It has been a tumultuous few days for the Consumer Financial Protection Bureau (CFPB), with dueling acting directors and emergency hearings. But while Office of Management and Budget (OMB) Director Mick Mulvaney is now officially the acting director of the CFPB—at least as of this writing—the story does not end there. Many questions remain to be answered regarding the legal framework governing the CFPB’s leadership structure, the future of the CFPB under a permanent director nominated by President Donald Trump, and the prospects for federal and state regulation of consumer financial matters. Continue Reading While CFPB Leadership Fight Continues, Broader Questions Remain About Future of Consumer Financial Regulation
Erin Fonté assists clients with a broad range of matters related to payments/payment systems, digital commerce, banking and financial services (including related legal and regulatory issues), technology/Internet products, privacy and data protection laws, and general corporate matters. Erin regularly advises financial institutions and alternative payment providers regarding mobile banking, mobile payments and mobile wallet products and services. She has been involved in the creation of new payment networks and has worked extensively on products, services and network operating rules related to emerging and mobile payment systems.
Every other year, the Texas Legislature convenes for roughly six months in Austin. Given the tight timeframe and biennial nature, sessions of the Texas Legislature tend to be “fast and furious” (and also full of drama). There were a total of 6,631 bills filed in the 2017 Texas Legislative Session. The Texas House filed 4,333 bills, of which 700 passed. The Texas Senate filed 2,298, of which 511 passed. Texas Governor Abbott vetoed 50 bills prior to the June 18, 2017, veto deadline. Below are summaries and effective dates of the major new laws that affect financial institutions operating in Texas. Continue Reading 2017 Texas Legislative Recap of New Laws Affecting Financial Institutions Operating in Texas
On June 15, 2017, the Federal Reserve Board (FRB) published in the Federal Register final amendments to Regulation CC (Availability of Funds and Collection of Checks). The amendments contain a number of changes that will affect financial institutions, such as modifications to check return requirements, additional warranties, and new indemnities, including a new indemnity for remote deposit capture (RDC). (Spoiler Alert: The indemnity for RDC has significant implications for financial institutions that offer RDC services.) The rule will become effective July 1, 2018.
Regulation CC implements the Expedited Funds Availability Act (EFAA) and the Check Clearing for the 21st Century Act (Check 21 Act). The FRB previously published a notice of proposed rulemaking to amend Regulation CC in February 2014. Continue Reading Amendments to Regulation CC Affect Liability Considerations for Financial Institutions
The Consumer Financial Protection Bureau (CFPB)’s long-delayed prepaid card rule has been delayed once again—and further delays may lie ahead, as the CFPB considers whether to make additional changes. The additional time gives prepaid providers and other stakeholders another bite at the apple to advocate for changes to this regulation.
On April 20, the CFPB issued a final rule officially delaying the prepaid rule’s effective date by six months, to April 1, 2018, after proposing that delay in light of calls from the industry for the need for more time to implement compliance. Along with announcing the delay, the CFPB stated that it also has “decided to revisit at least two substantive issues in the prepaid accounts rule through a separate notice and comment rulemaking process. We expect to release that proposal in the coming weeks.” Those two issues are “the linking of credit cards to digital wallets that are capable of storing funds” and “error resolution and limitations on liability for prepaid accounts that cannot be registered, have not yet been registered, or for which consumers have attempted but have not successfully completed the registration process.” Continue Reading The CFPB’s Prepaid Rule: Yet Another Delay Brings a New Opportunity to Shape the Course
For nonbank providers of consumer financial services, one of the most challenging parts of doing business is the need to comply with the laws of multiple states. Entities like money transmitters and consumer lenders typically must obtain licenses in the states in which they do business, and comply with an array of varying state laws. And for entities that are online or mobile in nature, the “states in which they do business” can mean all fifty states—plus the District of Columbia and U.S. territories. This has been the source of many operational challenges and frustrations for fintech companies and startups in recent years. Continue Reading OCC’s Fintech Charter Proposal: The End of State Licensing As We Know It? Comments Due April 14
As financial services innovators and financial technology (“FinTech”) have expanded over the last several years, a point of industry consensus is that the U.S. regulatory landscape in particular is challenging to, and in some cases poses a barrier to, innovation and new competition within the FinTech arena. Critics of the U.S. regulatory regime point to a confusing web of multiple federal functional regulators and state money transmission regulators. The sheer number of potential laws, rules, regulations and regulatory entities that can be involved in regulating a particular FinTech startup based upon the product and services provided are subject to increased scrutiny and criticism from the FinTech industry. Continue Reading U.S. FinTech Regulatory Landscape for 2017
Real estate lenders and agents struggling with the new TILA-RESPA Integrated Disclosure rules will have the opportunity to suggest improvements to the rules this summer. On April 28, Consumer Financial Protection Bureau (CFPB) Director Richard Cordray sent a letter to eight financial industry trade groups stating that the agency intends to propose new amendments in late July 2016 to the rules synthesizing mortgage lending disclosures under the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA). Issued pursuant to the Dodd-Frank Act, the rules are known as the TILA-RESPA Integrated Disclosures (TRID) rule, also referred to by the CFPB as the Know Before You Owe rules.
Federal regulators published guidance Monday regarding the application of customer identification program (CIP) requirements to holders of prepaid cards and other types of prepaid access. Although the guidance is meant to clarify longstanding CIP rules—issued in 2003 to implement USA PATRIOT Act amendments to the Bank Secrecy Act (BSA)—the guidance has the effect of setting new standards for banks that issue prepaid access. This includes prepaid cards that third-party program managers sell and distribute, as well as cards that are used to provide employee wages, healthcare, and government benefits. Continue Reading Federal Regulators Release BSA/AML Guidance for Prepaid Products
The FTC’s focus on data security appears to be expanding, with the agency now investigating the processes by which private industry measures data security compliance. On March 7, 2016, the FTC ordered nine different companies who are “Qualified Independent Assessors” to provide detailed information about how they assess their clients’ compliance with the Payment Card Industry Data Security Standards (“PCI DSS”). The nine companies receiving orders range from large accounting firms such as PricewaterhouseCoopers, LLP, to security-focused companies such as Foresite MSP, LLC. They must respond to the Commission within 45 days (absent any extensions that the Commission might grant). The FTC did not state that the orders were issued in connection with any apparent breach or other specific problem, and the agency’s ultimate goal for this inquiry remains to be seen.
As has been reported in the news recently, there is increasing litigation asserting that the websites of some commercial enterprises, including financial institutions, are not accessible to consumers with disabilities. The Americans with Disabilities Act was adopted before widespread adoption of the internet, but the Department of Justice and many courts have taken the position that the ADA’s prohibition of discrimination against anyone on the basis of disability in the use of “accommodations of any place of public accommodation” applies to websites as well as physical establishments. Continue Reading Watch for Litigation Concerning Website Accessibility to the Disabled to Rise