The Government Updateis 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: [email protected]. 
 IPA Launches Safe Shopping Webpage This year has led to more online shopping than ever. Unfortunately, that means that scammers and fraudsters are also sneaking around cyberspace. The Innovative Payments Association, the Retail Gift Card Association, and the Payments Fraud and Risk Consortium have brought together a dozen tips from our members’ security teams to help you & your customers have a safe holiday shopping season. Check out our newest page, shoppingsafely.org, that teaches everyone how to protect themselves from fraud as we take everything virtual in 2020 and beyond!  Ogilvy Government Relations 2021 Governance Analysis The IPA’s partners at Ogilvy Government Relations have prepared a 2021 Governance Analysis. While the Senate Majority is still not decided and there are pending lawsuits challenging the results of the presidential election, this document provides an analysis of the 2020 Election and a discussion of the likely dynamics between the White House, House, and Senate in 2021. It additionally provides insight into the priorities of each of these entities as well as a look at who might occupy key congressional leadership positions. Access the Analysis here!  OFFICE OF THE COMPTROLLER OF THE CURRENCY (OCC) Acting Comptroller of the Currency Nominated to Fill Role Permanently On November 17, President Trump announced his intent to nominate Brian Brooks to a five-year term as the Comptroller of the Currency. The Comptroller of the Currency is a key player for national banks and FinTechs. The Comptroller has a seat of the Board of Directors of the FDIC as well. According to statute, the Comptroller “shall hold his office for a term of five years unless sooner removed by the President, upon reasons to be communicated by him to the Senate.” Given this, it would be possible for President-elect Biden to remove Brooks as soon as he takes office, appoint and acting comptroller, and nominate a permanent replacement. FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) FDIC Consumer News: Banking With Apps On November 18, the FDIC issued a Consumer News release on “Banking with Apps”. The release provides an overview of the differences between deposit accounts offered by banks and financial products offered by non-bank companies, as well as tips for consumers considering using “fintech” for their banking needs. The full release can be accessed online here.  Recap of House Financial Services Committee Hearing with Financial Regulators On November 12, the House Financial Services Committee held a hearing entitled, “Oversight of Prudential Regulators: Ensuring the Safety, Soundness, Diversity, and Accountability of Depository Institutions during the Pandemic”, which featured the Chair of the FDIC, the Acting Comptroller of the Currency, the Chairman of the NCUA, and the Fed Vice Chair for Supervision. House Financial Services Committee Chairwoman Maxine Waters’ opening statement from the hearing provided insight into what her approach in the 117th Congress may look like. She discussed rulemakings from the financial regulators that, in her view, are harmful, like CRA reform, the Volker rule, and rulemakings that weaken capital and oversight requirements for financial institutions. She followed that up by saying, “the last thing the nation needs during this crisis are actions from regulators that harm communities and make our financial system riskier and less stable. I am putting our witnesses on notice that I will be working with the Biden Administration to roll back these rules.” Further, she closed by saying, “we are emerging from the dark days of the Trump Administration into the dawn of a new progressive America, where pro- consumer and pro-investor policies will always be first on the agenda.” These comments are likely a preview of some of what the Chairwoman’s priorities and approach will be in the next Congress. Democrats in Congress are also going to be putting pressure on the Biden Administration to take action via the regulators, so this may also give some insight into where that pressure may be focused. In addition, there was a confirmation on the timing of the Brokered Deposits final rule from the FDIC. In her opening statement, Chair McWilliams indicated that the FDIC plans to finalize the Brokered Deposits rulemaking before the end of the year. The final rule may be released as soon as this month. A recording of the hearing and Chair McWilliams opening statement can be accessed here and Chairwoman Waters’ opening statement can be accessed here. House Ways and Means Committee to Hold Oversight Hearing with IRS Commissioner On November 20, the House Ways and Means Oversight Subcommittee will conduct a hearing with IRS Commissioner Retting at 10 AM ET. This will be Commissioner Retting’s first appearance before the subcommittee during the 116th Congress. Economic Impact Payments will likely be up for discussion. The hearing will be livestreamed here. The IPA will follow the hearing and provide updates on any significant developments from the hearing.  Biden-Harris Transition Announces Agency Review Teams On November 11, the Biden-Harris Transition announced members of their agency review teams (ARTs). According to the Biden-Harris Transition, ARTs are responsible for evaluating the operations of the federal agencies so that the incoming Biden-Harris administration is prepared to lead, and are composed of experienced and talented professionals with deep backgrounds in crucial policy areas across the federal government. Below, please find the rosters for the Consumer Financial Protection Bureau (CFPB) and the Department of the Treasury ARTs. Additional information and the full list of ART rosters can be found here.  National Consumer Law Center Releases 2021 Consumer Protection Federal Priorities Agenda   U.S. Chamber of Commerce Releases Report on Consumer Arbitration On November 16, the U.S. Chamber of Commerce’s Institute for Legal Reform released a new report entitled, ““Fairer, Faster, Better II: An Empirical Assessment of Consumer Arbitration”. Conducted by NDP Analytics, the study analyzed more than 100,000 consumer arbitration and court claims between January 2014 and June 2020. The results show that in claims initiated by consumers they are more likely to win in arbitration, win more money through arbitration, and get through arbitration faster than litigation.
 None.  New Federal Laws
None. Pending Federal Bills H.R. 189--Financial Institution Customer Protection Act of 2019 Summary: This bill specifies that a federal banking agency cannot request or order a financial institution to close a customer account unless the agency has a valid reason for doing so, and that reason cannot be only reputational risk. Introduced: Jan. 3, 2019 Status: The bill was referred to the House Committee on Financial Services on Jan. 3, 2019. Sponsor: Rep. Blaine Luetkemeyer (R-MO); 0 co-sponsors. 3% chance of enactment (according to govtrack). Details:https://www.congress.gov/bill/116th-congress/house-bill/189/all-actions?q=%7B%22search%22%3A%5B%22hr+189%22%5D%7D&s=2&r=1 H.R. 758--Cooperate with Law Enforcement Agencies and Watch Act of 2019 Summary: The bill would protect institutions from regulatory action for keeping accounts open at the request of law enforcement. Introduced: Jan. 24, 2019 Status: The bill was received in the Senate, read twice, and referred to the Committee on Banking, Housing, and Urban Affairs on March 12, 2019. Sponsor: Rep. J. French Hill (R-AR); 2 co-sponsors. 3% chance of enactment (according to govtrack). Details:https://www.congress.gov/bill/116th-congress/house-bill/758/cosponsors?q=%7B%22search%22%3A%5B%22hr+758%22%5D%7D&r=1&s=1 H.R. 907—To Clarify Exclusions from the Definition of a Deposit Broker Summary: The bill would amend the Federal Deposit Insurance Act (“FDIA”) to clarify the exemptions from the definition of a “deposit broker.” Specifically, the bill would amend FDIA Section 29(g)(2)(I) to provide that a deposit broker does not include an agent or nominee (i) whose primary business purpose is not the placement of deposits with an insured financial institution; or (ii) who is an exclusive agent of an insurance company or insured depository institution affiliated with an insurance company, provided that the agent or nominee is, among other things, contractually prohibited from placing funds with any other unaffiliated depository institution. Introduced: Jan. 30, 2019 Status: The bill was referred to the House Committee on Financial Services on Jan. 30, 2019. Sponsor: Rep. Darin LaHood (R-IL); 2 co-sponsors. 3% chance of enactment (according to govtrack). Details: https://www.congress.gov/bill/116th-congress/house-bill/907/text?r=55&s=1 H.R. 1423—Forced Arbitration Injustice Repeal (FAIR) Act Summary: The bill would prohibit forced arbitration agreements and any agreements that would preclude class action lawsuits. Introduced: Feb. 28, 2019 Status: Received in the Senate and Read twice and referred to the Committee on the Judiciary on September 24, 2019. Sponsor: Rep. Johnson, Henry C. “Hank,” Jr. (D-GA); 222 cosponsors. 3% chance of enactment (according to govtrack). Details: https://www.congress.gov/bill/116th-congress/house-bill/1423 H.R. 2514—Counter Act of 2019 Summary: This bill would make changes to the Bank Secrecy Act and anti-money laundering laws. It would require the financial regulators and Financial Crimes Enforcement Network to each appoint a civil liberties and privacy officer who would need to consult on any new regulations. It would create a public-private information sharing program between FinCEN and the financial services industry, and it would require AML training for examiners. Introduced: May 3, 2019 Status: The bill passed the House of Representatives on October 28, 2019 and was received in the Senate and referred to the Senate Banking Committee on October 29, 2019. Sponsor: Rep. Emanuel Cleaver (D-MO); 2 co-sponsors, 3% chance of enactment (according to govtrack). Details:https://www.congress.gov/bill/116th-congress/house-bill/2514?q=%7B%22search%22%3A%5B%22hr2514%22%5D%7D&r=1&s=2 H.R. 2630—Cash Always Should be Honored (CASH) Act Summary: This bill would make it unlawful for any physical retail establishment to refuse to accept cash as payment. Introduced: May 9, 2019 Status: The bill was referred to the House Committee on Energy and Commerce on May 9, 2019. Sponsor: Rep. David Cicilline (D-RI); 10 co-sponsors. 3% chance of enactment (according to govtrack). Details: https://www.congress.gov/bill/116th-congress/house-bill/2630 H.R. 4501— Consumer Transaction Account Protection Act of 2019 Summary: This bill would specify that consumer transaction account deposits of an insured depository institution shall not be considered to be funds obtained through a deposit broker. Introduced: September 26, 2019 Status: The bill was referred to the House Committee on Financial Services on September 26, 2019. Sponsor: Rep. Roger Williams (R-TX); 1 co-sponsor. 3% chance of enactment (according to govtrack). Details: https://www.congress.gov/bill/116th-congress/house-bill/4501?r=11&s=1 H.R. 4767—Financial Services Innovation Act of 2019 Summary: The bill requires federal regulators to create Financial Services Innovation Offices (FSIOs) within their agencies to foster innovation in financial services. Companies would also be able to apply for an “enforceable compliance agreement” with the FSIOs that, if accepted, will allow them to provide an innovative product or service under an alternative compliance plan. Introduced: Oct. 21, 2019 Status: The bill was referred to the House Financial Services Committee and in addition to the Committee on Agriculture, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned. On Nov. 11, 2019 it was referred to the Subcommittee on Commodity Exchanges, Energy, and Credit of the Committee on Agriculture. Sponsor: Rep. Patrick McHenry (R-NC); 1 co-sponsor; 3% chance of enactment (according to govtrack). Details:https://www.congress.gov/bill/116th-congress/house-bill/4767?q=%7B%22search%22%3A%5B%224767%22%5D%7D&s=1&r=1 H.R. 6116-- Consumer Financial Protection Commission Act Summary: The bill would convert the leadership structure of the CFPB from a sole director to a commission. The commission would be made up of 5 members who are appointed by the president and approved by the Senate to serve 5-year terms. No more than 3 members of the commission would be allowed to be from the same political party. The name of the Bureau would also be changed to the Consumer Financial Protection Commission. Introduced: March 5, 2020 Status: The bill was referred to the House Financial Services Committee. Sponsor: Rep. Blaine Luetkemeyer (R-MO); 25 co-sponsors; 3% chance of enactment (according to govtrack). Details:https://www.congress.gov/bill/116th-congress/house-bill/6116/cosponsors?r=4&s=1&searchResultViewType=expanded&KWICView=false H.R. 6241-- Touchless Transactions Act of 2020 Summary: The bill would eliminate signatures for swipe, dip, or tap point-of-sale transactions. Introduced: March 12, 2020 Status: The bill was referred to the House Financial Services Committee. Sponsor: Rep. French Hill (R-AR); 10 co-sponsors; 3% chance of enactment (according to govtrack). Details:https://www.congress.gov/bill/116th-congress/house-bill/6241?q=%7B%22search%22%3A%5B%22hr+6241%22%5D%7D&s=2&r=1 H.R. 8721-- Public Banking Act of 2020 Summary: TThe bill would allow for the creation of state and locally administered public banks by establishing the Public Bank Grant program administered by the Secretary of the Treasury and the Federal Reserve Board which would provide grants for the formation, chartering and capitalization of public banks. It also codifies that public banks may be members of the Federal Reserve. The legislation also creates a pathway for state-chartered banks to gain federal recognition and provides a framework for public banks to interact with Fed Accounts, postal banking, and Digital Dollar platforms. Introduced: October 30, 2020 Status: Referred to the Committee on Financial Services, and in addition to the Committee on Oversight and Reform, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned. Sponsor: Reps. Rashida Tlaib (D-MI) and Alexandria Ocasio-Cortez (D-NY); 9 co-sponsors; % chance of enactment not yet available (according to govtrack). Details: https://www.congress.gov/bill/116th-congress/house-bill/8721?s=1&r=1 S. 142—The American Data Dissemination Act Summary: The bill would impose privacy requirements on providers of internet services similar to the requirements imposed on federal agencies under the Privacy Act of 1974. Introduced: Jan. 16. 2019 Status: The bill was referred to the Senate Commerce, Science, and Transportation Committee on Jan. 16, 2019. Sponsor: Sen. Marco Rubio (R-FL), 0 co-sponsors, 3% chance of enactment (according to govtrack). Details:https://www.congress.gov/bill/116th-congress/senate-bill/142/text?q=%7B%22search%22%3A%5B%22S.142%22%5D%7D&r=1&s=3 S. 149—Stop Senior Scams Act Summary: The bill would establish an advisory council made up of federal regulators and industry representatives from, among others, gift card and prepaid card companies, to collect and review information in the development of model materials to provide to retailers, financial services companies, and wire-transfer companies to be used to educate employees on how to identify and prevent scams affecting seniors. Introduced: Jan. 16, 2019 Status: Passed the Senate on June 16, 2020 by unanimous consent and was sent to the House of Representatives for further consideration. Sponsor: Sen. Robert Casey (D-PA); 2 co-sponsors, 83% chance of enactment (according to govtrack). Details:https://www.congress.gov/bill/116th-congress/senate-bill/149/text?q=%7B%22search%22%3A%5B%22S.149%22%5D%7D&r=1&s=2 S. 189—The Social Media Privacy Protection and Consumer Rights Act of 2019 Summary: This bill requires online platform operators to inform a user, prior to a user creating an account or otherwise using the platform, that the user’s personal data produced during online behavior will be collected and used by the operator and third parties. Introduced: Jan. 17, 2019 Status: Read twice and referred to the Committee on Commerce, Science, and Transportation on Jan. 17, 2019 Sponsor: Sen. Amy Klobuchar (D-MN); 3 co-sponsors, 3% chance of enactment (according to govtrack). Details:https://www.congress.gov/bill/116th-congress/senate-bill/189/text?q=%7B%22search%22%3A%5B%22S.189%22%5D%7D&r=1&s=1 S. 453—A Bill to Amend the Consumer Financial Protection Act of 2010 to Subject the Bureau of Consumer Financial Protection to the Regular Appropriations Process Summary: The bill would amend the Consumer Financial Protection Act of 2010 to subject the Consumer Financial Protection Bureau to the regular appropriations process. Introduced: Feb. 12, 2019 Status: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on Feb. 12, 2019. Sponsor: Sen. David Perdue (R-GA); 18 cosponsors. 3% chance of enactment (according to govtrack). Details: https://www.congress.gov/bill/116th-congress/senate-bill/453 S. 3108— Consumer Transaction Account Protection Act of 2019 Summary: This bill would specify that consumer transaction account deposits of an insured depository institution shall not be considered to be funds obtained through a deposit broker. Introduced: December 19, 2020 Status: The bill was referred to the Committee on Banking, Housing, and Urban Affairs on December 19, 2019. Sponsor: Sen. Doug Jones (D-AL); 2 co-sponsors. 3% chance of enactment (according to govtrack). Details:https://www.congress.gov/bill/116th-congress/senate-bill/3108?q=%7B%22search%22%3A%5B%22brokered+deposits%22%5D%7D&s=4&r=2 S. 3962— Asset Growth Restriction Act of 2020 Summary: The bill would strike the current legal framework for brokered deposits and replace it with an authorization for the FDIC to limit the asset growth of financially troubled banks by regulation, rule, or order. Introduced: June 15, 2020 Status: The bill was referred to the Committee on Banking, Housing, and Urban Affairs on June 15, 2020. Sponsor: Sen. Jerry Moran (R-KS); 0 co-sponsors. 1% chance of enactment (according to govtrack). Details: https://www.congress.gov/bill/116th-congress/senate-bill/3962?s=7&r=9 S. 4159 — E-SIGN Modernization Act of 2020 Summary: The bill would remove the requirement that consumers “ reasonably demonstrate” that they can access the disclosures that are the subject of the consent, through a website or e-mail, for example, after they’ve specifically asked to go paperless. Introduced: July 2, 2020 Status: The bill was marked-up and approved by the Commerce Committee on September 16, 2020. Sponsor: Sen. John Thune (R-SD); 3 co-sponsors. 15% chance of enactment (according to govtrack). Details: https://www.congress.gov/bill/116th-congress/senate-bill/3962?s=7&r=9 The Government Updateis 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: [email protected].
 IPA & Ogilvy Government Relations Post Election Analysis As you are aware, the results of the 2020 election will not only determine our country’s next President, but also the composition of the 117thCongress, where 35 U.S. Senate seats and all 435 U.S. House of Representatives seats were up for re-election. This year has been filled with surprises and challenges, and the election is shaping up to be no exception. Votes in many key states are still being counted due to record numbers of mail-in ballots and early votes. As a result, the winners of the races for the White House and Senate Majority have not been determined. At this time, Vice President Biden leads President Trump (238-213, according to CNN) in the race to 270 electoral votes. Pennsylvania (20 electoral college votes), Michigan (16), Georgia (16), North Carolina (15), Arizona (11), Wisconsin (10), Nevada (6), Maine (4), and Alaska (3) have not yet been called. Varying deadlines to receive ballots and millions of still-uncounted votes in these states, in addition to impending legal challenges, could extend the timeline for final results for days, if not weeks. In the race for the Senate Majority, Democrats have a net gain of one at this point (Colorado and Arizona pickup, Alabama loss), with Sen. Peters’ race in Michigan still not called. On the Republican side, Sen. Collins’ and Sen. Tillis’ elections have not been called. The Georgia special election for Sen. Loeffler is headed to a runoff, and Sen. Perdue’s lead is right at 50% and has not been called either. If that were to slip below 50%, there could be a second runoff. Control of the Senate may ultimately be determined by the January 5th Georgia runoff. Democrats will need two of these seats plus a Biden win, or three seats without Biden, to take control of the Senate. The one area where there is clarity is the U.S. House of Representatives. Democrats retained their majority in the House, but Republicans have exceeded expectations with a current net gain of at least four seats. To help make sense of this all, our partners at Ogilvy Government Relations have prepared a 2020 post-election analysis, which provides an excellent overview of the current state of play and the potential impacts of the 2020 election. In addition, to explain the impacts of the election in more detail and provide an update on where things stand in the presidential and Senate races, the IPA will host a members-only Post Election Analysis Call on Thursday, November 5th at 3 PM ET. On the call, political consultants from Ogilvy GR will provide an analysis of the election including a discussion of (i) the results of the election and insight into who might occupy key congressional leadership positions, (ii) how the election results may impact the priorities of the 117th Congress, and (iii) potential executive-level appointments. To join the November 5th Post Election Analysis Call, please register here.  FEDERAL RESERVE Federal Reserve Releases Detailed Data on Noncash Payments On October 29, the Federal Reserve released detailed data about noncash payments in the United States from 2012 to 2018. This release supplements top-line data from the 2019 Federal Reserve Payments Study (FRPS), previously reported in December 2019. The FRPS Detailed Data Release includes new information about core noncash payments and some evolving areas of payments:
Details on the following highlights, previously reported in December, also are provided:
The detailed data include a spreadsheet with 11 tabs for accounts, cards, and payment instrument use as well as a release note describing the data sources and allocations. The December report of the 2019 Federal Reserve Payments Study, glossaries, and questionnaires also are posted. The detailed data and the December report can accessed here. MULTI-AGENCY Financial Regulatory Agencies Propose Regulation on the Role of Supervisory Guidance On October 29, five federal financial regulatory agencies today released a Notice of Proposed Rulemaking (NPR) inviting comment on a proposed rule that would codify the Interagency Statement Clarifying the Role of Supervisory Guidance issued by the agencies on September 11, 2018. The Statement clarified that, unlike a law or regulation, supervisory guidance does not have the force and effect of law and, as such, does not create binding legal obligations for the public. According to the NPR, the proposed rule is intended to confirm that the agencies will continue to follow and respect the limits of administrative law in carrying out their supervisory responsibilities. The proposal would also clarify that the 2018 Statement, as amended, is binding on the agencies. The five agencies that are party to the NPR include:
Comments will be accepted for 60 days following publication in the Federal Register. The full NPR can be accessed here. MULTI-AGENCY Financial Regulatory Agencies Propose Regulation on the Role of Supervisory Guidance On October 29, five federal financial regulatory agencies today released a Notice of proposed Rulemaking (NPR) inviting comment on a proposed rule that would codify the Interagency Statement Clarifying the Role of Supervisory Guidance issued by the agencies on September 11, 2018. The Statement clarified that, unlike a law or regulation, supervisory guidance does not have the force and effect of law and, as such, does not create binding legal obligations for the public. According to the NPR, the proposed rule is intended to confirm that the agencies will continue to follow and respect the limits of administrative law in carrying out their supervisory responsibilities. The proposal would also clarify that the 2018 Statement, as amended, is binding on the agencies. The five agencies that are party to the NPR include:
Comments will be accepted for 60 days following publication in the Federal Register. The full NPR can be accessed here.  Reps. Tlaib & Ocasio-Cortez Introduce Public Banking Legislation On October 30, Congresswomen Rashida Tlaib (D-MI) and Alexandria Ocasio-Cortez (D-NY) introduced the Public Banking Act (H.R. 8721), which allows for the creation of state and locally administered public banks by establishing the Public Bank Grant program administered by the Secretary of the Treasury and the Federal Reserve Board which would provide grants for the formation, chartering and capitalization of public banks. It also codifies that public banks may be members of the Federal Reserve. The legislation also creates a pathway for state-chartered banks to gain federal recognition and provides a framework for public banks to interact with Fed Accounts, postal banking, and Digital Dollar platforms. It also:
The legislation currently has nine co-sponsors, all of whom are Democrats, and has been referred to the Committee on Financial Services, and in addition to the Committee on Oversight and Reform. Additional information can be found here. It is unlikely that this legislation will be considered in the 116th Congress. However, this proposal and others like it (postal banking, FedAccounts, pass-through wallets, etc.) will likely be priorities for Democrats in the 117th Congress. None.  It's a Jersey Thing: Earned Wage Access Bill Gets Amended By: Steve Middlebrook, Of Counsel, Womble Bond Dickinson California, New York and New Jersey all have earned wage access (EWA) legislation pending, although nothing much has happened with these bills for months. Last week, however, a New Jersey Assembly committee amended one of these bills, AB 3450, and sent it to the floor for further consideration. Some of the changes made by the committee are helpful but some of them are not. We’ve written about earned wage access products before as well as legislative initiatives to regulate them. New Jersey’s Assembly Bill 3450, introduced in late February 2020, would regulate EWA products in several ways. The bill requires EWA providers to have contracts with the employers, verify the employee’s earned income before making an advance and to secure the employee’s consent before obtaining information about the employee from the employer. The amended version also requires providers to register with state regulators and to base the amount of an advance on the employee’s net wages rather than gross wages. These modifications seem appropriate and beneficial. This original bill essentially killed direct-to-consumer business models because it prohibited the provider from recouping the advance directly from the consumer’s bank account. The amended bill strikes this provision and allows for direct-to-consumer products as long as the provider does not charge the consumer a “mandatory fee.” The ban on “mandatory fees” presumably allows providers to collect “voluntary fees.” One provider in the marketplace operates on a business model where it does not assess fees but does collect “tips” from consumers who use the service. This amendment would allow that provider’s tip business model but would prohibit all other direct-to-consumer products. It seems inappropriate and unfair for legislation to pick winners and losers in the competitive and evolving marketplace for EWA products. This is especially true when the provider who relies on tips has been sued over whether the voluntary payments really are voluntary. More on that litigation below. Another problem with the ban on mandatory fees for direct-to-consumer models is that given the way the provision is written, it arguably applies to all EWA providers and not just direct-to-consumer services. The actual provision states that a “provider that contracts directly with a consumer shall not charge a mandatory fee to the consumer.” The issue with this wording is that employer-integrated providers typically interact with employees through mobile apps or websites that require the user to agree to Terms of Service that are technically a contract. This means the prohibition could be interpreted to apply not just to direct-to-consumer business models but to all to EWA providers. Most employer-integrated providers allow an employee to receive an advance without charge via electronic fund transfer. Those transfers take two to three days to arrive, however, so providers commonly also offer a real-time payment option at a nominal fee which makes the advanced funds available to the worker in a few minutes. Real-time payments are more expensive than old-fashioned ACH and the fee is necessary if providers are going to offer this option. If providers cannot offer real-time payments, EWA products become less useful to employees. AB 3450 should be further amended to clarify that the prohibition on mandatory fees does not apply to employer-integrated services. This bill appears to have some momentum and we expect additional legislative action in the near future. Stay tuned for more developments. We mentioned above the class action litigation filed against Earnin back in 2019. Those cases were recently settled. While the complaints had alleged a number of causes of action, including violations of federal and state lending laws as well as unfair and deceptive acts and practices, the settlement focuses on consumers who were charged an overdraft or insufficient funds fee by their bank due to an Earnin withdrawal. The settlement provides for up to $12,500,000 in relief. That amount includes $3,000,000 to cover compensation to class members, attorney’s fees and class administration costs. Earnin is also required to forgive certain unpaid advances up to an aggregate amount of $9,500,000. In addition, Earnin agreed to provide consumers with disclosures regarding the risk of third-party fees, to refund subsequent overdraft and NSF fees for a year, to not consider individual tipping behavior when determining a consumer’s advance limit, and to otherwise comply with all applicable state and federal law. All providers in the EWA space should review the settlement in detail to glean some valuable lessons learned.  New Federal Laws
None. Pending Federal Bills H.R. 189--Financial Institution Customer Protection Act of 2019 Summary: This bill specifies that a federal banking agency cannot request or order a financial institution to close a customer account unless the agency has a valid reason for doing so, and that reason cannot be only reputational risk. Introduced: Jan. 3, 2019 Status: The bill was referred to the House Committee on Financial Services on Jan. 3, 2019. Sponsor: Rep. Blaine Luetkemeyer (R-MO); 0 co-sponsors. 3% chance of enactment (according to govtrack). Details:https://www.congress.gov/bill/116th-congress/house-bill/189/all-actions?q=%7B%22search%22%3A%5B%22hr+189%22%5D%7D&s=2&r=1 H.R. 758--Cooperate with Law Enforcement Agencies and Watch Act of 2019 Summary: The bill would protect institutions from regulatory action for keeping accounts open at the request of law enforcement. Introduced: Jan. 24, 2019 Status: The bill was received in the Senate, read twice, and referred to the Committee on Banking, Housing, and Urban Affairs on March 12, 2019. Sponsor: Rep. J. French Hill (R-AR); 2 co-sponsors. 3% chance of enactment (according to govtrack). Details:https://www.congress.gov/bill/116th-congress/house-bill/758/cosponsors?q=%7B%22search%22%3A%5B%22hr+758%22%5D%7D&r=1&s=1 H.R. 907—To Clarify Exclusions from the Definition of a Deposit Broker Summary: The bill would amend the Federal Deposit Insurance Act (“FDIA”) to clarify the exemptions from the definition of a “deposit broker.” Specifically, the bill would amend FDIA Section 29(g)(2)(I) to provide that a deposit broker does not include an agent or nominee (i) whose primary business purpose is not the placement of deposits with an insured financial institution; or (ii) who is an exclusive agent of an insurance company or insured depository institution affiliated with an insurance company, provided that the agent or nominee is, among other things, contractually prohibited from placing funds with any other unaffiliated depository institution. Introduced: Jan. 30, 2019 Status: The bill was referred to the House Committee on Financial Services on Jan. 30, 2019. Sponsor: Rep. Darin LaHood (R-IL); 2 co-sponsors. 3% chance of enactment (according to govtrack). Details: https://www.congress.gov/bill/116th-congress/house-bill/907/text?r=55&s=1 H.R. 1423—Forced Arbitration Injustice Repeal (FAIR) Act Summary: The bill would prohibit forced arbitration agreements and any agreements that would preclude class action lawsuits. Introduced: Feb. 28, 2019 Status: Received in the Senate and Read twice and referred to the Committee on the Judiciary on September 24, 2019. Sponsor: Rep. Johnson, Henry C. “Hank,” Jr. (D-GA); 222 cosponsors. 3% chance of enactment (according to govtrack). Details: https://www.congress.gov/bill/116th-congress/house-bill/1423 H.R. 2514—Counter Act of 2019 Summary: This bill would make changes to the Bank Secrecy Act and anti-money laundering laws. It would require the financial regulators and Financial Crimes Enforcement Network to each appoint a civil liberties and privacy officer who would need to consult on any new regulations. It would create a public-private information sharing program between FinCEN and the financial services industry, and it would require AML training for examiners. Introduced: May 3, 2019 Status: The bill passed the House of Representatives on October 28, 2019 and was received in the Senate and referred to the Senate Banking Committee on October 29, 2019. Sponsor: Rep. Emanuel Cleaver (D-MO); 2 co-sponsors, 3% chance of enactment (according to govtrack). Details:https://www.congress.gov/bill/116th-congress/house-bill/2514?q=%7B%22search%22%3A%5B%22hr2514%22%5D%7D&r=1&s=2 H.R. 2630—Cash Always Should be Honored (CASH) Act Summary: This bill would make it unlawful for any physical retail establishment to refuse to accept cash as payment. Introduced: May 9, 2019 Status: The bill was referred to the House Committee on Energy and Commerce on May 9, 2019. Sponsor: Rep. David Cicilline (D-RI); 10 co-sponsors. 3% chance of enactment (according to govtrack). Details: https://www.congress.gov/bill/116th-congress/house-bill/2630 H.R. 4501— Consumer Transaction Account Protection Act of 2019 Summary: This bill would specify that consumer transaction account deposits of an insured depository institution shall not be considered to be funds obtained through a deposit broker. Introduced: September 26, 2019 Status: The bill was referred to the House Committee on Financial Services on September 26, 2019. Sponsor: Rep. Roger Williams (R-TX); 1 co-sponsor. 3% chance of enactment (according to govtrack). Details: https://www.congress.gov/bill/116th-congress/house-bill/4501?r=11&s=1 H.R. 4767—Financial Services Innovation Act of 2019 Summary: The bill requires federal regulators to create Financial Services Innovation Offices (FSIOs) within their agencies to foster innovation in financial services. Companies would also be able to apply for an “enforceable compliance agreement” with the FSIOs that, if accepted, will allow them to provide an innovative product or service under an alternative compliance plan. Introduced: Oct. 21, 2019 Status: The bill was referred to the House Financial Services Committee and in addition to the Committee on Agriculture, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned. On Nov. 11, 2019 it was referred to the Subcommittee on Commodity Exchanges, Energy, and Credit of the Committee on Agriculture. Sponsor: Rep. Patrick McHenry (R-NC); 1 co-sponsor; 3% chance of enactment (according to govtrack). Details:https://www.congress.gov/bill/116th-congress/house-bill/4767?q=%7B%22search%22%3A%5B%224767%22%5D%7D&s=1&r=1 H.R. 6116-- Consumer Financial Protection Commission Act Summary: The bill would convert the leadership structure of the CFPB from a sole director to a commission. The commission would be made up of 5 members who are appointed by the president and approved by the Senate to serve 5-year terms. No more than 3 members of the commission would be allowed to be from the same political party. The name of the Bureau would also be changed to the Consumer Financial Protection Commission. Introduced: March 5, 2020 Status: The bill was referred to the House Financial Services Committee. Sponsor: Rep. Blaine Luetkemeyer (R-MO); 25 co-sponsors; 3% chance of enactment (according to govtrack). Details:https://www.congress.gov/bill/116th-congress/house-bill/6116/cosponsors?r=4&s=1&searchResultViewType=expanded&KWICView=false H.R. 6241-- Touchless Transactions Act of 2020 Summary: The bill would eliminate signatures for swipe, dip, or tap point-of-sale transactions. Introduced: March 12, 2020 Status: The bill was referred to the House Financial Services Committee. Sponsor: Rep. French Hill (R-AR); 10 co-sponsors; 3% chance of enactment (according to govtrack). Details:https://www.congress.gov/bill/116th-congress/house-bill/6241?q=%7B%22search%22%3A%5B%22hr+6241%22%5D%7D&s=2&r=1 H.R. 8721-- Public Banking Act of 2020 Summary: The bill would which allows for the creation of state and locally administered public banks by establishing the Public Bank Grant program administered by the Secretary of the Treasury and the Federal Reserve Board which would provide grants for the formation, chartering and capitalization of public banks. It also codifies that public banks may be members of the Federal Reserve. The legislation also creates a pathway for state-chartered banks to gain federal recognition and provides a framework for public banks to interact with Fed Accounts, postal banking, and Digital Dollar platforms. Introduced: October 30, 2020 Status: Referred to the Committee on Financial Services, and in addition to the Committee on Oversight and Reform, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned. Sponsor: Reps. Rashida Tlaib (D-MI) and Alexandria Ocasio-Cortez (D-NY); 9 co-sponsors; % chance of enactment not yet available (according to govtrack). Details: https://www.congress.gov/bill/116th-congress/house-bill/8721?s=1&r=1 S. 142—The American Data Dissemination Act Summary: The bill would impose privacy requirements on providers of internet services similar to the requirements imposed on federal agencies under the Privacy Act of 1974. Introduced: Jan. 16. 2019 Status: The bill was referred to the Senate Commerce, Science, and Transportation Committee on Jan. 16, 2019. Sponsor: Sen. Marco Rubio (R-FL), 0 co-sponsors, 3% chance of enactment (according to govtrack). Details:https://www.congress.gov/bill/116th-congress/senate-bill/142/text?q=%7B%22search%22%3A%5B%22S.142%22%5D%7D&r=1&s=3 S. 149—Stop Senior Scams Act Summary: The bill would establish an advisory council made up of federal regulators and industry representatives from, among others, gift card and prepaid card companies, to collect and review information in the development of model materials to provide to retailers, financial services companies, and wire-transfer companies to be used to educate employees on how to identify and prevent scams affecting seniors. Introduced: Jan. 16, 2019 Status: Passed the Senate on June 16, 2020 by unanimous consent and was sent to the House of Representatives for further consideration. Sponsor: Sen. Robert Casey (D-PA); 2 co-sponsors, 83% chance of enactment (according to govtrack). Details:https://www.congress.gov/bill/116th-congress/senate-bill/149/text?q=%7B%22search%22%3A%5B%22S.149%22%5D%7D&r=1&s=2 S. 189—The Social Media Privacy Protection and Consumer Rights Act of 2019 Summary: This bill requires online platform operators to inform a user, prior to a user creating an account or otherwise using the platform, that the user’s personal data produced during online behavior will be collected and used by the operator and third parties. Introduced: Jan. 17, 2019 Status: Read twice and referred to the Committee on Commerce, Science, and Transportation on Jan. 17, 2019 Sponsor: Sen. Amy Klobuchar (D-MN); 3 co-sponsors, 3% chance of enactment (according to govtrack). Details:https://www.congress.gov/bill/116th-congress/senate-bill/189/text?q=%7B%22search%22%3A%5B%22S.189%22%5D%7D&r=1&s=1 S. 453—A Bill to Amend the Consumer Financial Protection Act of 2010 to Subject the Bureau of Consumer Financial Protection to the Regular Appropriations Process Summary: The bill would amend the Consumer Financial Protection Act of 2010 to subject the Consumer Financial Protection Bureau to the regular appropriations process. Introduced: Feb. 12, 2019 Status: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on Feb. 12, 2019. Sponsor: Sen. David Perdue (R-GA); 18 cosponsors. 3% chance of enactment (according to govtrack). Details: https://www.congress.gov/bill/116th-congress/senate-bill/453 S. 3108— Consumer Transaction Account Protection Act of 2019 Summary: This bill would specify that consumer transaction account deposits of an insured depository institution shall not be considered to be funds obtained through a deposit broker. Introduced: December 19, 2020 Status: The bill was referred to the Committee on Banking, Housing, and Urban Affairs on December 19, 2019. Sponsor: Sen. Doug Jones (D-AL); 2 co-sponsors. 3% chance of enactment (according to govtrack). Details:https://www.congress.gov/bill/116th-congress/senate-bill/3108?q=%7B%22search%22%3A%5B%22brokered+deposits%22%5D%7D&s=4&r=2 S. 3962— Asset Growth Restriction Act of 2020 Summary: The bill would strike the current legal framework for brokered deposits and replace it with an authorization for the FDIC to limit the asset growth of financially troubled banks by regulation, rule, or order. Introduced: June 15, 2020 Status: The bill was referred to the Committee on Banking, Housing, and Urban Affairs on June 15, 2020. Sponsor: Sen. Jerry Moran (R-KS); 0 co-sponsors. 1% chance of enactment (according to govtrack). Details: https://www.congress.gov/bill/116th-congress/senate-bill/3962?s=7&r=9 S. 4159 — E-SIGN Modernization Act of 2020 Summary: The bill would remove the requirement that consumers “ reasonably demonstrate” that they can access the disclosures that are the subject of the consent, through a website or e-mail, for example, after they’ve specifically asked to go paperless. Introduced: July 2, 2020 Status: The bill was marked-up and approved by the Commerce Committee on September 16, 2020. Sponsor: Sen. John Thune (R-SD); 3 co-sponsors. 15% chance of enactment (according to govtrack). Details: https://www.congress.gov/bill/116th-congress/senate-bill/3962?s=7&r=9 |
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