guidance. On June 29, Vermont’s Attorney General Issued guidance intended to help businesses and government entities comply with newly enacted Vermont restrictions on the use of Social Security Numbers (SSNs). These restrictions are contained in Vermont’s Social Security Number Protection Act, located at 9 Vt. Stat. Ann., tit. 9, § 2440. The Attorney General’s guidance provides seven principles, each with more detailed explanations, to comply with the Act: (i) reduce the collection of SSNs, (ii) Inform individuals of policies and procedures affecting SSNs when collecting this information, (iii) Eliminate the public display of SSNs, (iv) Control access to SSNs, (v) Develop internal security safeguard procedures to protect SSNs, (vi) Make your organization accountable for protecting SSNs, and (vii) institute practices to safely destroy SSNs and other personal information. To view the Attorney General’s guidance, go to http://www.atg.state.vt.us/upload/1183130595_SSN_Guidance.pdf.
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