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July 21, 2022

On the web

Consumer Bureau to Push Banks to Refund More Victims of Scams on Zelle and Other Payment Services

MarketWatch

“The Consumer Financial Protection Bureau is preparing to prod banks to pay back more customers who are the victims of scams on Zelle and other money-transfer services, according to people familiar with the coming regulatory effort. Under new guidance the bureau is preparing to release in the coming weeks, banks could face heightened requirements around certain scams that have become more prevalent on these platforms, these people said, such as when a customer is tricked into sending money to a scammer pretending to be a representative of his or her bank.”

June 23, 2022

On the web

U.S. Consumer Watchdog to Review ‘Excessive’ Credit Card Late Payment Fees

Reuters

“The top U.S. consumer watchdog on Wednesday said it had begun a review of “excessive” credit card fees and asked card issuers for data on revenue and expenses in a bid to stamp out abuses and boost competition. The advanced notice of proposed rulemaking issued by the Consumer Financial Protection Bureau (CFPB) confirms a Reuters April report that the agency would scrutinize credit card fees as part of a broader crackdown on what it calls “junk fees,” a catch-all for overdraft, credit card late-payment fees, bounced check fees, and other charges.”

June 22, 2022

On the web

CFPB Initiates Review of Credit Card Company Penalty Policies Costing Consumers $12 Billion Each Year

Consumer Financial Protection Bureau

“The Consumer Financial Protection Bureau (CFPB) is taking the first step toward addressing credit card company penalty policies costing consumers $12 billion each year, starting by looking at excessive late fees. In an Advance Notice of Proposed Rulemaking published today, the CFPB asks for information on the Federal Reserve Board of Governors’ 2010 immunity provision for excessive late fees that allows credit card companies to escape enforcement scrutiny. The CFPB is seeking data about credit card late fees and late payments, assessing whether those fees are “reasonable and proportional.” We are also seeking data about card issuers’ revenue and expenses, the potential deterrent effect of late fees, and the role late fees play in credit card companies’ profitability.”

April 28, 2022

On the wires

U.S. Consumer Chief Chopra to Revisit Rules Around Credit Card Fees, Abuses

Reuters

“The U.S. consumer watchdog will revisit its rules around credit card fees in a bid to stamp out abuses, discourage excessive late fees and boost competition, the agency’s director told Congress on Wednesday, confirming a Reuters April report.  “I am asking the staff to look at whether we should reopen the CARD Act rules … to determine whether there needs to be any changes,” said Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra.”

April 26, 2022

On the web

CFPB Invokes Dormant Authority to Examine Nonbank Companies Posing Risks to Consumers

“The Consumer Financial Protection Bureau (CFPB) announced that it is invoking a largely unused legal provision to examine nonbank financial companies that pose risks to consumers. The CFPB believes that utilizing this dormant authority will help protect consumers and level the playing field between banks and nonbanks. The CFPB is also seeking public comments on a procedural rule to make this process more transparent.”

April 13, 2022

On the web

CFPB Charges TransUnion and Senior Executive John Danaher With Violating Law Enforcement Order | Consumer Financial Protection Bureau

Consumer Financial Protection Bureau

“Today, the Consumer Financial Protection Bureau (CFPB) is filing a lawsuit against TransUnion, two of its subsidiaries, and longtime executive John Danaher for violating a 2017 law enforcement order. The order was issued to stop the company from engaging in deceptive marketing, regarding its credit scores and other credit-related products. After the order went into effect, TransUnion continued its unlawful behavior, disregarded the order’s requirements, and continued employing deceitful digital dark patterns to profit from customers. The Bureau’s complaint also alleges that TransUnion violated additional consumer financial protection laws.”

February 16, 2022

On the web

CFPB Issues Warning on Use of Prepaid Cards to Pay Government Benefits

American Banker

“The Consumer Financial Protection Bureau warned financial services companies Tuesday about a longstanding prohibition on using prepaid debit cards as the sole method for distributing government benefits. Companies that get hired by government agencies to distribute payments to consumers may be extracting illegal fees that would be considered an abuse of their exclusive contracts, the agency said.”

December 2, 2021

On the wires

CFPB Research Shows Banks’ Deep Dependence on Overdraft Fees | Consumer Financial Protection Bureau

“Banks continue to rely heavily on overdraft and non-sufficient funds (NSF) revenue, which reached an estimated $15.47 billion in 2019, according to research released today by the Consumer Financial Protection Bureau (CFPB). Three banks—JPMorgan Chase, Wells Fargo, and Bank of America—brought in 44% of the total reported that year by banks with assets over $1 billion. The CFPB also found that while small institutions with overdraft programs charged lower fees on average, consumer outcomes were similar to those found at larger banks. The research also notes that, despite a drop in fees collected, many of the fee harvesting practices persisted during the COVID-19 pandemic.”

November 12, 2021

On the web

November 1, 2021

On the web

PayPal Calls CFPB’s Fee Disclosure Rule ‘Problematic’ – Law360

law360

“PayPal has asked the D. C. Circuit to uphold its win against the Consumer Financial Protection Bureau over the agency’s disclosure rules for prepaid cards and digital wallets, calling the requirements “problematic. “The CFPB is allowed by law to craft model disclosures for prepaid cards and digital wallets, but the agency overstepped its authority by creating requirements that include details such as the disclosures’ layout, font, font size and color, PayPal Inc. argued Wednesday.”

October 21, 2021

On the wires

Regarding the CFPB’s Inquiry into Big Tech Payment Platforms

“Congress has tasked the CFPB with ensuring that markets for consumer financial products and services are fair, transparent, and competitive. To that end, it has authorized the CFPB to require participants in the marketplace to provide information that help the Bureau monitor risks to consumers and to publish aggregated findings that are in the public interest. Little is known publicly about how Big Tech companies will exploit their payments platforms. For example, will the operators engage in invasive financial surveillance and combine the data they collect on consumers with their geolocation and browsing data? Will they in turn use this data to deepen behavioral advertising, engage in price discrimination, or sell to third parties?”

October 1, 2021

On the web

Card Issuers Resisted Slashing Credit Limits During Pandemic: CFPB

American Banker

“In a shift from the previous U.S. economic crisis, credit card issuers last year mostly avoided clamping down on their existing customers’ borrowing limits, according to a new report from the Consumer Financial Protection Bureau. The report, one of the most extensive analyses of credit card trends during the pandemic, found a significant tightening of credit availability as lenders lessened their appetite for new business. But the stricter credit criteria mostly appeared to affect potential new customers rather than existing ones, the CFPB’s biennial report to Congress on credit cards indicated.”

September 2, 2021

On the wires

CFPB Proposes Rule to Shine New Light on Small Businesses’ Access to Credit | Consumer Financial Protection Bureau

“The Consumer Financial Protection Bureau (CFPB) today proposed a new rule designed to help small businesses gain access to the credit they need and deserve by increasing transparency in the lending marketplace. This rule, mandated by Congress in the Dodd-Frank Act, would, if finalized, require lenders to disclose information about their lending to small businesses, allowing community organizations, researchers, lenders, and others to better support small business and community development needs.”

July 13, 2021

On the web

What Biden’s Data Portability Push Means for Banks

American Banker

“How much of an effort this will require banks to make from a technology and business point of view will depend on the rules the CFPB writes. The agency could validate the current state of consumer data sharing in the U.S., in which aggregators pull data out of banks and give it to fintechs on behalf of consumers. Or it could require something new — actually letting consumers download their own data in a usable format onto a device or into an online storage account, or allowing customers to have their data sent from one bank to another.”

July 9, 2021

On the web

Recent Analysis of Consumer Financial Protection Bureau Data Shows Exponential Increase in Fintech and Crypto Complaints to CFPB

Lexology

“Data intelligence company Morning Consult recently analyzed consumer complaints made to the Consumer Financial Protection Bureau (CFPB). The analysis showed that fintech and crypto-related complaints made by consumers to the CFPB “exploded” in early 2021 compared to the same period in 2020. Our clients should be aware that the sharp increase in fintech and crypto consumer complaints is well known within the CFPB and that fintech enforcement is key priority for the CFPB Office of Enforcement. The Office of Enforcement is already active in the fintech space and seeking new matters for investigation.”

June 29, 2021

On the wires

CFPB Provides Guidance on Unauthorized Transfers | Davis Wright Tremaine

“Recent technological developments in banking and other financial services, combined with the effects of the pandemic, have led consumers to increasingly adopt digital payment solutions. At the same time, reports of digital fraud 1 and disputed electronic funds transfers (EFTs) are on the rise. In response to these trends, the Consumer Financial Protection Bureau (CFPB) recently provided guidance in updated FAQs 2 on unauthorized EFTs, consumer liability for unauthorized EFTs, and the related obligations of financial institutions.”

May 7, 2021

On the web

CFPB Investigating U.S. Bancorp Over Consumer Sales Practices

American Banker

“U.S. Bancorp is facing regulatory scrutiny over how it sells products to consumers. The $553.8 billion-asset company is under investigation by the Consumer Financial Protection Bureau regarding “certain of the company’s consumer sales practices,” according to a securities filing this week. The CFPB has been scrutinizing banks’ sales practices in the wake of Wells Fargo’s fake-accounts scandal. In 2019 the agency opened a civil investigation into Bank of America to determine whether the Charlotte, North Carolina-based company violated federal law by opening credit card accounts without customers’ knowledge. Last year, the consumer bureau sued Cincinnati-based Fifth Third Bancorp for allegedly opening customer accounts without their authorization between 2010 through 2016. That case is expected to go to trial in 2022 or later, unless a settlement is reached.”

March 30, 2021

On the web

CFPB Poised to Reinstate Tough Stance on Payday Lenders

American Banker

“The Consumer Financial Protection Bureau is giving its clearest signal yet that a 2020 regulation easing standards for payday lenders is in jeopardy, despite efforts already in motion by the industry to implement the Trump administration rule. Acting CFPB Director Dave Uejio — appointed by the Biden administration to lead the agency following Kathy Kraninger’s resignation — offered his most forceful comments to date on the 2020 rule, which eliminated underwriting requirements for small-dollar lenders.”

March 25, 2021

On the wires

CFPB Annual Complaint Report Highlights More Than a Half-Million Complaints Received in 2020 | Consumer Financial Protection Bureau

“Today, the Consumer Financial Protection Bureau (CFPB) provided to Congress the Consumer Response Annual Report for 2020. The impact of the COVID-19 pandemic on the consumer financial marketplace is reflected in the increase of complaints submitted to the CFPB. The CFPB handled approximately 542,300 complaints last year—a nearly 54% increase over the approximately 352,400 complaints handled in 2019.”

March 5, 2021

On the wires

Consumer Financial Protection Bureau Takes Action Against Payment Processor and Its Former CEO for Supporting Internet-Based Technical-Support Scams | Consumer Financial Protection Bureau

“The Consumer Financial Protection Bureau (CFPB) filed a lawsuit in federal court against BrightSpeed Solutions Inc. (BrightSpeed) and its founder and former chief executive officer, Kevin Howard, for knowingly processing payments for companies engaged in internet-based technical-support fraud. Chicago-based BrightSpeed was a privately owned, third-party payment processor founded and operated by Howard in 2015. It wound down business operations in March 2019.”

February 5, 2021

On the web

PayPal Says U.S. Consumer Watchdog Investigating Payment App Venmo

Reuters

“PayPal Holdings Inc said on Friday it was cooperating with the U.S. consumer watchdog regarding a civil investigation demand relating to its app Venmo’s alleged unauthorized fund transfers and collections processes. The demand from the U.S. Consumer Financial Protection Bureau was made last month, the digital payment processor said in a regulatory filing. ( bit.ly/3tsOHn1 )”

January 5, 2021

On the web

Paypal Wins Bid to Strike Down CFPB Prepaid Card Regulations

Reuters

“A federal judge in Washington, D.C., has invalidated part of a U.S. Consumer Financial Protection Bureau rule governing prepaid cards and digital wallets, emphatically agreeing with fintech giant PayPal that the agency overstepped its authority. In a decision studded with exclamation points, U.S. District Judge Richard Leon wrote that the agency’s rulemaking authority under Dodd–Frank Wall Street Reform and Consumer Protection Act did not allow it to dictate how prepaid card and digital wallet providers disclose fees to customers or to limit when credit cards could be linked to new accounts, saying those restrictions were precluded by other consumer finance laws.”

On the wires

PayActiv Becomes First And Only CFPB-Approved Earned Wage Access Provider

“The Consumer Financial Protection Bureau today issued a groundbreaking approval order (Approval) confirming that Payactiv’s Earned Wage Access (EWA) Program is not credit and therefore is exempt from the federal Truth in Lending Act (TILA) and Regulation Z rules governing creditors.   Specifically, the Approval notes that a Payactiv EWA user does not create a debt because “the accrued cash value of an employee’s earned but unpaid wages is the employee’s own money.” The Approval is specific to Payactiv and is the first of its kind from the Bureau. The Payactiv EWA Program is the only model approved by the CFPB.”

November 9, 2020

On the web

CFPB investigating Regions’ overdraft practices

American Banker (paywall)

“Regions Financial is the latest bank to face regulatory scrutiny over fees charged to consumers who overdraw their accounts. The $145 billion-asset company disclosed Thursday that it was in the process of responding to a civil investigative demand from the Consumer Financial Protection Bureau over certain overdraft practices and policies. The disclosure, which did not include any additional details, came in a quarterly filing with the Securities and Exchange Commission.”

July 8, 2020

On the web

Consumer Bureau Scraps Restrictions on Payday Loans

The New York Times

“The Consumer Financial Protection Bureau on Tuesday formally rescinded a plan to impose new limits on payday lending, handing the industry a major victory by killing off tighter rules that it spent years lobbying to overturn. The proposed rules would have been the first significant federal regulations on an industry that makes $30 billion a year in high-interest, short-term loans, often to already struggling borrowers. Those loans can leave borrowers trapped in cycles of debt, incurring fees every few weeks to replenish loans they cannot afford to pay off.”

May 12, 2020

On the web

CFPB Expands Relief for Banks and Credit Unions From Remittance Rules

American Banker (paywall)

“More banks will be able to estimate costs to consumers of remittance transfers rather than quote exact third-party fees and exchange rates under a final rule issued by the Consumer Financial Protection Bureau. The rule released Monday expanded and made permanent temporary protections established in an earlier 2013 regulation. The new rule establishes a safe harbor for banks providing 500 or fewer transfers a year from complying with a requirement that they disclose the price of a remittance transfer, the exact exchange rate, the amount to be delivered and the date funds are available.”

April 14, 2020

On the wires

Consumer Financial Protection Bureau Paves Way for Consumers to Receive Economic Impact Payments Quicker

“Government agencies may not always be able to use direct deposit to distribute funds because they do not have access to consumers’ account information, such as account and routing numbers, and because some consumers receiving payments do not have a pre-existing account that can accept direct deposits. In such cases, the disbursement of funds via alternative means, such as a newly-issued prepaid account, may be faster, more secure, more convenient, and less expensive—for both the government agency and the consumer—than making disbursements through other methods such as paper check.”

May 14, 2019

On the web

Payday Lenders Mobilize in Support of Rule’s Repeal, Consumer Group Says

Wall Street Journal (paywall)

“Payday lenders have been mobilizing their customers to push the federal government to ease Obama-era regulations of the industry, according to research by a consumer advocacy group that favors the rules. Since the Consumer Financial Protection Bureau began soliciting public comment on a proposed rule governing small-dollar, high-interest consumer loans, the lenders have organized thousands of customers who have sent in duplicated comments in support of the change, said Allied Progress, the consumer group.”

April 2, 2019

Top Post

The Prepaid Business Adopts a Sanguine Approach As the CFPB’s Big Rule Finally Takes Effect

Digital Transactions

“The Consumer Financial Protection Bureau’s voluminous prepaid card rule finally took effect with sweeping provisions governing matters ranging from fee disclosures to error-resolution rights to consumers’ access to their accounts. But issuers of prepaid cards and digital wallets have had time to adjust to the CFPB’s rule, which a hostile Congress once tried to quash under the Congressional Review Act, and are now more or less sanguine about its many provisions.”

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