2025 Regulatory Summit

Colorado Litigation

• On June 5, 2023, Colorado enacted a law that purported to “opt out” of DIDMCA Section 521 with respect to all consumer credit transactions involving consumers located in Colorado. • On March 25, 2024, the group of trades sued the Colorado officials charged with enforcing the “opt out” law. • Plaintiffs moved for a preliminary injunction, arguing Colorado’s “opt out” was preempted by DIDMCA. – State-chartered banks located outside Colorado do not “make” loans in Colorado for purposes of DIDMCA’s opt out provision, even when extending credit to Colorado borrowers.

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Court Decision

• District court (Judge Domenico) granted a preliminary injunction. – Plaintiffs made a strong showing of likely success on the merits of their preemption claim. • Injunction: Colorado barred from applying its DIDMCA “opt-out” to loans made by Plaintiffs’ members located and performing key loan-making functions outside Colorado. • Court’s reasoning: – Under DIDMCA’s opt-out provision, “where a loan is made” depends on where the bank is located and performs loan-making functions, not the borrower’s location. • Status: Case is currently on appeal in the Tenth Circuit.

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