Department News COMPLIANCE
What’s New With the CFPB? By Carol Barnett, Senior Vice President of Compliance Services
As we start another year in the ever-changing world of banking compliance, I thought I would highlight a few of the developments over the past few months from the Consumer Financial Protection Bureau.
CFPB Reports Government agencies love to issue reports, and two recent ones from the CFPB likely provide a hint of future rulemaking. On Dec. 1, the CFPB issued two reports presenting research results related to overdraſt and nonsufficient funds revenue at banks. Missing from these reports is information related to consumer attitudes and choices related to overdraſt practices and all of the options that are available to consumers to help avoid overdraſts. Te CFPB is not alone in its attention to bank overdraſt programs, and bankers can expect increased regulatory scrutiny, potential legislation and/or possible rulemaking. Further action was taken by the CFPB in January by issuing its request for information about overdraſt fees and other bank fees. See the column from MBA President & CEO Max Cook on Page 5 for further information.
Another report issued Jan. 5 detailed alleged deficiencies in complaint response by the nationwide consumer reporting companies. Although directed at the big three credit bureaus, banks as furnishers also have obligations for investigating disputes from consumers related to information on their credit reports. Any actions taken by the CFPB or through legislation could result in higher credit report costs or increased requirements regarding investigations of disputed credit report information.
CFPB Orders In the category of “good news” from the bureau, two recent orders to fintech companies will hopefully shed light on their business models and practices. On Dec. 16, the CFPB issued a series of orders to five companies offering “buy now, pay later” credit. Te CFPB is concerned about accumulating debt, regulatory arbitrage and data harvesting. Te CFPB recognizes that international companies also are part of the landscape of providers and plans to work with international regulatory agencies, as well as the rest of the Federal Reserve System and state regulatory partners.
On Oct. 21, the CFPB issued a series of orders to collect information on the business practices of six large technology companies operating payment systems, including PayPal, Square and others. Te orders will compel information on data harvesting and monetization, access restrictions and user choice, and consumer protections. Te bureau also will be studying the payment system practices of Chinese tech giants.
Increased attention by the CFPB to these nonbank competitors will potentially pull them into legal and regulatory requirements that banks have to contend with when offering credit and payment products. Any effort that potentially helps level the playing field is welcome.
This article is for information purposes and does not contain or convey legal advice. The information should not be used or relied upon in regard to any particular situation without consultation with your bank attorney. MBA Compliance Services and its Compliance Force program offer various programs to aid banks with compliance needs. For more information, call 573-636-8151.
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