On September 17, the CFPB issued a circular stating that financial institutions can be found liable for violating the Electronic Funds Transfer Act by charging overdraft fees if the there
Continue Reading CFPB Issues Circular Warning Against Overdraft Practices
In a letter to the CFPB released on September 10, several Senate Democrats implored the Bureau to establish stricter guardrails for BNPL providers, arguing that consumer harm will occur absent
Continue Reading Senators Urge Regulators to Adopt Tighter Controls for BNPL
On August 2, members of U.S. House of Representatives introduced H.J. Res. 195, a joint resolution providing for congressional disapproval under the Congressional Review Act (CRA) of recent CFPB guidance (previously discussed here) on buy now pay later (BNPL) lending. The Bureau’s guidance applied TILA protections previously reserved for credit card issuers, to BNPL lenders. Continue Reading Congressional Measure Aims to Undo Recent CFPB Buy Now Pay Later Guidance
The CFPB recently released a report on payment processing companies that manage school lunch payments for school districts. The companies, the report argues, cater to a captive market and often impose transaction fees that disproportionately affect low-income families. According to the Bureau, the report is intended to assist school districts in avoiding contracts with firms that charge families allegedly excessive fees to process their school lunch payments.Continue Reading CFPB Report Spotlights Hidden Fees in School Lunch Payments
Illinois has become the first state to enact restrictions on credit and debit card interchange fees – commonly known as swipe fees – linked to taxes and gratuities. The Interchange Fee Prohibition Act (the “Act”), embedded as Section 150-10 of the state’s latest revenue bill, signed on June 7 by Governor J.B. Pritzker, aims to accommodate retailers who have long contested the fairness of these fees. The Act forbids card issuers, payment card networks, acquirer banks and payment processors from charging retailers for swipe fees on gratuities and “any use and occupation tax or excise tax” imposed by the State or a local government. The Act will become effective in July 2025.Continue Reading Swipe Fee Showdown: Illinois Passes Novel Payments Law
On May 22, the CFPB announced an interpretive rule confirming that Buy Now, Pay Later (BNPL) lenders qualify as credit card providers under the Truth in Lending Act, Regulation Z and are required to provide consumers legal protections and rights that apply to credit cards, including the ability to dispute charges, secure refunds for returned products and receive billing statements.Continue Reading CFPB Interpretive Rule Holds That BNPL Lenders Are Credit Card Providers
On April 25, the FTC took action against a Washington-based bill payment company and its two co-founders alleging that the company used misleading search ads to impersonate consumers’ billers and deceptive design practices to mislead those consumers into paying “junk fees” they tacked on to consumers’ bills. Continue Reading FTC Calls Out Bill Payment Company’s Use of Dark Pattern Practices
On May 1, the FTC announced a settlement in federal court in the Northern District of Georgia against a payment processing company, along with its former CEO and senior vice president, for the company’s role in handling transactions for a debt-relief company engaging in fraud. The defendants have agreed to a settlement that includes a $10 million payment to compensate affected consumers and tighter restrictions on future business operations.Continue Reading FTC Cracks Down on Payments Processor for Facilitating Fraud
On February 15, Senators Sherrod Brown (D-OH), Jack Reed (D-RI) and Elizabeth Warren (D-MA) sent a letter to a leading payment app seeking clarification of its reimbursement policy for victims of imposter scams. Calling its protocol for reporting fraud and scams “unnecessarily complicated,” the Senators asked the payment app to add more categories of scams for which users can be reimbursed, and to streamline its process for reporting fraud, scams, and unauthorized transactions. The Senators noted that the company’s policy did not make clear which types of scams would qualify for reimbursement or what steps consumers needed to take to exercise their rights under its policy. The Senator’s pressed the payment app to make public whether banks and credit unions are required to reimburse customers who are victims of qualifying imposter scams. The Senators asked for responses to their questions by March 13, 2024.Continue Reading Congress Continues to Pressure Payment Apps to Change their Fraud Policies
On the June 20, the CFPB released its Office of Servicemember “(“OSA”) Affairs Annual Report. This year’s report focuses on the challenges faced by servicemembers and their families when using digital payment apps. As further discussed in a prior post, these digital payment platforms are gaining widespread popularity as substitutes for traditional banking services despite their lack of deposit insurance and lack of information in platform user agreements. The report presented the following findings with respect to servicemember use of digital payment apps:Continue Reading CFPB Report Identifies Issues with Increased Servicemember Use of Digital Payment Apps
On June 1, the CFPB published an issue spotlight and a consumer advisory detailing the risks associated with storing funds on digital payment apps, particularly in the event of a platform’s financial distress. Specifically, the issue spotlight presented the following findings with respect to consumer funds stored on payment apps:Continue Reading CFPB Highlights Risks of Storing Funds in Digital Payment Apps