​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​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;  Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: [email protected].

​The IPA Compliance Book Camp Will Be Held in Chicago in September
Mark your calendars to join us at the IPA's Compliance Boot Camp on September 12th to ensure you don't miss out. The $199 IPA Member Early Bird Rate expires on June 30th. 
 
We will have sessions on Regulation E, Earned Wage Access, Artificial Intelligence, court cases impacting the payments sector, Buy Now Pay Later, and Stablecoins. Some attendees may be eligible to receive CLE credits through their attendance. 
 
IPA Continues Its Series of Meetings with the FBI
Building on earlier meetings in Atlanta and New York, the IPA plans to host future meetings with FBI field offices in Minneapolis on July 19 and Chicago on September 13, immediately following our Compliance Boot Camp. The meetings will give members of the payments community the opportunity to meet the agents in their local field offices and learn about trends in financial crimes. The IPA would like to thank our members Sunrise Banks and Discover for hosting these events in Minneapolis and Chicago, respectively. 
 
Registration for the Minneapolis event can be found here.  Registration for the Chicago event will open closer to September. 

Sens. Durbin, Marshall Reintroduce Interchange Legislation
Sens. Richard Durbin (D-IL) and Roger Marshall (R-KS) reintroduced the Credit Card Competition Act. The bill would call on the Federal Reserve to issue regulations within one year that ensures banks that have assets of over $100 billion cannot restrict the number of networks on which an electronic card transaction can be processed to less than two unaffiliated networks, at least one of which must be outside the top two largest networks. The bill appears to be identical to previous versions of the bill. While the bill has little chance of passing as a standalone bill, there is always the possibility of it being included in a larger legislative package. More information can be found in Sen. Marshall’s press release, or in an article published in the Wall Street Journal.
 
CFPB Release Fall 2022 Semi-Annual Report
The CFPB has released the Fall 2022 Semi-Annual Report of the Consumer Financial Protection Bureau. The report highlights recent rules and orders, complaints, and supervisory and enforcement actions. It also gives updates on the Bureau’s work in the areas of state consumer financial law, fair lending, and workplace and contracting diversity. The Semi-Annual Report typically provides a preview of areas in which the Bureau plans on regulating in the near future. Notably, there is no mention of earned wage access in the report, although the report reviews the September 2022 Buy Now, Pay Later report, and their December 2021 inquiry into BNPL providers Affirm, Afterpay, Klarna, PayPal, and Zip.
 
CFPB Publishes Blog on Open Banking
The CFPB published a blog post by Director Rohit Chopra on the potential for open banking to improve market access for American consumers and emerging businesses. The blog post highlighted the Bureau’s rulemaking to implement Dodd Frank Section 1033, which would give consumers the right to control their personal financial data, and said they expect the rule to be finalized in 2024. 
 
Notably, the proposal will recognize that while the CFPB should resolve certain core issues related to the ownership of personal financial data, many of the details and standards should be set outside of the agency to allow open banking to evolve as new technologies and new products are brought to the market.
 
CFPB Regulatory Agenda
The CFPB has published an updated regulatory agenda, which is an agenda identifying rules that the Bureau expects to consider over the course of the next year, and notes in which stage of the rulemaking process the Bureau is in. 
 
Among other regulatory actions, the agenda highlights upcoming rules on overdraft fees, Fair Credit Reporting Act, and NSF fees, all in the pre-rule stage. The Bureau is also in the Proposed Rule Stage on personal financial data rights, and the Supervision of Larger Participants in Consumer Payments Markets; and the Final Rule Stage for credit card penalty fees.
 
Although the CFPB is known to regulate outside of the normal rulemaking process, the published regulatory agenda gives the industry a good idea of the topics they are focusing their attention on.
 
CFPB Director Chopra Testifies at Senate Banking, House Financial Services Committees
Last week, CFPB Director Rohit Chopra appeared before both the Senate Banking and House Financial Services Committees to deliver the Semi-Annual Report of the CFPB. The hearings proceeded as expected, with Democrats praising the Bureau and administration and for their work at reducing so-called “junk fees,” and defending their funding mechanism; and Republicans criticizing Dir. Chopra for using compliance bulletins, circulars, advisory opinions, and blog posts to regulate in place of the normal regulatory rulemaking process. Earned wage access was not discussed in either hearing.    
 
On Tuesday in the Senate Banking Committee, Ranking Member Tim Scott (R-SC), now a candidate for the Republican presidential primary, questioned Dir. Chopra on the CFPB proposal to cap credit card late fees at $8. According to Ranking Member Scott, late fees incentivize on-time payments, and capping late fees would force banks to charge higher interest rates on all customers or cut access to credit for certain borrowers. Dir. Chopra disagreed with Ranking Member Scott’s conclusion and said that banks would still be able recapture costs even at a lower late fee. Sen. Elizabeth Warren (D-MA) later noted that credit card late fees make up a relatively small revenue stream for credit card issuers. 
 
Democrats on the Committee, led by Chairman Sherrod Brown (D-OH) also questioned Dir. Chopra on the potential effect if the Supreme Court upholds a Fifth Circuit Appeals Court decision which found the CFPB’s funding structure is unconstitutional. Dir. Chopra responded that depending on how the ruling is written, it could complicate current and future rulemakings, and would create major uncertainty in financial markets. Sen. Mark Warner (D-VA) said the results of such a decision would be “chaos.”
 
On Wednesday in the House Financial Services Committee, Republicans, led by Rep. Andy Barr (R-KY), Chairman of the Subcommittee on Financial Institutions and Monetary Policy, criticized Dir. Chopra for regulating outside the normal regulatory rulemaking process, and echoed the comments of his Senate colleagues that capping credit card late fees would increase rates on all borrowers. In her opening remarks, Ranking Member Maxine Waters (D-CA) praised the CFPB and defended the constitutionality of their funding mechanism. 
 
During questioning from both sides of the aisle on recent bank runs, Dir. Chopra said that the bank runs were accelerated by digital media and social media, and have brought the risks of uninsured deposits in the public view.
 
FDIC Demands Three Companies Cease False Representations about Deposit Insurance
The FDIC has issued letters to three companies demanding they cease and desist from making false representations and misleading statements about FDIC deposit insurance coverage of their products. The FDIC found that representatives from Bodega Importadora de Pallets, Money Avenue, LLC, and OKCoin USA, Inc. made statements that suggested the companies are FDIC-insured, which is false. No fines were assessed as part of the demands. 
 
According to the press release, the FDIC has observed an increasing number of instances where firms or individuals misused the FDIC’s name or logo, or made false misrepresentations about deposit insurance.
 
FDIC Updates Guidance Regarding Multiple Re-Presentment NSF Fees
Last August, the FDIC issued guidance to supervised institutions addressing compliance risks associated with assessing multiple non-sufficient funds (NSF) fees as a result of the re-representment of the same unpaid transaction.
 
Last week, the FDIC updated that guidance and issued a Financial Institution Letter to clarify its supervisory approach for corrective action when a violation of law is identified. According to the FIL, based on additional data and experience gained since the original guidance, the FDIC is updating and reissuing its guidance to reflect their current supervisory approach to not request an institution to conduct a lookback review absent a likelihood of substantial consumer harm. The updated guidance can be found here.
 
CFPB Publishes Report on Servicemember Use of Digital Payment Apps
The CFPB issued its annual report on the top financial concerns facing military families. Notably, the report highlighted the growth of digital payment app usage in the servicemember community; and focused on several risks to military families, including financial harm from fraud and scams, identity theft and unauthorized account access, and lack of timely and substantive resolutions servicemember complaints. The report offered a number of recommendations, including increasing the network security to prevent fraud, improve responsiveness in the event fraud does occur, and tailoring refund and fraud policies to recognize the unique experiences of military families. More information can be found in the CFPB’s press release.
 
FY24 FSGG Bill Text and Summary
With Appropriations season in full swing, House Republicans have another platform to address disagreements with the Administration and financial regulators. Unlike in the Senate where appropriators are working across the aisle, the prospect of bipartisanship in the House is non-existent. In the FY24 Financial Services and General Government appropriations bill, Republicans are aggressively pursuing funding limitations, policy riders, and report language designed to inject Congress into executive branch operations. We anticipated the FSGG bill will be marked up by the full committee on July 13th. While the Senate Appropriations Committee is kicking off its markup process this week, it has yet to unveil its FSGG bill. A detailed summary of the full bill can be found here. 
 
Federal Reserve Survey on Demand for Faster Payments
The Federal Reserve has released the results of two surveys highlighting an increased appetite for faster payment options, covering both business and consumer demand. The business survey found that slow payments was the top challenge identified by business, and that nearly half of businesses believe faster payments will lower their costs, mainly through more efficient processing. The consumer survey found that 
consumers ages 35-54 use smartphones more often than younger consumers (21-34) for activities such as checking account balances, making bill payments and account-to-account transfers, and that nearly 7 in 10 customers think it’s important for their financial institutions to offer faster payment services. More information can be found in a Federal Reserve blog post here.

New Federal Bills
H.R. 1163, The Protecting Taxpayers and Victims of Unemployment Fraud Act
This bill, sponsored by Rep. Jason Smith (R-MO-08), would provide financial incentives for states to recover fraudulently paid Federal and State unemployment compensation. The bill was marked up and reported favorably from the House Ways and Means Committee on 2/28/23 by a vote of 20-17. The bill was placed on the floor calendar for consideration on 4/6/23.
 
H.R. 1165, Data Privacy Act of 2023
This bill, sponsored by Rep. Patrick McHenry (R-NC-10) would create a federal data privacy standard, and would preempt preexisting state frameworks. This bill was marked up and reported favorably by the House Financial Services Committee on 2/28/23 by a vote of 26-21.

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​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;  Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: [email protected].

The IPA Compliance Book Camp Will Be Held in Chicago in September
Mark your calendars to join us at the IPA's Compliance Boot Camp on September 12th to ensure you don't miss out. The $199 IPA Member Early Bird Rate expires on June 30th. 
 
We will have sessions on Regulation E, Earned Wage Access, Artificial Intelligence, court cases impacting the payments sector, Buy Now Pay Later, and Stablecoins.

CLE credits have been applied for the Complaince Boot Camp, ensuring that attendees can earn valuable continuing legal education credits.

 IPA Conference Wrap Up
If you were not able to join us for the Innovative Payments Conference last month, then make sure to check out the highlights from our conference at the IPA Website. Our MC, Tim Sloane, shared highlights on our blog, and Tim and Brian Tate also recorded a podcast to talk about lessons learned from the event.
 
IPA Continues Its Series of Meetings with the FBI
Building on earlier meetings in Atlanta and New York, the IPA plans to host future meetings with FBI field offices in Minneapolis on July 19 and Chicago on September 13, immediately following our Compliance Boot Camp. The meetings will give members of the payments community the opportunity to meet the agents in their local field offices and learn about trends in financial crimes. The IPA would like to thank our members Sunrise Banks and Discover for hosting these events in Minneapolis and Chicago, respectively.  

HFSC and House Agriculture Chairmen Release Digital Market Structure Proposal
HFSC Chairman Patrick McHenry (R-NC) and House Agriculture Committee Chairman Glenn Thompson (R-PA) released a discussion draft of legislation which would create a statutory framework for digital asset regulation. The bill would allow digital assets to be traded on more conventional trading platforms, and introduces a division of authority between the SEC and CFTC. Specifically, the proposal grants regulatory authority over digital-asset securities to the SEC, while granting the CFTC spot market authority over crypto commodities. This proposal is just a starting point in negotiations that are likely to occur in the coming weeks and months between members of both the House Financial Services and House Agriculture Committees. More information, including a section-by-section summary, can be found here.
 
PayPal and CFPB Files Motions in Prepaid Account Rule Case
PayPal filed a renewed motion for summary judgment in the United States District Court for the District of Columbia in their remanded case challenging the CFPB’s prepaid account rule as it applies to providers of digital wallets. 
 
In their memo, PayPal argued that the rule’s heightened regulatory requirements are arbitrary and capricious as applied to digital wallets, the CFPB failed to perform appropriate cost-benefit analysis regarding the application of the rule to digital wallets, and that the rule violates the First Amendment by compelling PayPal to disclose information that is largely inapplicable to its products and likely to confuse its customers, while also prohibiting PayPal from presenting clarifications to dispel that confusion. 
 
Simultaneously, the CFPB filed its own motion for summary judgement, arguing that the rule is not arbitrary and capricious with respect to digital wallets, the CFPB appropriately considered the costs and benefits of the rule, and the short-form disclosure requirements do not violate the First Amendment. Oral arguments in the case are currently scheduled for July 6th.
 
CFPB Publishes Statement on Payment App Deposit Insurance
The CFPB published an issue spotlight on popular digital payment apps and reminded consumers that funds stored on these apps may not be held in accounts with federal deposit insurance coverage. Specifically, the spotlight found that more than three-quarters of adults in the U.S. have used payment apps, nonbanks can earn money when users store funds on their platforms, funds sitting in payment app accounts often lack deposit insurance, and user agreements often lack specific information on where funds are invested and under what situations they may be insured. 
 
Perhaps not surprisingly, the CFPB failed to mention the fact that many of these apps are regulated as money transmitters and as such, consumer funds are protected under state regulations.
 
CFPB Fines OneMain $20 Million for Deceptive Sales Practices
The CFPB announced a $20 million fine against installment lender OneMain Financial for failing to refund interest charged to customers who cancelled purchases within the full refund period. OneMain will pay $10 million in refunds to affected consumers, and an additional $10 million penalty to the CFPB’s victims relief fund. Additionally, the order requires OneMain to adjust their cancellation policies to make cancellation of add-on products easier, increase from 30-60 days the period in which a consumer can cancel an unused add-on product, and include interest in refunds after cancellations at any time. More information can be found here.
 
Chairman Brown Introduces Forced Arbitration Bill
Senators Sherrod Brown (D-OH) and Richard Blumenthal (D-CT) and Rep. Hank Johnson (D-GA) introduced The FAIR (Forced Arbitration Injustice Repeal) Act, a bill which would ban pre-dispute arbitration clauses in consumer, antitrust, employment, and civil rights cases.
 
CFPB Issues Guidance to Rein in Creation of Fake Accounts to Harvest Fees
The CFPB released guidance that affirms it would be a violation of federal law if a bank were to unilaterally reopen a deposit account to process transactions after a customer has already closed it. According to the press release, some customers have complained that even after they have completed all the necessary steps to close their accounts, banks have reopened the closed account and assessed overdraft and NSF fees. The guidance confirms that this practice may violate the Consumer Financial Protection Act’s prohibition on unfair acts or practices. More information can be found here. 
 
Rep. Luetkemeyer Introduces Small Business Stability Act
Rep. Blaine Luetkemeyer (R-MO), introduced the Small Business Stability Act, which would give the FDIC the ability to guarantee all non interest-bearing transaction accounts for up to 60 days if a systemic exemption is declared. An exemption declaration would require a 2/3rds vote by the FDIC and Federal Reserve Boards, and approval by Treasury.
 
Update on May 18th HFSC Stablecoin Hearing
The House Financial Services Committee, Subcommittee on Digital Assets, Financial Technology and Inclusion, held a hearing entitled “Putting the ‘Stable’ in ‘Stablecoins:’ How Legislation Will Help Stablecoins Achieve Their Promise.” 
 
During his opening statement, Subcommittee Chairman French Hill (R-AR) noted that although they were discussing separate proposals from both the majority and minority members (available at the links below), there were many similarities between the two, and expressed confidence an agreement could be reached, although Subcommittee Ranking Member Bill Foster (D-IL) and Committee Ranking Member Maxine Waters (D-CA) were less optimistic. 
 
One notable difference in the bills is the relationship between state and federal stablecoin regulation. The Republican bill would allow stablecoin issuers to choose which state they register in without going through the Federal Reserve. Supporters of this approach say it would prevent a “race to the bottom” and would mirror the two-tiered federal/state banking regulatory system. The Democratic bill, on the other hand, would preserve access to regulation at the appropriate federal regulator.
 
Drawing comparisons to the recent collapse of FTX, Ranking Member Maxine Waters (D-CA) highlighted that a central point of the Democratic bill is strong protection for digital wallets when it comes to preventing the comingling of customer assets from crypto exchanges. 
 
CFPB Fines Citizens Bank $9 Million for Unlawful Credit Card Servicing
The CFPB announced a settlement with Citizens Bank to resolve allegations the bank violated consumer protection laws. Specifically, the CFPB alleges that Citizens Bank violated the Truth in Lending Act by improperly denying customer reports of fraud and errors and failing to provide refunds, and failing to provide required documents and referrals. 
 
As part of the settlement, Citizens Bank is required to pay a $9 million fine to the CFPB’s victims relief fund, and fix its credit card practices related to billing error notices and unauthorized use claims. More information can be found here.

New Federal Bills
H.R. 1163, The Protecting Taxpayers and Victims of Unemployment Fraud Act
This bill, sponsored by Rep. Jason Smith (R-MO-08), would provide financial incentives for states to recover fraudulently paid Federal and State unemployment compensation. The bill was marked up and reported favorably from the House Ways and Means Committee on 2/28/23 by a vote of 20-17. The bill was placed on the floor calendar for consideration on 4/6/23.
 
H.R. 1165, Data Privacy Act of 2023
This bill, sponsored by Rep. Patrick McHenry (R-NC-10) would create a federal data privacy standard, and would preempt preexisting state frameworks. This bill was marked up and reported favorably by the House Financial Services Committee on 2/28/23 by a vote of 26-21.