Deposit Accounts

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On October 26, 2022, President Biden appeared at the White House with Rohit Chopra, CFPB Director, and Lina Khan, FTC Chair, to announce that his Administration is taking action to eliminate all “junk fees,” such as fees for deposited checks that are returned unpaid, surprise banking overdraft fees, hidden hotel booking fees and termination charges to stop people from changing cable plans. … Continue Reading

The FDIC has issued new supervisory guidance (FIL-40-2022) on multiple non-sufficient funds (NSF) fees arising from the re-presentment of the same unpaid transaction.  The guidance directly applies only to state-chartered banks and thrifts that are not members of the Federal Reserve System.  National banks and federal thrifts are supervised by the Office of the Comptroller of the Currency (OCC) and state-chartered banks that are members of the Federal Reserve System are supervised by the Federal Reserve Board (FRB). … Continue Reading

Just one day after announcing that it was launching a new system to provide guidance to other agencies with consumer financial protection responsibilities on how the CFPB intends to enforce federal consumer financial laws, the CFPB released its first Consumer Financial Protection Circular (2022-02) addressing deceptive representations involving the FDIC’s name or logo or deposit insurance. … Continue Reading

A California Court of Appeal recently found a bank liable to a judgment creditor under California’s Enforcement of Judgments Law for the bank’s registered agent’s mistake in misreading, and subsequently rejecting, a notice of levy.  Although the bank itself did not have knowledge of the mistake, the Court held the bank responsible through principles of agency, rendering the bank liable for amounts that the account holder drained from the account when the levy should have been in effect.… Continue Reading

The CFPB recently ordered a bank to cancel garnishment fees, review its system for processing garnishment orders, cease using contracts which limit consumer rights, and pay a $10 million penalty to the CFPB’s Civil Penalty Fund.  

The garnishment process is a method for creditors to recover amounts that a judgment debtor owes from a third party that holds the judgment debtor’s assets, such as a deposit account held by a bank. … Continue Reading

The CFPB has released the Spring 2022 edition of its Supervisory Highlights.  The report discusses the Bureau’s examinations in the areas of auto servicing, consumer reporting, credit card account management, debt collection, deposits, mortgage origination, prepaid accounts, remittance transfers, and student loan servicing that were completed between July 2021 and December 2021. … Continue Reading

A Pennsylvania federal district court recently held that Regulation J did not completely preempt state law claims related to a wire transfer, and thus did not fall under the “complete preemption” exception to the “well-pleaded complaint rule.”  Reg J deals with the collection of checks and other items by Federal Reserve Banks and fund transfers through Fedwire.… Continue Reading

Marketing by nonbanks of products and services offered with bank partners is coming under increasing scrutiny that focuses on the potential for consumers to be led to believe that the nonbank is a bank, or is FDIC insured.  We discuss recent state and federal regulatory and enforcement developments, including the FDIC’s proposed rule addressing false advertising, misuse of the FDIC logo, and misrepresentation of insured status, and state regulators’ and federal lawmakers’ interest in the issue, and offer takeaways for banks and nonbank partners on what these developments mean for their marketing efforts.… Continue Reading

We discuss the practices found to be unlawful by CFPB examiners in the areas of deposits, auto servicing, and payday lending, identify practical takeaways for avoiding criticism by the “new CFPB,” and share our thoughts on what the findings signal for future scrutiny in these areas by the “new CFPB.”

Ballard Spahr Senior Counsel Alan Kaplinsky hosts the conversation, joined by Chris Willis, Co-Chair of the firm’s Consumer Financial Services Group, and Jason Cover, a partner in the Group.… Continue Reading

On April 1, 2021, the FDIC’s final rule issued in December 2020 revising its brokered deposits regulation became effective.  The full compliance date for the final rule is January 1, 2022.  The rule established a new framework for analyzing whether deposits made through deposit arrangements qualify as “brokered deposits” and amended the methodology for calculating the interest rate restrictions that apply to less than well capitalized insured depository institutions.… Continue Reading