​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​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].

​Summer of Learning Schedule Continues to Grow
The IPA continues to add interesting and informative webinars to our Summer of Learning Series. We currently have the following scheduled:

• September 7th — Summer of Learning Webinar with Tracy Chin, OCC. Details and registration information are forthcoming.

 
Compliance Boot Camp
The IPA will gather in Chicago, IL on September 29th for our Compliance Boot Camp. Topics to be discussed include Regulation E, EWA, BNPL, Paypal v. CFPB, Fraud Prevention, and Cryptocurrency. Registration information can be found here. 

FDIC Issues Update on Brokered Deposits
The FDIC published an update to the Brokered Deposit page on their Banker Resource Center. As you recall, the Final Rule had two exceptions: 1) the “25 percent test,” which provides that an entity will not be considered a deposit broker if less than 25 percent of the total assets that the agent has under administration for its customers, in a particular business line, is placed at an Insured Depository Institutions (IDI), and 2) the “Enabling Transactions Test,” which provides that an entity will not be considered a deposit broker if 100 percent of depositors’ funds that the third party places at IDIs are placed into transactional accounts that do not pay any fees or interest to the depositor.
 
Our initial thoughts are that FDIC’s statement does not appear to substantively change the “Enabling Transactions” exception. Rather it seems to be focused on companies availing themselves of the “25 Percent Test.” It appears that the FDIC believes that some companies are using the 25 Percent Test as a cover that they are conducting matchmaking activities and not reporting properly to the FDIC.  
 
NY State Credit Card Reward Points Bill Goes Takes Effect in December
NY Senate Bill S133B, which was signed into law by New York Governor Kathy Hochul, will take effect this December. The bill will provide a 90-day grace period for the use of credit card reward points before an account is modified, cancelled, closed, or terminated. While the bill does not contain any specific penalty provisions, it does amend New York’s general business law, so both private plaintiffs and the state attorney general could have standing to bring actions to ensure compliance.
 
CFPB Sues ACE Cash Express for Concealing No-Cost Repayment Plans and Improperly Withdrawing Consumers’ Funds
The CFPB filed a lawsuit against payday lender Ace Cash Express, accusing the lender of concealing free repayment plans from borrowers. According to the press release, individual borrowers paid hundreds or thousands of dollars in fees when they were eligible for free repayment plans. This generated at least $240 million in fees for ACE. ACE also withdrew money from borrowers’ bank accounts in violation of contracts.
 
CFPB Director Chopra Blog Post on Competition in Financial Markets
CFPB Director Rohit Chopra published a blog post highlighting the actions the CFPB has taken over the last year to promote competition in financial markets. Specifically, Director Chopra discussed CFPB efforts to identify obstacles for consumers to refinance or switch financial providers, and roadblocks that small financial institutions and new entrants face when challenging larger financial institutions. Director Chopra also highlighted CFPB’s recent initiatives related to the fee RFI and their rulemaking to address credit card late fees.
 
Michael Barr confirmed as Fed Vice Chair for Supervision
Michael Barr was confirmed as the Fed Vice Chair of Supervision with bipartisan support and a vote of 66-28. Barr is a former senior Treasury Department official who played a role in shaping the Dodd-Frank Act. 
 
The Fed Vice Chair for Supervision position has been vacant since late last year. In this role, Barr will oversee day-to-day oversight of the nation’s largest financial institutions and will play a role in the development of financial regulatory policies.
 
Federal Regulators Fine Bank of America $225 Million Over Botched Disbursement of State Unemployment Benefits
The CFPB is fining Bank of America $100 million for botching the disbursement of state unemployment benefits during the pandemic. Separately, the OCC is fining the bank $125 million. The CFPB alleges the bank froze accounts of consumers using a faulty fraud prevention program, and then provided little recourse when there was, in fact, no fraud. In addition to the fine, Bank of America must pay back the money they wrongfully denied consumers and provide a lump sum consequential harm payment. Additional information on the OCC’s fine can be found here.
 
Sen. Kennedy introduces CFPB transparency bill
Sen. John Kennedy (R-LA) introduced the Transparency in CFPB Cost-Benefit Analysis Act. The bill would, in part, require the CFPB to conduct a cost benefit analysis of all proposed regulations, including compliance costs, effects on economic activity, efficiency, competition and capital formation; regulatory and administrative costs; and costs imposes on state, local, and tribal entities. More information on the bill can be found here.  
 
CFPB blog post on overdraft/NSF fee revenues
Last week the CFPB published a blog post on banks’ reliance on overdraft and NSF fees. Specifically, their research found that overdraft/NSF fee revenues continued to be depressed in 2021 and stayed below their 2019 volume by 27.4 percent. In the first quarter of 2022, overdraft/NSF fee revenues stopped their decline and reversed somewhat and were 20.1 percent below their corresponding 2019 levels.

New Federal Bills
 
None.
 
Pending Federal Bills
 
Financial Data Privacy Bill Discussion Draft
 
Summary: The bill would modernize financial data privacy laws and give consumers more control over how their personal information is collected and used.
 
Status: Discussion Draft released. Not officially introduced.
 
Sponsor: Rep. Patrick McHenry (R-NC)
 
S. 4356 Responsible Financial Innovation Act
 
Summary: The bill would create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law.
 
Status: Introduced in Senate on June 7, 2022, Referred to the Committee on Finance.
 
Sponsors: Senators Kristen Gillibrand (D-NY) and Cynthia Lummis (R-WY)
 
The Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act 
 
Summary: The bill would require that payment stablecoin issuers choose from one of three regulatory regimes: a traditional bank charter; a new federal license designed specifically for stablecoin issuers; or a state-based money transmitter or similar license under state law. The bill would also subject all payment stablecoin issuers to standardized disclosure, redemption, and audit requirements; and would clarify that stablecoins that do not offer interest are not securities.
 
Status: Proposed, but not yet introduced.
 
The Stablecoin Innovation and Protection Act
 
Summary: This bill would require stablecoin issuers to either become a bank or to partner with a bank and be subject to bank-like regulation. The bill also requires nonbank stablecoin issuers to maintain collateral in an amount equal to 100 percent of the value of outstanding stablecoin.
 
Status: Proposed, but not yet introduced.
 
Sponsor: Rep. Josh Gottheimer (D-NJ)
 
H.R. 6415 To amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, and for other purposes.
 
Summary: This bill amends the Federal Reserve Act to prohibit the Federal Reserve banks from offering banking products and services, including CBDC, directly to consumers.
 
Status: Introduced in the House and referred to the Financial Services Committee on January 18, 2022.
 
Sponsor: Rep. Tom Emmer (R-MN)
 
H.R. 4773 – Consumer Financial Protection Commission Act
 
Summary: This bill removes the CFPB from the Federal Reserve System, converts the Bureau into an independent commission, and modifies its leadership structure. Specifically, the bill eliminates the position of director and deputy director and establishes a five-person commission appointed by the President and confirmed by the Senate.
 
Status: Introduced in the House and referred to the Financial Services Committee on July 28, 2021.
 
Sponsor:  Rep. Blaine Luetkemeyer (R-MO)
 
H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act
 
Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute.
 
Status: The bill passed the House on 3/17/2022 by a vote of 222-209 and was received in the Senate on 3/21/22.
 
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 purposes.
 
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)
 
H.R. 3968 - Municipal IDs Acceptance Act
 
Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer.
 
Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23.
 
Sponsor: Rep. Richie Torres (D-NY)
 
H.R. 4277 – Overdraft Protection Act of 2021
 
Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs.
 
Status: Introduced and referred to the House Financial Services Committee on 6/30/21.
 
Sponsor: Rep. Carolyn Maloney (D-NY)
 
IV. U.S. Congress Members Not Seeking Re-Election in 2022
The current structure of the U.S. Senate is 48 Democrats, 50 Republicans, and 2 Independents. Currently 1 Democratic and 5 Republican Senators have announced they will not be running for reelection in 2022. The current structure of the U.S. House is 222 Democrats and 211 Republicans. Currently 31 Democratic and 18 Republican House members have announced they will not be running for reelection in 2022. More information about Congressional retirements can be found here. 

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​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].

Summer of Learning Schedule Continues to Grow
The IPA continues to add interesting and informative webinars to our Summer of Learning Series. We currently have the following scheduled:

• July 20th  — Stablecoin Update with Davis, Wright, Tremaine’s Alex Barrage, learn more and register here. 

 
Compliance Boot Camp
The IPA will gather in Chicago, IL on September 29th for our Compliance Boot Camp. Topics to be discussed include Regulation E, EWA, BNPL, Paypal v. CFPB, Fraud/Government Benefits, and Cryptocurrency. Registration information can be found here. 
 
New Member Q&A with Nico Simko CEO & Co-Founder, Clair
IPA COO Ben Jackson conducted a Q&A with Nico Simko, CEO & Co-Founder of Clair. You can learn more about this digital banking platform and their services here. 
 Proliferation of Email Scams Warrant Increased Diligence
IPA Head of Government Relations Chris Stromberg was targeted in an email spoof scam co-starring IPA President Brian Tate. You can read more about his experience and get tips on avoiding similar scams here. 

​CFPB Rescinds Sandbox Approval Order for Payactiv
The CFPB issued an order terminating Payactiv’s Sandbox Approval Order relating to their earned wage access product. The approval order had been in effect since December 2020, and Payactiv requested its termination on June 21st. 
 
Notably, the press release states that the CFPB has received requests for clarification regarding its advisory opinion on EWA, and that they plan on issuing further guidance to provide clarity on the definition of “credit” under TILA and Regulation Z.
 
Joint Statement on the Risk-Based Approach to Assessing Customer Relationships and Conducting Customer Due Diligence
The Federal Reserve, FDIC, FinCEN, NCUA, and OCC issued a joint statement to remind banks of the risk-based approach to customer due diligence. In the statement, the Agencies reinforced their position that no customer type presents a single level of uniform risk or a particular risk profile related to money laundering, terrorist financing, or any other illicit financial activity. Further, a risk-based approach to customer due diligence should be used to develop the initial risk profile and conduct ongoing monitoring to identify and report suspicious transactions and to update customer information.  
 
Waters Announces July House Financial Services Committee Schedule
Chairwoman Waters announced the House Financial Services Committee’s July hearing schedule. Notably, the Committee will hold a hearing on CRA reform and a legislative markup on the 27th. The committee also will hold a hearing on mass shootings, and oversight hearings for the SEC Division of Enforcement and the Federal Housing Finance Agency
 
CFPB Issues Advisory on Sharing Credit and Background Reports
The CFPB issued an advisory to ensure that companies that use and share credit and background reports have a permissible purpose under the Fair Credit Reporting Act (FCRA), and reminds covered entities of potential criminal liability for certain misconduct. The advisory notes that FCRA section 604 identifies an exclusive list of permissible purposes for which consumer reporting agencies may provide consumer reports, and agencies may not provide reports for any other purpose. Some common permissible purposes include using consumer reports for credit, insurance, housing, or employment decisions.
 
Treasury Releases Fact Sheet on International Engagement on Digital Assets
The Department of Treasury released a fact sheet on the framework for interagency engagement with forum counterparts that they, in partnership with the Departments of State and Commerce, and the U.S. Agency for International Development, developed as directed in the President’s Executive Order on digital assets. Specifically, the fact sheet outlined a framework for engagement with the G7, G20, Financial Stability Board (FSB), Financial Action Task Force (FATF), Organization for Economic Cooperation and Development (OECD), International Monetary Fund (IMF), the World Bank, other standard-setting bodies, and regional and bilateral engagements.
 
Senators Send Letter to Zelle to Crack Down on Fraud
Eight Democratic Senators, led by Sens. Bob Menendez, Elizabeth Warren, and Jack Reed, sent letters to Capitol One, Wells Fargo, PNC Bank, JPMorgan Chase, US Bank, Bank of America, and Truist, owners of Zelle through parent company Early Warning Services. The letter criticized the banks for not doing more for customers defrauded by scammers on Zelle. 
 
The letter follows a similar letter sent by senators in April to Early Warning Services. In response to that letter, the company said they have already made changes such as real-time alerts to ask users to consider if they know and trust the recipient before initiating a transaction using the service. 
 
The letters include five questions for response on the prevalence of fraud on the Zelle platform and the banks’ policies for detecting, eliminating, and mitigating the effects of fraud.

​New Federal Bills
 
None.
 
Pending Federal Bills
 
Financial Data Privacy Bill Discussion Draft
 
Summary: The bill would modernize financial data privacy laws and give consumers more control over how their personal information is collected and used.
 
Status: Discussion Draft released. Not officially introduced.
 
Sponsor: Rep. Patrick McHenry (R-NC)
 
S. 4356 Responsible Financial Innovation Act
 
Summary: The bill would create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law.
 
Status: Introduced in Senate on June 7, 2022, Referred to the Committee on Finance.
 
Sponsors: Senators Kristen Gillibrand (D-NY) and Cynthia Lummis (R-WY)
 
The Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act 
 
Summary: The bill would require that payment stablecoin issuers choose from one of three regulatory regimes: a traditional bank charter; a new federal license designed specifically for stablecoin issuers; or a state-based money transmitter or similar license under state law. The bill would also subject all payment stablecoin issuers to standardized disclosure, redemption, and audit requirements; and would clarify that stablecoins that do not offer interest are not securities.
 
Status: Proposed, but not yet introduced.
 
The Stablecoin Innovation and Protection Act
 
Summary: This bill would require stablecoin issuers to either become a bank or to partner with a bank and be subject to bank-like regulation. The bill also requires nonbank stablecoin issuers to maintain collateral in an amount equal to 100 percent of the value of outstanding stablecoin.
 
Status: Proposed, but not yet introduced.
 
Sponsor: Rep. Josh Gottheimer (D-NJ)
 
H.R. 6415 To amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, and for other purposes.
 
Summary: This bill amends the Federal Reserve Act to prohibit the Federal Reserve banks from offering banking products and services, including CBDC, directly to consumers.
 
Status: Introduced in the House and referred to the Financial Services Committee on January 18, 2022.
 
Sponsor: Rep. Tom Emmer (R-MN)
 
H.R. 4773 – Consumer Financial Protection Commission Act
 
Summary: This bill removes the CFPB from the Federal Reserve System, converts the Bureau into an independent commission, and modifies its leadership structure. Specifically, the bill eliminates the position of director and deputy director and establishes a five-person commission appointed by the President and confirmed by the Senate.
 
Status: Introduced in the House and referred to the Financial Services Committee on July 28, 2021.
 
Sponsor:  Rep. Blaine Luetkemeyer (R-MO)
 
H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act
 
Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute.
 
Status: The bill passed the House on 3/17/2022 by a vote of 222-209 and was received in the Senate on 3/21/22.
 
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 purposes.
 
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)
 
H.R. 3968 - Municipal IDs Acceptance Act
 
Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer.
 
Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23.
 
Sponsor: Rep. Richie Torres (D-NY)
 
H.R. 4277 – Overdraft Protection Act of 2021
 
Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs.
 
Status: Introduced and referred to the House Financial Services Committee on 6/30/21.
 
Sponsor: Rep. Carolyn Maloney (D-NY)
 
IV. U.S. Congress Members Not Seeking Re-Election in 2022
The current structure of the U.S. Senate is 48 Democrats, 50 Republicans, and 2 Independents. Currently 1 Democratic and 5 Republican Senators have announced they will not be running for reelection in 2022. The current structure of the U.S. House is 222 Democrats and 211 Republicans. Currently 31 Democratic and 18 Republican House members have announced they will not be running for reelection in 2022. More information about Congressional retirements can be found here.