In this issue. The Consumer Financial Protection Bureau (CFPB) issued a final rule on overdraft fees; the CFPB issued an advance notice of proposed rulemaking (ANPR) seeking public comment on potential changes to Regulation V, which implements the Fair Credit Reporting Act, to address the harmful effects of inaccurate credit reporting on survivors of domestic violence, elder abuse, and other forms of financial abuse; and the Board of Governors of the Federal Reserve Board (Federal Reserve) provided technical clarification that its account access guidelines apply to excess balance accounts (EBAs). These and other developments are discussed in more detail below.
Regulatory Developments
CFPB Issues Final Rule on Overdraft Fees
On December 12, the CFPB issued a final rule amending Regulations E and Z
to treat overdraft products as credit subject to Regulation Z,
unless the overdraft fee is capped at $5 or an amount that covers a
financial institution's costs and losses. Institutions that
continue extending profit-generating overdraft loans will need to
comply with Regulation Z's requirements for loans, including
giving consumers a choice on whether to open a line of overdraft
credit account, providing account-opening disclosures, sending
periodic statements, and allowing consumers to decide whether to
pay automatically or manually. The final rule also applies all the
credit card provisions of Regulation Z to covered overdraft credit,
if the credit account can be accessed by a hybrid debit-credit
card. The final rule applies only to insured depository
institutions, insured credit unions, and their affiliates, with
more than $10 billion in assets and is set to take effect on
October 1, 2025.
CFPB Seeks Public Comment on Effects of Inaccurate
Credit Reporting and Financial Abuse on Vulnerable Populations In
Advance of New Rulemaking
On December 9, the CFPB issued an ANPR seeking public comment on inaccurate
credit reporting affecting survivors of domestic violence, elder
abuse, and other forms of financial abuse, including non-consensual
financial obligations incurred through abuse or coercion.
Specifically, the CFPB is considering expanding the definitions of
“identity theft” and “identity theft
report” in Regulation V to include information stemming from
transactions that occur without a consumer's effective
consent. The ANPR covers topics including the prevalence of coerced
debt, how the current consumer reporting system contributes to or
alleviates harm, and possible solutions, including self-attestation
or presumptions of coercion for victims. The ANPR also explores how
amendments to Regulation V could reduce barriers faced by
vulnerable populations, such as domestic violence survivors, woman
of color, older Americans, and foster youth, while establishing
appropriate safeguards and documentation standards. Comments may be
submitted before March 7, 2025.
Federal Reserve Clarifies Application of Account Access
Guidelines
On December 9, the Federal Reserve issued a technical clarification, stating that its
account access guidelines apply to EBAs – limited purpose
accounts established by a Federal Reserve Bank to maintain the
reserve balances of eligible institutions and typically managed by
an agent for the participating institutions. The Federal
Reserve's clarification is intended to convey that the same
standard of review will be applied to any institution requesting
access to Federal Reserve accounts and services, including
EBAs.
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District of Texas preliminarily enjoined the enforcement of the
Corporate Transparency Act (CTA) in its entirety nationwide, and
also specifically stayed the reporting deadline of January 1, 2025
for reporting companies formed or registered to do business in the
US before January 1, 2024. To read the full alert, click here.
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