Banking and Finance Law Daily Wrap Up, EXPERT INSIGHTS—5 trends to watch: 2025 financial services litigation, (Jan 31, 2025)

Organizations Mentioned:Consumer Financial Protection Bureau | Greenberg Traurig, LLP

By Greenberg Traurig, LLP of Greenberg Traurig, LLP

Continued and increased litigation in a number of areas can be expected in 2025, according to the article, including litigation involving payments, mass arbitration, anti-money laundering, consumer protection, and information security.

Increasing Focu ...

By Greenberg Traurig, LLP of Greenberg Traurig, LLP

Increasing Focus on Payments—Payments litigation will likely continue and increase in 2025 in the United States and globally, along with increased use of Automated Clearing House (ACH) transfers and wires, bank and non-bank competition, state regulation, and more sophisticated fraud schemes. This trend should continue regardless of the incoming administration's enforcement priorities. Borrowing from Europe, the United States could see increasing pressure for a Payment Services Regulation or other laws to shift more risk of payment fraud to financial institutions. State-based efforts to regulate interchange fees may create additional risk.
Increasing Use of Mass Arbitration and Rise of International Arbitration—Mass arbitration in the United States is likely to continue and increase, particularly as plaintiffs' counsels become more equipped, efficient, and coordinated at lodging these attacks. International arbitration also is likely to increase, given globalization and diversification, driven by the growing complexity of cross-border issues. The strategic advantage of leveraging global litigation offices in regions like Latin America, Europe, and the Middle East will be crucial, as these areas continue to be hot spots for international business activities and disputes. Reliance on local knowledge will become increasingly important as parties seek more efficient and culturally sensitive resolutions.
Anti-Money Laundering (AML), Know Your Customer (KYC), and Compliance-Related Issues—There was increased activity over the past year on AML-related matters globally, and this trend appears likely to continue. This increase also is likely to carry over to civil litigation, including complex fraud and Ponzi schemes and allegations relating to improper asset management or trust disputes, where financial institutions are being more heavily scrutinized over actions taken by their customers, and the plaintiffs' bar is expected to try to create more hospitable case law and jurisdictions. As regulatory scrutiny intensifies globally, financial institutions will continue to find themselves at the intersection of civil litigation and concurrent regulatory/criminal investigations, creating additional risks. The growing complexity of these cases underscores the need for banks to maintain vigilance and adaptability.
Changing Enforcement and Regulatory Risks—A slowdown of Consumer Financial Protection Bureau (CFPB)-related activity, including a relative slowdown of crypto enforcement, could take place over the course of the year due to the change of administration and agency leadership, but there could be an increase in certain states' attorneys general activity. State-based regulation and legislation would pose additional risks, creating jurisdictional and other challenges. State regulatory agencies may continue enforcement efforts related to consumer protections in the financial services space. There also may be continued focus on fair lending practices, with potential litigation concerning artificial intelligence's (AI) role in lending or other decisions. The rise of digital currencies also has introduced new legal challenges. Cryptocurrency exchanges are being held accountable for frauds occurring on their platforms and ongoing uncertainties in digital asset regulations are resulting in compliance challenges and related litigation.
Information Use and Security—The increasing use of new technologies and AI likely will result in increased risks and a rise in civil litigation. Litigation may emerge over AI tools allegedly infringing on copyrights. Another area would be AI-based pricing algorithms being scrutinized for potential collusion and antitrust violations or discrimination and bias. More U.S. states are proposing and passing comprehensive AI and other laws that do not have broad financial institution or Graham Leach Bliley Act-type exemptions, so there could be additional regulation. States also could continue efforts to pass new laws in the privacy area to address areas not currently regulated through federal laws.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Greenberg Traurig, LLP

4 Embarcadero Ctr, Ste. 3000

San Francisco

CA 94111-5983

United States

Tel.: +1 415 655 1300

E-mail: contentteam@gtlaw.com

URL: www.gtlaw.com/

Attorneys: (Greenberg Traurig, LLP).

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Banking and Finance Law Daily Wrap Up, EXPERT INSIGHTS—5 trends to watch: 2025 financial services litigation, (Jan 31, 2025)

Organizations Mentioned:Consumer Financial Protection Bureau | Greenberg Traurig, LLP

By Greenberg Traurig, LLP of Greenberg Traurig, LLP

Increasing Focu ...

By Greenberg Traurig, LLP of Greenberg Traurig, LLP

Increasing Focus on Payments—Payments litigation will likely continue and increase in 2025 in the United States and globally, along with increased use of Automated Clearing House (ACH) transfers and wires, bank and non-bank competition, state regulation, and more sophisticated fraud schemes. This trend should continue regardless of the incoming administration's enforcement priorities. Borrowing from Europe, the United States could see increasing pressure for a Payment Services Regulation or other laws to shift more risk of payment fraud to financial institutions. State-based efforts to regulate interchange fees may create additional risk.
Increasing Use of Mass Arbitration and Rise of International Arbitration—Mass arbitration in the United States is likely to continue and increase, particularly as plaintiffs' counsels become more equipped, efficient, and coordinated at lodging these attacks. International arbitration also is likely to increase, given globalization and diversification, driven by the growing complexity of cross-border issues. The strategic advantage of leveraging global litigation offices in regions like Latin America, Europe, and the Middle East will be crucial, as these areas continue to be hot spots for international business activities and disputes. Reliance on local knowledge will become increasingly important as parties seek more efficient and culturally sensitive resolutions.
Anti-Money Laundering (AML), Know Your Customer (KYC), and Compliance-Related Issues—There was increased activity over the past year on AML-related matters globally, and this trend appears likely to continue. This increase also is likely to carry over to civil litigation, including complex fraud and Ponzi schemes and allegations relating to improper asset management or trust disputes, where financial institutions are being more heavily scrutinized over actions taken by their customers, and the plaintiffs' bar is expected to try to create more hospitable case law and jurisdictions. As regulatory scrutiny intensifies globally, financial institutions will continue to find themselves at the intersection of civil litigation and concurrent regulatory/criminal investigations, creating additional risks. The growing complexity of these cases underscores the need for banks to maintain vigilance and adaptability.
Changing Enforcement and Regulatory Risks—A slowdown of Consumer Financial Protection Bureau (CFPB)-related activity, including a relative slowdown of crypto enforcement, could take place over the course of the year due to the change of administration and agency leadership, but there could be an increase in certain states' attorneys general activity. State-based regulation and legislation would pose additional risks, creating jurisdictional and other challenges. State regulatory agencies may continue enforcement efforts related to consumer protections in the financial services space. There also may be continued focus on fair lending practices, with potential litigation concerning artificial intelligence's (AI) role in lending or other decisions. The rise of digital currencies also has introduced new legal challenges. Cryptocurrency exchanges are being held accountable for frauds occurring on their platforms and ongoing uncertainties in digital asset regulations are resulting in compliance challenges and related litigation.
Information Use and Security—The increasing use of new technologies and AI likely will result in increased risks and a rise in civil litigation. Litigation may emerge over AI tools allegedly infringing on copyrights. Another area would be AI-based pricing algorithms being scrutinized for potential collusion and antitrust violations or discrimination and bias. More U.S. states are proposing and passing comprehensive AI and other laws that do not have broad financial institution or Graham Leach Bliley Act-type exemptions, so there could be additional regulation. States also could continue efforts to pass new laws in the privacy area to address areas not currently regulated through federal laws.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Greenberg Traurig, LLP

4 Embarcadero Ctr, Ste. 3000

San Francisco

CA 94111-5983

United States

Tel.: +1 415 655 1300

E-mail: contentteam@gtlaw.com

URL: www.gtlaw.com/

Attorneys: (Greenberg Traurig, LLP).