August 9, 2017

State Regulators File Suit Over Unauthorized Use of Licensing Test Information
CSBS Urges Congress to Reject New Fees on State-Chartered Banks
Same-Day ACH Debits Go Live September 15
Financial Services Groups Send Joint Letter to Fed on Proposed Revision to Regulation CC
CFPB Unveils Overdraft Disclosure Designed to Make Costs and Risks Easier to Understand


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The State Regulatory Registry (SRR) has filed a lawsuit against two individuals and one company who illegally obtained and distributed confidential information from the national licensing exam that mortgage loan originators must pass to conduct business.

"The actions cited in our lawsuit undermined the integrity of the state licensing exam, which is designed to ensure public confidence in the way state regulators approve licenses," said John Ducrest, chairman of the SRR Board of Managers and commissioner of the Louisiana Office of Financial Institutions.

The suit charges B. Glenn Bartholomew, Cary Green, and MTI Services, Corp., for conducting a "conspiracy to steal, reproduce and sell...licensing examination questions to prospective loan officers so as to give those customers an unfair advantage on the test." The suit lists several illicit methods to gather and distribute copyrighted test questions. SRR concluded that the defendants' conduct compromised a significant number of test questions.

The suit, filed in the U.S. District Court, District of Colorado, charges that these actions amount to copyright infringement, trade secrets violations, and breaches of contract. The suit seeks monetary damages, legal and court cost reimbursements, and that defendants be enjoined from engaging in such conduct.

SRR is a subsidiary of the Conference of State Bank Supervisors, and oversees the operation of the Nationwide Multistate Licensing System. The formal name of the licensing exam is the SAFE MLO National Test, mandated for mortgage loan officers by the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008.
This September, same-day debits to the Automated Clearing House (ACH) will go live, meaning that debit transfers will be able to occur within hours of processing a transaction.

To help banks prepare itself and its customers for the move to same-day debits, the National Automated Clearing House Association (NACHA) maintains a resource center dedicated to information on the transfer to Same Day ACH. Additionally, the New England Automated Clearing House (NEACH) has established Check@5, an initiative to help banks prepare their customers for these changes.

Check@5 signifies a call-to-action, urging customers to get used to checking their accounts at the close of business each day, to get a good sense of their balance. The resource center also has a toolkit for businesses to help prepare for the change.
A joint comment letter sent to the Federal Reserve Board regarding a proposed revision to Regulation CC, seeks to create a presumption of alteration for any dispute over whether the dollar amount or the payee on a substitute check or electronic check has been altered. Letter co-signers included the Electronic Check Clearing House Organization, the American Bankers Association, Credit Union National Association, Independent Community Bankers of America (ICBA), National Association of Federally-Insured Credit Unions and The Clearing House Payments Company.

The associations supported the proposed presumption of alteration in Regulation CC as it is preferable to a presumption of forgery. Alteration of a check is more common than check fraud today, and a presumption of alteration is more in line with ECCHO rules. However, the associations believed that the presumption of alteration under Regulation CC should not be available to the paying bank in any situation in which the paying bank received the original check and requested that the final rule should clarify that the presumption of alteration also applies to the alteration of the electronic check image itself, and not just to alteration of the original check.

Read letter....

New CFPB Study Shows Opted-In Frequent Overdrafters Typically Pay Almost $450 More in Fees

The Consumer Financial Protection Bureau (CFPB) unveiled new Know Before You Owe overdraft disclosure prototypes designed to improve the model form that banks and credit unions already provide to consumers weighing overdraft coverage. The Bureau is currently testing four prototypes that each have a simple, one-page design aimed at making the costs and risks of opting in to overdraft coverage easier to understand and evaluate. People who frequently attempt to overdraw their checking accounts typically pay almost $450 more in fees if they opted in to debit card and ATM overdraft coverage, according to a new CFPB study published today. The study found that most of these frequent overdrafters are financially vulnerable, with lower daily balances and lower credit scores than people who do not overdraft as often.

"Our study shows that financially vulnerable consumers who opt in to overdraft risk incurring a rash of fees when using their debit card or an ATM," said CFPB Director Richard Cordray. "Our new Know Before You Owe overdraft disclosure prototypes are designed to help consumers better understand the consequences of the opt-in decision."

An overdraft occurs when consumers lack the funds in their account to cover a transaction, but the bank or credit union pays anyway. Financial institutions may charge a fee for this service, typically around $34 per transaction, and require that the account deficit be repaid with subsequent deposits. In 2010, federal regulations began requiring financial institutions to obtain a consumer's consent in advance before charging overdraft fees on most debit card transactions and ATM withdrawals. Consumers who do not opt in to overdraft coverage will generally have debit card purchases and ATM withdrawals declined with no charge if their account doesn't have enough funds to cover the transaction at the time they attempt it.

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See Prototypes.... 

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