In this issue. The Consumer Financial Protection Bureau (CFPB) proposed an amendment to the remittance transfer rule under the Electronic Fund Transfer Act (EFTA); the CFPB issued guidance on improper overdraft opt-in practices; and the CFPB published its first application for open banking standard setter recognition, seeking public comment. These and other developments are discussed in more detail below.
Regulatory Developments
CFPB Proposes Amendment to Remittance Transfer Rule Relating to Disclosure
On September 20, the CFPB issued a proposed rule to amend its February 2012 rule implementing the EFTA, which requires remittance transfer providers to disclose to consumers that they can contact the CFPB, and the state agency that licenses the remittance transfer provider, with any questions or complaints. In commentary accompanying the proposed rule, the CFPB notes that this disclosure has led to consumers calling the CFPB with questions that the CFPB believes are more appropriately directed to the remittance transfer provider. The proposed rule would update the disclosure to more prominently display remittance transfer provider contact information in the header and footer of disclosures. Comments on the proposed rule are due by November 4.
CFPB Issues Guidance on Improper Overdraft Opt-In Practices
On September 17, the CFPB released guidance to assist federal and state consumer protection agencies in reviewing improper overdraft opt-in practices based on phantom opt-in agreements. "Phantom opt-in" agreements occur when banks claim they have a customer's consent to charge overdraft fees, but there is no proof the banks obtained the consent. Under the EFTA and Regulation E, banks cannot charge overdraft fees on ATM and one-time debit card transactions unless the customer has affirmatively opted in. Valid forms of records evidencing opt-in may include a copy of the form signed by the consumer indicating affirmative consent, a recorded phone call in which the consumer indicates affirmative consent, or an electronic signature conclusively demonstrating the affirmative consent.
CFPB Seeks Public Comment on First Application for Open Banking Standard Setter Recognition
On September 24, the CFPB published its first application from a company seeking to be recognized as an industry standard-setting body under the CFPB's final rule, issued in June 2024, which determined that consensus industry standards would be an appropriate means of allowing banks to achieve compliance with the CFPB's upcoming Personal Financial Data Rights Rule. The final rule specified the qualifications and application process to become a recognized industry standard-setting body and established that the CFPB may publish an entity's application in order to seek public input and comment. Applications that are ready for public comment, as well as the applicable comment deadlines, are available here. Comments on this first application are due by October 16.
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New Client Alert: The Publication of the CSSF's Annual Report 2023: Information Related to Digital Assets, Cryptocurrency
On September 19, the CSSF published its 2023 annual report, highlighting key regulatory challenges, particularly in the realm of crypto-assets following the implementation of the Markets in Crypto-Assets Regulation (MiCA). MiCA introduces a unified legal framework across the EU, bringing much-needed legal clarity and enhanced protection for consumers and investors in this rapidly evolving sector. However, it also exposes new regulatory gaps, such as the rise of illegal cryptocurrency providers operating from outside the EU, often via social media and influencers. Addressing these cross-border threats will require coordinated efforts, with regulators like the CSSF needing to intensify digital monitoring and collaborate with the European Supervisory Authorities (ESAs). To read the full alert, click here.
New Client Alert: Constitutionality of Shortened Time Limits on New York Foreclosures Still Unresolved
On September 12, New York's highest court dismissed an appeal challenging the constitutionality of the retroactive application of the Foreclosure Abuse Prevention Act (FAPA), a law that amended certain New York rules to strictly cabin the time limits for commencing mortgage foreclosures. The Court of Appeals, on its own motion, decided that there was no constitutional issue before it. See MTGLQ Invs., L.P. v. Singh, 2024 NY Slip Op. 74046 (Sep 12, 2024). The question of FAPA's constitutionality remains unresolved. To read the full alert, click here.
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