Litigation

The Consumer Financial Protection Bureau is investigating how the Jack Dorsey-led company handles fraud on its person-to-person payments app. After the bureau accused Block of dragging its feet, a federal magistrate judge gave the company a Jan. 5 deadline.

Early next year the 2nd Circuit Court of Appeals is slated to consider whether certain loans are actually securities.

The case involved a customer who was charged $100,000 in legal fees when he tried to pay off a commercial mortgage early. After the borrower waged a nearly decadelong legal fight, a Florida court ordered the bank to reimburse a portion of the fees.

The ruling means that a lower court's pro-consumer decision cannot be used as a precedent in other litigation. Consumer advocates had hoped the case would make it more difficult for debt buyers in North Carolina to file a large volume of lawsuits, which often lead to default judgments against borrowers.

The Canadian-owned bank vowed to appeal the large verdict, which illustrated the risks that banks take on when they shoulder the liabilities of companies they acquire.

Following the verdict, the student-loan servicer could potentially owe Louis Beryl more than $4.4 million in severance money. Navient fired Beryl less than three months after acquiring Earnest, the student loan refinancing company that he co-founded.

Legal experts are gaming out the various options for the CFPB after a three-judge panel of the U.S. Court of Appeals for the 5th Circuit ruled on Oct. 19 that the bureau's funding is unconstitutional.

Custodia's lawsuit with the Federal Reserve over master account access is poised to advance to trial. Regardless of the outcome, the case will be consequential.

The agreement, which still needs court approval, should help what remains of the online small-business lender as it moves through bankruptcy proceedings. After Kabbage emerged as a major Paycheck Protection Program lender, some of its key assets were sold to American Express.

An appeals court ruling last week found that the Consumer Financial Protection Bureau's funding structure violates the Constitution, but another court filing shows how the agency might fight back.