Unfair and Deceptive Practices Civil Money Penalty
The FDIC has announced that a South Dakota Bank will pay a $140,000 civil money penalty (CMP) and approximately $10 million to 283,000 credit card customers under the terms of settlement of charges of unfair and deceptive practices in connection with the bank's credit card billing procedures. If you have never heard of the Unfair and Deceptive Practices Act, it may be time for a refresher course. For credit unions check out NCUA regulation Part 706 and for banks check out Federal Reserve Board Regulation AA. If they are not enough late night reading, you should also check out your state laws, as many/most state have their own version of Unfair and Deceptive Practices.
FinCEN Expands Special Information Sharing Procedures
The special information sharing procedures are being expanded to allow certain foreign law enforcement agencies, and State and local law enforcement agencies, to submit
requests for information to financial institutions. The rule also clarifies that FinCEN itself, on its own behalf and on behalf of other appropriate components of the Department of the Treasury (‘‘Treasury’’), may submit such requests. This is an expansion of what is commonly known as the section 314(a) sharing of information. The text of the change may be found at: http://www.fincen.gov/statutes_regs/frn/index.html
Financial Regulators issue statement on Prudent Small Business Loans
Financial regulators including the NCUA released a statement on February 5th reassuring their regulated institutions that prudently made small business loans would not face "regulatory criticism”. The statement emphasizes that financial institutions should perform a comprehensive review of a borrower’s financial condition, understanding the long-term viability of the borrower’s business. The financial institution should focus on the strength of a borrower’s business plan to manage risk rather than using portfolio management models that rely primarily on general inputs, such as a borrower’s geographic location or industry. A copy of the statement may be found at: http://www.ncua.gov/default.aspx
The “Credit Card Act” and Consumers under the age of 21
The question has been posed: Is there an exception for share-secured credit card accounts with regard to determining an underage consumer's "ability to pay”? The answer appears to be: No.
The credit union will not be able to open such an account unless:
| the young consumer submits a written application, |
| obtains the signature of a cosigner, guarantor, or joint applicant who is at least 21 |
| has the means to repay the debt and agrees to joint liability, or proves that the consumer has the income needed to make the required payments. |
These are the same rules that apply to all credit card accounts.
The FFIEC Releases Updated White Paper on Mortgage Fraud
On February 18th the Federal Financial Institutions Examination Council released an updated version of its white paper on mortgage fraud detection and deterrence. The white paper provides details on numerous mortgage fraud methods. It includes information on:
| builder bailouts, |
| buy and bail schemes, |
| double selling, |
| equity skimming, |
| fictitious loans, |
| short sales, |
| loan modifications, |
| refinancing, |
| mortgage servicing, |
| property flip, |
| reverse mortgage. |
Federal Reserve Board Issues Proposals on Overdraft Services
On February 19th the FRB issued several proposal to clarity Regulation E – Electronic Funds Transfer Act and Regulation DD – Truth in Savings (Banks) with respect to their application to the new overdraft services rules. The proposals have a 30 day comment period after publication in the Federal Register. For the full text of the proposal see the following link: http://www.federalreserve.gov/newsevents/press/bcreg/20100219a.htm
FRB Issues new Online Publication for Consumer on Overdraft Services
The Federal Reserve Board has produced a new online publication, What You Need to Know: New Overdraft Rules for Debit and ATM Cards. It is designed to help consumers understand the rules that provide additional protection when a debit card or automated teller machine (ATM) transaction causes an account to be overdrawn. You may want to make your consumers aware of this through a news letter or other consumer communication. The site can be accessed at: http://www.federalreserve.gov/consumerinfo/wyntk_overdraft.htm
NCUA Indicates “Hot Examination Issues” for 2010
The NCUA will soon provide guidance through its Letters to Credit Unions on some of the hottest exam topics for 2010. They are expected to include indirect lending and risk concentration as two areas on which they will place a focus for the upcoming year.
The FFIEC has issued an updated Retail Payment Systems Booklet
The purpose of the booklet is to serve as guidance for examiners, financial institutions, and service providers on identifying and controlling risks related to retail payment systems and related banking activities. A copy of the booklet may be accessed at: http://www.ffiec.gov/press/pr022510.htm