​​​​​​​​​​​​​​​​​​​​​​​​​​is issued by the Innovative Payments Association twenty times a year as a service to members.
Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA;  Grant Hannah, Director of Government Relations, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP.
Please address comments and suggestions to: gr@ipa.org.

IPA Podcast: Regulators at All Levels Have Been Busy, and We have a Round Up for You.
The regulatory environment for payments has become very active over the past few weeks, with proposed rules, congressional hearings, and even lawsuits. In this episode of the IPA Payments Pod, our CEO, Brian Tate, and our Government Relations Director, Grant Hannah, help to make sense of everything that has been happening.  

There are proposed rules on transaction routing and advertising FDIC insurance. There is a lawsuit over interchange fees. And a major fintech was sanctioned in two states for its advertising. This is all just the tip of the iceberg.  
Listen now!
​

IPA Financial Crimes Task Force Call: Mitigating Losses from Social Engineering, Victim Assisted,
& Gift Card Fraud
 
We often think of cyber criminals as expert hackers who break into systems using technical expertise. But many times, the danger lies in helpful employees, tricked customers, or gifts with dark surprises. Join us for a session on Mitigating Losses from Social Engineering, Victim Assisted, & Gift Card Fraud, led by Nigel Carty, Director of Fraud and Risk at InComm Financial Services Inc. 
 
Speaker
Nigel Carty
Director; Fraud and Risk Department,
InComm Financial Services, Inc.
 
This call is open to any IPA Member. Please register online, call details will be provided in the confirmation email, and share this with any of your colleagues who may be interested.
 
When: May 27 at 2pm Eastern
Who: IPA Members Only
 
Please login to your IPA account to register. Need help or have questions? Email us. 

FEDERAL RESERVE (THE FED)
 
Federal Reserve Chair Powell Says Fed to Issue Report on U.S. Digital Currency
 
On May 20, the Federal Reserve Board Chair Jerome Powell announced that the Fed will issue a discussion paper this summer outlining their current thinking on digital payments, with a particular focus on the benefits and risks associated with CBDC in the U.S. context. He additionally announced that, as part of this process, they seek public comment on issues related to payments, financial inclusion, data privacy, and information security.
 
Chair Powell further stated that the Federal is committed to hearing a wide range of voices on this important issue before making any decision on whether and how to move forward with a U.S. CBDC, taking account of the broader risks and opportunities it could offer. Finally, he stated that the Fed expects to play a leading role in developing international standards for CBDCs, engaging actively with central banks in other jurisdictions as well as regulators and supervisors here in the United States throughout that process.
 
Additional information can be found here.
 
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC)
 
FDIC Issues Request for Information on Digital Assets
On May 17, the Federal Deposit Insurance Corporation (FDIC) released a request for information and comment on digital assets. The FDIC says it recognizes that there are novel and unique considerations related to digital assets, and this RFI is intended to help inform the FDIC’s understanding in this area. Specifically, the FDIC is seeking input on current and potential use cases involving IDIs and their affiliates and risk and compliance management in conducting such activities. 
Comments are due by July 16, 2021. Additional information can be found here. 
 
Agencies Extend Comment Period on Request for Information on Artificial Intelligence
On May 17, five federal financial regulatory agencies announced they will extend the comment period on the request for information (RFI) on financial institutions’ use of artificial intelligence (AI) until July 1, 2021.

The Federal Reserve System, the Consumer Financial Protection Bureau (CFPB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA) and the Office of the Comptroller of the Currency (OCC) issued the RFI on March 29, 2021 and are seeking information from the public on how financial institutions use AI in their activities, including fraud prevention, personalization of customer services, credit underwriting, and other operations. More specifically, the RFI seeks comments to better understand the use of AI, including machine learning, by financial institutions; appropriate governance, risk management, and controls over AI; and challenges in developing, adopting, and managing AI.

Additional information can be found here. 
 
FDIC Issues Proposed Rule Regarding False Advertising, Misrepresentations About Insured Status, and Misuse of the FDIC’s Name or Logo
On April 22, the Federal Deposit Insurance Corporation (FDIC) issued a proposed rule implementing its statutory authority to prohibit any person or organization from making misrepresentations about FDIC deposit insurance or misusing the FDIC’s name or logo. This statutory authority allows the FDIC to bring formal enforcement actions, such as cease and desist orders or civil money penalties, against individuals or entities for violations.

The proposed rule describes the process by which the FDIC would identify and investigate potential violations, and the procedures it would follow, when formally and informally enforcing the statutory prohibitions. The proposed rule would also create a central point-of-contact where the public could report or make inquiries about potential violations. Additionally, the proposed rule would establish a more transparent process that would promote stability and public confidence in FDIC deposit insurance and the nation’s financial system.

The IPA is in the process of working with our members to finalize a draft comment letter in response. If you’d like a copy of the draft comment letter, please contact Grant Hannah (ghannah@ipa.org). Additional information can be found here. 
 
OFFICE OF THE COMPTROLLER OF THE CURRENCY (OCC)
 
Acting Comptroller of the Currency Michael Hsu Calls for Greater Cooperation on Chartering Issues and Outlines Priorities
 
In testimony before the House Financial Services Committee on May 19, Acting Comptroller of the Currency Michael Hsu identified four issues requiring the agency’s immediate attention: (1) guarding against complacency by banks, (2) reducing inequality in banking, (3) adapting to digitalization, and (4) acting on the risks that climate change presents to the financial system.
 
Further, when discussing “adapting to digitalization” in more detail, Acting Comptroller Hsu identified the issue of charters as a topic that is relevant in this context. Specifically, he called for greater interagency coordination amongst the OCC, FDIC, Fed, and state regulatory agencies to find a way to consider how fintechs and payments platforms fit into the banking system.
 
Additional information can be found here. 

​Capital Clues
 
Below is latest intelligence the IPA has received on recent activity on Capitol Hill related to financial services:
 

• Sen. Dick Durbin (D-IL) is working on legislation that would apply similar limitations on credit interchange as the Durbin Amendment has applied to debit interchange. Specifics and timeline are unclear at this point, but indications are coming from the Hill that the legislation could focus on routing and potentially prohibit network exclusivity for credit routing. Sen. Durbin is also thought to be courting Sen. Kevin Cramer (R-ND) as a co-sponsor. 
• Chief executive officers serving at the nation’s largest financial institutions will appear before both the Senate Banking Committee and House Financial Services Committee on Wednesday and Thursday, respectively.  The committees’ members are likely to focus on the banks’ response to consumers during the pandemic, the banking system’s proper role in society, their profitability relative to average Americans, and their role in promoting environmental, social and governance goals and financial innovation.  
• Rep. French Hill was tapped to lead Republicans on the Financial Services Subcommittee on Housing, Community Development, and Insurance.  That move created a vacancy in the ranking member slot on the National Security, International Development and Monetary Policy Subcommittee, which was filled by Rep. Andy Barr.  Rep. Tom Emmer will serve as ranking member on the Subcommittee on Oversight and Investigations Subcommittee and Warren Davison will move up to head the Financial Technology Task Force for committee Republicans.  

 

​New Federal Laws
 
None.
 
Pending Federal Bills
 
H.R.963 - Forced Arbitration Injustice Repeal (FAIR) Act
 
Summary: This bill prohibits a predispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute.
 
Status: Referred to the Subcommittee on Antitrust, Commercial, and Administrative Law on 04/23/2021.
 
Sponsor: Rep. Hank Johnson (D-GA)
 
H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purpose
 
Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement.
 
Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21.
 
Sponsor: Rep. David Scott (D-GA)
 
H.R. 1996 – SAFE Banking Act
 
Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system.
 
Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21.
 
Sponsor: Rep. Ed Perlmutter (D-CO)

​​​​​​​​​​​​​​​​​​​​​​​​​is issued by the Innovative Payments Association twenty times a year as a service to members.
Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA;  Grant Hannah, Director of Government Relations, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP.
Please address comments and suggestions to: gr@ipa.org.

IPA Podcast: Customer Disputes During COVID and Beyond: Ubiquity discusses setting up and managing dispute processes
 
As online shopping and remote payments grew over the past year, so did the number of customer disputes over payments. While many of the disputes were legitimate, some were fraudulent – either by people attempting to get out of paying for something they bought or by organized rings of criminals attempting to hack a company through social engineering.  
In this episode, we talk about these problems and how payments companies can manage them with Corey Besaw, the banking operations president for Ubiquity.

He talks about best practices for handling disputes including: 

1. Prioritizing dispute cases, 
2. Setting investigation thresholds,  
3. Working with third parties such as ATM operators and merchants. 

He brings together the experiences of many of their customers and talks about some of the common pitfalls and practices that have worked to avoid them. He also gets into considerations around using tools like artificial intelligence.
Listen now!
​
IPA Summer of Learning

FEDERAL RESERVE (THE FED)
 
Federal Reserve Board invites public comment on proposed changes to Regulation II regarding network availability for card-not-present debit card transactions and publishes a biennial report containing summary information on debit card transactions in 2019
 
On May 7, the Federal Reserve Board proposed changes to Regulation II (Debit Card Interchange Fees and Routing) to clarify that debit card issuers should enable, and allow merchants to choose from, at least two unaffiliated networks for card-not-present debit card transactions, such as online purchases. The Board views these clarifications of Regulation II's existing requirements as necessary in light of information indicating that often only one network is enabled for such transactions.
 
Next, the Board also published a report on debit card transactions in 2019, including information on volume and value, interchange fee revenue, certain issuer costs, and fraud losses. The report is the sixth in a series published every two years as prescribed by section 920 of the EFTA and summarizes information collected from debit card issuers subject to the interchange fee standard in Regulation II and payment card networks. 
 
Comments will be accepted for 60 days after publication in the Federal Register. You can find the report and the proposed rule attached here.
 
Federal Reserve Board invites public comment on proposed guidelines to evaluate requests for accounts and payment services at Federal Reserve Banks
 
On May 5, the Federal Reserve Board invited public comment on proposed guidelines to evaluate requests for accounts and payment services at Federal Reserve Banks ("Account Access Guidelines"). 
 
According to the Federal Reserve, there has been a recent uptick in novel charter types being authorized or considered across the country and, as a result, the Reserve Banks are receiving an increasing number of inquiries and requests for access to accounts and services from novel institutions. To help achieve the goal of applying a transparent and consistent process for all access requests, as well as considering the ramifications for the broader financial system, the Board says it is proposing the Account Access Guidelines for the Reserve Banks to evaluate such requests. These guidelines take into account the Board's legal authority and reflect an analysis of its policy goals.
 
Comments will be accepted for 60 days after publication in the Federal Register. The proposed guidelines and a companion memo from the Fed can be found here. 
 
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC)
FDIC Issues Proposed Rule Regarding False Advertising, Misrepresentations About Insured Status, and Misuse of the FDIC’s Name or Logo

On April 22, the Federal Deposit Insurance Corporation (FDIC) issued a proposed rule implementing its statutory authority to prohibit any person or organization from making misrepresentations about FDIC deposit insurance or misusing the FDIC’s name or logo. This statutory authority allows the FDIC to bring formal enforcement actions, such as cease and desist orders or civil money penalties, against individuals or entities for violations.

The proposed rule describes the process by which the FDIC would identify and investigate potential violations, and the procedures it would follow, when formally and informally enforcing the statutory prohibitions. The proposed rule would also create a central point-of-contact where the public could report or make inquiries about potential violations. Additionally, the proposed rule would establish a more transparent process that would promote stability and public confidence in FDIC deposit insurance and the nation’s financial system.
​
The IPA is preparing comments in response. Comments on the proposed rule will be accepted for 60 days after publication in the Federal Register. Additional information can be found here. 
 
INTERNAL REVENUE SERVICE (IRS)/DEPARTMENT OF THE TREASURY (TREASURY)
 
More than 1.1 million additional Economic Impact Payments disbursed under the American Rescue Plan; payments total approximately 164 million
 
The Internal Revenue Service, the U.S. Department of the Treasury, and the Bureau of the Fiscal Service announced on May 5 that they are disbursing more than 1.1 million payments in the eighth batch of Economic Impact Payments from the American Rescue Plan.
 
The announcement brings the total disbursed so far to approximately 164 million payments, with a total value of approximately $386 billion, since these payments began rolling out to Americans in batches as announced on March 12.
 
The eighth batch of payments began processing on Friday, April 30, with an official payment date of May 5, with some people receiving direct payments in their accounts earlier as provisional or pending deposits. Here is additional information on this batch of payments:

• In total, this batch includes more than 1.1 million payments with a value of more than $2 billion.

 

• More than 585,000 payments, with a value of over $1.2 billion, went to eligible individuals for whom the IRS previously did not have information to issue an Economic Impact Payment but who recently filed a tax return. 

 

• This batch also includes additional ongoing supplemental payments for people who earlier this year received payments based on their 2019 tax returns but are eligible for a new or larger payment based on their recently processed 2020 tax returns. This batch included more than 570,000 of these "plus-up" payments, with a value of nearly $1 billion.

 

• Overall, this eighth batch of payments contains about 600,000 direct deposit payments (with a total value of $1.1 billion) with the remainder on paper payments.

 
The IRS will continue to make Economic Impact Payments on a weekly basis. Ongoing payments will be sent to eligible individuals for whom the IRS previously did not have information to issue a payment but who recently filed a tax return, as well to people who qualify for "plus-up" payments.
 
Additional information can be found here. 
 
OFFICE OF THE COMPTROLLER OF THE CURRENCY (OCC)
 
Secretary Yellen Announces Intention to Appoint Michael J. Hsu as First Deputy Comptroller of the Office of the Comptroller of the Currency
 
On May 7, Treasury Secretary Yellen announced her intention to appoint Michael Hsu as First Deputy Comptroller of the Office of the Comptroller of the Currency (OCC). In addition, Mr. Hsu will also serve as Acting Comptroller of the Currency.
 
Prior to his appointment, Mr. Hsu was associate director of the Federal Reserve’s division of supervision and regulation, where he oversaw the Large Institution Supervision Coordinating Committee program. He has also held positions at the International Monetary Fund, the Treasury Department and the Securities and Exchange Commission.
 
Additional information can be found here. 

North Dakota Retail Associations File Lawsuit Against Fed on Debit Interchange
On April 29, North Dakota Retail Association and North Dakota Petroleum Marketers Association (“Associations”) filed a lawsuit in the United States District Court for the District of North Dakota Western Division against the Federal Reserve Board (“Board”) seeking a declaratory judgment and permanent injunction finding the standard for reasonable and proportional interchange fees in Regulation II and confirmed by the Updated Rule (12 C.F.R. §235.3(b)) invalid and setting it aside. The associations, allege that the Board has failed to properly follow Congress’s instructions to ensure that debit-card processing fees are reasonable and proportional to the costs of debit-card transactions.
The associations’ full complaint can be found here. 

Chime Enters Into Settlement Agreements with California & Illinois Regarding Its Use of the Term "Banking"
 
In March, Chime Financial, Inc. entered into settlement agreements with the California Department of Financial Protection and Innovation (DFPI) and the Illinois Department of Financial and Professional Regulation – Division of Banking regarding the use of the term “banking” and its derivatives by Chime. These settlements come after inquiries that were launched last year by both agencies independently found that Chime’s usage of the words “bank” and “banking” in certain aspects of Chime’s business violated California and Illinois law respectively. 
 
In brief, both settlements require Chime to distance itself from the use of the term “banking” and its derivatives by modifying statements on its website, on its mobile app, and in advertising to clarify that Chime is not a bank and banking services are provided by its bank partner(s). In addition, Chime will cease using the name “chimebank.com” in its business unless and until it becomes licensed or otherwise authorized to engage in the business of banking under the laws of a state or of the United States. 
 
In addition, Chime has agreed to pay a $200,000 civil money penalty to the State of Illinois. 
 
The California settlement agreement can be accessed here and Illinois settlement can be accessed here.

New Federal Laws
 
None.
 
Pending Federal Bills
H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purpose
Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement.
Status: Referred to the Committee on Financial Services, and in addition to the Committee on the Budget on 3/9/21
Sponsor: Rep. David Scott (D-GA)
 
H.R. 1996 – SAFE Banking Act
Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system.
Status: Referred to the Committee on Financial Services, and in addition to the Committee on the Judiciary on 3/18/21
Sponsor: Rep. Ed Perlmutter (D-CO)