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On July 16, the Sixth Circuit held that the Federal Electronic Funds Transfer Act (EFTA) does not provide for an implied right of indemnification or contribution, and preempts indemnification claims under the Michigan Electronic Funds Transfer Act (“MEFTA”) and common law, when a bank reimburses customers for unauthorized electronic transfers, even if the unauthorized transfers were caused by the entity from which indemnification is sought.… Continue Reading

On July 17, Acting Comptroller of the Currency Michael Hsu delivered prepared remarks before the Exchequer Club entitled “Size, Complexity, and Polarization in Banking.”

These were his first public remarks about the Supreme Court’s recent opinion in Cantero v. Bank of America. In that case, the Court reversed a Second Circuit opinion which had held that because of preemption a national bank need not comply with a New York law which requires the payment of 2% interest on residential mortgage escrow accounts.… Continue Reading

The U. S. Court of Appeals for the D.C. Circuit held that the CFPB’s prepaid card rule (Prepaid Rule) does not mandate a “model clause.”  The ruling was made in the lawsuit that PayPal, one of the largest digital wallet providers, filed against the CFPB in December 2019 to challenge the Prepaid Rule. … Continue Reading

In Integrity Advance LLC v. Consumer Financial Protection Bureau, a panel of the U.S. Court of Appeals for the Tenth Circuit affirmed a CFPB Order requiring Integrity, a lender making short-term loans, and its CEO, James Carnes, to pay $38.4 million in legal and equitable restitution and imposing civil penalties against Integrity ($7.5 million) and Carnes ($5 million), for alleged violations of the Consumer Financial Protection Act, the Truth in Lending Act, and the Electronic Fund Transfer Act. … Continue Reading

The Federal Trade Commission provided its annual report to the Consumer Financial Protection Bureau on its enforcement and related activities in 2021 regarding the Truth in Lending Act (TILA), Consumer Leasing Act (CLA), and Electronic Fund Transfer Act (EFTA) (collectively, the “Financial Acts”).

Under Dodd-Frank, the FTC retained its authority to enforce these regulations with respect to entities subject to its jurisdiction. … Continue Reading

The CFPB has issued a compliance bulletin “to reiterate that the compulsory use prohibition in the [Electronic Fund Transfer Act (EFTA)] applies to government benefit accounts, as defined in Regulation E.”

In the bulletin, the CFPB reviews what constitutes a “government benefit account” subject to the EFTA’s compulsory use prohibition.  As implemented by Regulation E, the EFTA provides that no person may require a consumer to establish an account for receipt of an electronic fund transfer (EFT) with a particular financial institution as a condition of receipt of a government benefit. … Continue Reading

Last month, the CFPB updated its Electronic Fund Transfers FAQs that address compliance with the Electronic Fund Transfer Act (EFTA) and Regulation E.  The FAQs provide guidance on Regulation E’s coverage and on the error resolution requirements, with the bulk of the new questions focusing on person-to-person (P2P) payment providers and P2P transfers.… Continue Reading

On December 30, 2020, the CFPB announced a consent order with Omni Financial of Nevada, Inc. based on alleged violations of the Military Lending Act (MLA) and Electronic Funds Transfer Act (EFTA).  This is the second consent order announced as part of a sweep of investigations for potential MLA violations.

According to the CFPB, Omni as an installment lender making tens of thousands of loans annually, generally in smaller amounts, ranging from $500 to $10,000. … Continue Reading

In filings submitted last week, the Consumer Financial Protection Bureau (the Bureau) both opposed and moved for summary judgment in PayPal, Inc. v. Consumer Financial Protection Bureau, asking the court to put an end to PayPal, Inc.’s lawsuit challenging the prepaid card rule (Rule), which took effect last year. The Rule set out certain fee disclosure requirements, credit-linking restrictions, and other consumer protections for “prepaid accounts.”… Continue Reading

The CFPB has issued its annual report on TILA, EFTA, and the CARD Act which covers activity in 2016 and 2017.  The report provides brief summaries of the 2016 and 2017 enforcement actions brought by the CFPB and other federal agencies with relevant enforcement authority and provides data on reimbursements required as a result of enforcement actions brought during these periods.… Continue Reading