​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​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: IPA’s Government Update for July 2021
 
Capitol Hill has been taking an active interest in the payments industry. Overdraft, buy now pay later products, and even a possible computer chip shortage have all drawn lawmakers’ attention. 
 
On top of all that, the Durbin Amendment has resurfaced as a topic of conversation, and there are rumors that it may be extended to other types of payments. 
 
We cover all of this and more in our latest podcast episode with the IPA’s CEO, Brian Tate, and our Government Relations Director, Grant Hannah.
​
To learn more about the forces shaping the payments industry, we encourage our listeners to join the IPA for its Summer of Learning Webinar series, where we talk with regulators, industry leaders, and analysts about what they see coming in the world of payments innovation. 
 
Listen here!

IPA Summer of Learning
Please join the IPA on July 27th when we will be joined by the Honorable Warren Davidson, U.S. Representative (R-OH).  U.S. Representative Davidson, the Ranking Member of the House Financial Services Committee’s Task Force on Financial Technology, will discuss cryptocurrencies, blockchains, and the future of payments. This conversation is only for members of the IPA. 
Speaker:  Honorable Warren Davidson, U.S. Representative
When: July 27th, 2pm Eastern

Register Now

FEDERAL RESERVE (THE FED)
 
Federal Banking Agencies Request Comment on Proposed Risk Management Guidance for Third-Party Relationships
 
On July 13, three federal bank regulatory agencies (FDIC, Federal Reserve, and OCC) requested public comment on proposed guidance designed to help banking organizations manage risks associated with third-party relationships, including relationships with financial technology-focused entities. The proposed guidance is intended to assist banking organizations in identifying and addressing the risks associated with third-party relationships and responds to industry feedback requesting alignment among the agencies with respect to third-party risk management guidance.
 
A copy of the proposed guidance can be found here. Comments are due by September 17, 2021. 
 
CONSUMER FIANCIAL PROTECTION BUREAU (CFPB)
 
CFPB Releases Blog on Buy Now Pay Later Products
On July 8, the CFPB released a blog on Buy Now Pay Later (BNPL) products. This represents some of the first public statements we’ve heard from the CFPB on BNPL. The blog post discusses how BNPL works generally, how late fees work, consumer protection and credit reporting issues, and more. 
 
When it comes to consumer protection, the blog highlights that buy now pay later BNPL loans currently lack the consumer protections that apply to other forms of payment. It also discusses issues consumer could face when returning merchandise bought with a BNPL loan.
 
It is expected that the CFPB as well as other regulators and Congress will increasingly take closer looks at BNPL products. The full blog post can be accessed here. 

President Biden Issues Executive Order on Competition
 
On July 9, President Biden signed an Executive Order (EO) aimed at promoting competition in the American Economy. The EO includes 72 initiatives that will direct more than a dozen federal agencies to address issues of competition across the economy. The White House says that President Biden is taking this action to, “…reduce the trend of corporate consolidation, increase competition, and deliver concrete benefits to America’s consumers, workers, farmers, and small businesses.” 
 
Included in the EO is a “banking and consumer finance” section which discusses branch closures and consolidation in the banking industry and difficulties faced by consumers who want to move banks due to issues with the portability of financial transaction history data. 
 
The EO seeks to address these issues by:

• Encouraging DOJ and the agencies responsible for banking (the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency) to update guidelines on banking mergers to provide more robust scrutiny of mergers.
• Encouraging the Consumer Financial Protection Bureau (CFPB) to issue rules allowing customers to download their banking data and take it with them.

 
In addition to the provisions around bank mergers and the portability of financial transaction history data, there is an additional requirement that the Secretary of the Treasury submit a report to the Chair of the White House Competition Council, not later than 270 days after the date of the order, assessing the effects on competition of large technology firms’ and other non‑bank companies’ entry into consumer finance markets. Given the 270-day timeframe, the report would come out no later than early April of next year.
 
A fact sheet with a full overview of the EO can be found here.
 
Senate Banking Republicans Send Letter to CFPB Nominee
 
On July 13, all Republican members of the Senate Banking Committee sent a letter to CFPB Director Nominee Rohit Chopra expressing their concern, “…with [his] refusal to respond to a congressional request seeking information about potential violations of law at the Consumer Financial Protection Bureau (CFPB).” Senate Banking Republicans had previously sent Mr. Chopra and CFPB Acting Director Dave Uejio a letter asking them to respond to reports last month that senior career civil servants at the CFPB were being pressured to quit to make room for political allies to be installed at those positions.
 
A copy of the letter can be accessed here. 
 
House Republicans Request Information from CFPB Acting Director
 
On July 15, Republican Members of the House Financial Services sent a letter to CFPB Acting Director David Uejio requesting additional information on actions he’s taken related to issuing new rules, guidance, and policy statements; delaying the implementation date of multiple major rulemakings; reversing and rescinding policy statements and guidance; and undertaking nine enforcement actions against financial services companies. The members additionally express concerns that, “…the CFPB is conducting business as usual without a Senate-confirmed Director and without proper oversight.”
 
In a separate letter, Ranking Member Patrick McHenry (R-NC) sent a letter to Chairwoman Waters requesting that the Committee hold an oversight hearing with Acting Director Uejio. 
 
Fed Chair Jerome Powell Testifies Before Congress
 
Fed Chair Jerome Powell provided his semiannual testimony before the House Financial Services Committee and Senate Banking Committee on July 14th and July 15th respectively. Inflation, stablecoins, and central bank digital currencies (CBDC) were common subjects of Members’ questions. Chair Powell indicated that the Fed believes that the recent rise in inflation is temporary and that continued economic recovery and growth would bring it down. In addition, Powell mentioned that the Fed’s report on CBDCs will likely be released sometime in September. Finally, he was asked about stablecoins a number of times and, in his responses, discussed their similarities with deposit accounts and money market accounts and called for a similar regulatory framework to be applied. 
 
Capital Clues
 
Below is latest intelligence the IPA has received on recent activity on Capitol Hill:

• The nomination of Rohit Chopra to be the next Director of the CFPB has remained in limbo between the Banking Committee and the Senate floor for nearly four months, but we still expect Leader Schumer to move his nomination, possibly before the August recess or when they return in September.
• On Monday, July 19, House Members joined Senators in DC for what could be a pivotal stretch for two major Biden Administration priorities. Early August recess plans could be impacted should Democratic leaders need more time to secure wins before the extended annual recess next month. 
• As Senator Schumer works to build Democratic support for a $3.5 trillion budget resolution that could pave the way for a second reconciliation package to fund President Biden’s American Families Plan, he announced plans to file cloture on a motion to proceed to the $1.4 trillion Bipartisan Infrastructure Framework (BIF), which has yet to be converted into legislative text.  That would set up a cloture vote on the MTP on Wednesday, July 21. 

 
IPA Draft Letter to the California Financial Regulator on EWA
 
The IPA has drafted a letter to the California Department of Financial Protection and Innovation (DFPI) on earned wage access (EWA). In brief, the letter provides an overview of the industry, discusses principles for regulation going forward that the IPA believes would appropriately balance consumer protection and innovation, and expresses the IPA’s desire to being an ongoing dialogue with DFPI on EWA.  
 
The IPA held a call to review and discuss our initial draft of the letter and is currently working to incorporate feedback received from members. 

New Federal Laws
 
S.J. Res 15 – A joint resolution providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Office of the Comptroller of Currency relating to "National Banks and Federal Savings Associations as Lenders" (True Lender Congressional Review Act Resolution)
Summary: This disapproval resolution invalidates the OCC’s True Lender Rule, which addressed lending arrangements between banks and non-bank third party lenders. Additionally, the Resolution prevents the OCC from issuing the Rule, or one like it, again. 
Status: Signed by the President on 6/30/20.
Sponsor: Sen. Chris Van Hollen (D-MD)
 
Pending Federal Bills
 
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: 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 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)

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​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: Payments for Good with Blackhawk Network: How a pandemic led to a new vertical for the company
 
The pandemic created problems for individuals, governments, and businesses, but as the old saying goes, every problem brings new opportunities.  
 
For Blackhawk Network, that opportunity began when it channeled its payments expertise into helping distribute relief money for governments and nonprofits. It used both closed-loop and open-loop prepaid cards as a way to deliver aid. The plastic and virtual cards were used to replace checks so that people could get access to funds quickly and inexpensively.  
 
As the pandemic begins to subside, Blackhawk plans to continue working to deliver funds to vulnerable populations. The company has created a new vertical that it calls Payments for Good to work with governments and nonprofits who need new ways to disburse money. 
 
In this episode, we talk with Tyler Gentry, the director of Payments for Good, about the work that led to its creation and the company’s future plans.  
 
Listen here!

IPA Summer of Learning
Join Us Thursday
The Summer Learning Series is provided as a complimentary benefit to the payments community. There is no cost to register for these events. 
 
Join the IPA at our next Summer of Learning event with special guest, Ron Shevlin. 
Ron is the Managing Director of Fintech Research at Cornerstone Advisors, the author of the book Smarter Bank, and a Senior Contributor at Forbes where he authors the Fintech Snark Tank blog.

Please join us on Thursday, July 8th at 2 pm (EST) as Ron shares his insights on the innovations occurring in the financial services marketplace and where things might be headed in the future.
 
Speaker: Ron Shevlin, Forbes
When: July 8th, 2pm Eastern
 
Register Now

FEDERAL RESERVE (THE FED)
 
Federal Reserve Board Extends Comment Period on Proposed Changes to Regulation II
 
On June 22, the Federal Reserve Board announced that it will extend until August 11, 2021, the comment period for its proposed changes to Regulation II regarding network availability for card-not-present debit card transactions. Originally, comments were due by July 12, 2021.
 
The IPA sent a letter to the Federal Reserve Board requesting an extension of the comment period on June 11th. In addition, the IPA is working to incorporate feedback received from IPA members into our larger comment letter to the Fed on the proposed rule.
 
Federal Reserve Files Motion to Dismiss / Motion to Transfer N.D. Retailer Interchange Litigation
 
On July 2, the Federal Reserve filed a motion to dismiss or, in the alternative, a motion to transfer to D.C. the litigation brought by North Dakota retailers in the U.S. District Court for the District of North Dakota challenging the Federal Reserve’s Reg. II rulemaking. In the motion, the Fed moves to dismiss or transfer based on a lack of subject matter jurisdiction or failure to state a claim on grounds that the six-year limitations period applicable to this action under the Administrative Procedure Act has expired. In addition, in support of its motion to transfer, the Fed cites that a transfer is appropriate in this case because the ND retailers complaint raises virtually identical claims to those that were fully litigated in litigation brought by the NRF and others previously challenging the Fed’s Reg. II rulemaking in 2011 in the U.S. District Court for the District of Columbia and appealed to the D.C. Circuit, which ordered a limited remand for additional clarification by the Board on one narrow issue without vacating any part of the Final Rule. 
 
The Fed’s brief can be found here. 
 
CONSUMER FIANCIAL PROTECTION BUREAU (CFPB)
 
CFPB Releases July CFPB Consumer Complaint Bulletin
 
On July 1, the Consumer Financial Protection Bureau (CFPB) released a new complaint bulletin covering several areas related to relief provided in response to the COVID-19 pandemic. Specifically, the bulletin focuses on consumer complaints around EIPs, eviction protections, and student loan servicing. 
 
The full bulletin can be accessed here. 
 
Financial Crimes Enforcement Network (FinCEN)
 
FinCEN Completes Assessment on the Use of No-Action Letters
 
On June 30, the Financial Crimes Enforcement Network announced that it has completed a report on its assessment of whether to establish a process for the issuance of no-action letters in response to inquiries concerning the application of the Bank Secrecy Act (BSA) and other anti-money laundering and countering-the-financing-of-terrorism laws to specific conduct. Pursuant to Section 6305 of the Anti-Money Laundering Act of 2020 (AML Act), the report was delivered on June 28, 2021, to the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services.  FinCEN’s assessment included consultation with the Attorney General, the Federal functional regulators, State bank supervisors, State credit union supervisors, and other Federal agencies, as required by the AML Act.  
 
“FinCEN concludes that a no-action letter process would be a useful complement to its current forms of regulatory guidance and relief,” said Acting Director Michael Mosier.  “FinCEN looks forward to continuing to engage with our government partners and the public during a future rulemaking process to ensure all constructive feedback is considered on this important issue.”
 
A copy of the report can be found attached and additional information can be found here.
 
FinCEN Issues First National AML/CFT Priorities
 
On June 30, the Financial Crimes Enforcement Network issued the first government-wide priorities for anti-money laundering and countering the financing of terrorism (AML/CFT) policy (the “Priorities”), following consultation with other relevant Department of the Treasury offices, as well as Federal and State regulators, law enforcement, and national security agencies. The Priorities identify and describe the most significant AML/CFT threats currently facing the United States. In no particular order, these include corruption, cybercrime, domestic and international terrorist financing, fraud, transnational criminal organizations, drug trafficking organizations, human trafficking and human smuggling, and proliferation financing.  FinCEN today also issued two statements (attached) to provide guidance to covered institutions on how to approach the Priorities.  
 
Additional information can be found here.

July House Financial Services Committee Hearing Schedule Announced
On June 28, House Financial Services Committee Chairwoman Maxine Waters (D-CA) announced the Committee hearing schedule for the month of July. Highlights from the schedule can be found below and the full schedule can be found here.
 

• July 14 at 12:00 PM ET: The full Committee will convene for a virtual hearing entitled, “Monetary Policy and the State of the Economy.” (Fed Chair Jerome Powell will appear)
• July 16 at 12:00 PM ET: The Task Force on Artificial Intelligence will convene for a virtual hearing entitled, “I Am Who I Say I Am: Verifying Identity while Preserving Privacy in the Digital Age.”
• July 21 at 10:00 AM ET: The Subcommittee on Consumer Protection and Financial Institutions will convene for an in-person hearing entitled, “Banking the Unbanked: Exploring Private and Public Efforts to Expand Access to the Financial System.”
• July 27 at 10:00 AM ET: The Subcommittee on National Security, International Development and Monetary Policy will convene for an in-person hearing entitled, “The Promises and Perils of Central Bank Digital Currencies.”

 
Rep. Maloney (D-NY) Introduces Overdraft Legislation
On June 30, Rep. Carolyn Maloney (D-NY) announced the introduction of the Overdraft Protection Act of 2021. This bill is aimed at limiting overdraft fees and would establish a set of practices for overdraft coverage programs. Rep. Maloney has introduced a version of this legislation since 2009.
 
Specifically, the Overdraft Protection Act of 2021 would:
 

• require that fees be “reasonable and proportional” to the cost of processing these transactions and the amount of the overdraft;
• prevent institutions from re-ordering transactions to artificially increase their fees;
• limit the number of fees that can be charged to 1 per month and 6 per year;
• require that consumers proactively opt-in to overdraft programs – rather than automatically being enrolled;
• improve transparency and disclosures; and
• prohibit charging overdraft fees for “debit holds” that exceed actual transaction amounts, among other strong measures.

 
Legislative text has not been made available yet but will likely be made available here in the next few business days. In the meantime, the bill as introduced in the 116th Congress can be found here.
 
Capital Clues
Below is latest intelligence the IPA has received on recent activity on Capitol Hill:
 

• The Senate is in recess until Monday, July 13. The Senate will begin a four-week session upon its return.
• The House will be in recess July 5-9.
• Significant progress was made the week of June 22 when a bipartisan group of senators, together with President Biden, announced agreement on an infrastructure framework.  President Biden’s support for the deal was clouded, however, when just hours later, he indicated that his support for the deal is contingent upon passage of a larger multi-trillion-dollar budget reconciliation bill.  Things appeared back on track over the weekend with the key negotiators after Biden issued a statement on Saturday clarifying his comments.  
• Beyond infrastructure, there are three policy areas which are generating bipartisan collaboration at the moment: (1) immigration reform; (2) police reform; (3) and China competitiveness. A bill relating to China competitiveness (U.S. Innovation and Competition Act) has cleared the Senate and components have begun moving through the House. Notably, the bill provides $52 billion in emergency subsidies for semi-conductor manufacturers. In addition, there was a bipartisan breakthrough announced on policing reform recently, though some sticking points still remain. Bipartisan discussions continue on immigration reform.

New Federal Laws
 
S.J. Res 15 – A joint resolution providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Office of the Comptroller of Currency relating to "National Banks and Federal Savings Associations as Lenders" (True Lender Congressional Review Act Resolution)
Summary: This disapproval resolution invalidates the OCC’s True Lender Rule, which addressed lending arrangements between banks and non-bank third party lenders. Additionally, the Resolution prevents the OCC from issuing the Rule, or one like it, again. 
Status: Signed by the President on 6/30/20.
Sponsor: Sen. Chris Van Hollen (D-MD)
 
Pending Federal Bills
 
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: 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)
 
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)
 

​​​​​​​​​​​​​​​​​​​​​​​​​​​​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: Is Green Dot the Model for Fintech Evolution?
As the fintech industry continues to innovate, one of the big questions is where does it go from here? 

The future direction of the industry may be best represented by a company that has gone through its own evolution. Green Dot is one of the original Fintechs. It started with prepaid cards sold mostly through retail and has since evolved into a leader in the digital bank space. Its change from a prepaid card program manager to digital banking company could foreshadow the future.  
​
In this episode, we talk with Greg Quarles, president of Green Dot Bank, about how the company has evolved to work with tech partners like Apple, Google, and Uber. We also discuss the advantages of having a bank charter, and why other fintechs will need to consider adding products like lending if they want to thrive in the long run. 
 
Listen here!

FEDERAL RESERVE (THE FED)
 
IPA Letter & Federal Reserve Board Comment Period Extension on Proposed Changes to Regulation II
 
On June 11, the IPA submitted a letter to the Board of Governors of the Federal Reserve System in response to the Notice of Proposed Rulemaking concerning Debit Card Interchange Fees and Routing issued by the Board and published in the Federal Register on May 13, 2021 (the "Proposed Rule").  While the Proposed Rule has an initial deadline for comments of July 12, 2021, the letter requests that the Board extend the deadline for an additional 30-day period.  
 
The Federal Reserve Board subsequently announced on June 21 that it will extend until August 11, 2021, the comment period for its proposed changes to Regulation II. 
 
The IPA is still working with our members to finalize our larger comment letter to the Fed on the proposed rule and will have a revised draft to share soon. In the meantime, the IPA extension request can be found here. 
 
CONSUMER FIANCIAL PROTECTION BUREAU (CFPB)
 
CFPB Issues Spring 2021 Rulemaking Agenda
 
On June 11, the CFPB issued published their Spring 2021 Agenda as part of the Spring 2021 Unified Agenda of Federal Regulatory and Deregulatory Actions. The agenda lists the regulatory matters that the Bureau is currently pursuing under interim leadership pending the appointment and confirmation of a permanent Director. The permanent Director’s changes to the regulatory agenda will be reflected in the Fall 2021 Unified Agenda.
 
A brief summary of the Bureau’s planned regulatory activity can be found below. The full Agenda can be accessed here. 
 
CFPB Planned Regulatory Activities:
 

• Small business lending data – Section 1071 of the Dodd-Frank Act requires financial institutions to collect, report, and make public certain information concerning credit applications made by women-owned, minority-owned, and small businesses. The Bureau anticipates issuing a Notice of Proposed Rulemaking on Sec. 1071 in September 2021.
• Availability of electronic consumer financial account data – The Bureau is considering a rulemaking to implement section 1033 of the Dodd-Frank Act to address the availability of consumer financial account data in electronic form.  
• Property Assessed Clean Energy (PACE) financing – Section 307 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) requires that the Bureau prescribe certain regulations relating to PACE financing. In March 2019, they released an ANPRM and are continuing to engage with stakeholders and collect information for the rulemaking, including by collecting quantitative data on the effect of PACE on consumers’ financial outcomes.
• Standards for Automated Valuation Models (AVMs) – The Bureau is pursuing an interagency rulemaking with the Board of Governors of the Federal Reserve System (Board), the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Federal Housing Finance Agency to develop regulations to implement the amendments made by the Dodd-Frank Act to the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) concerning appraisals.
• Facilitating transition away from LIBOR index – The Bureau is continuing a rulemaking to address the anticipated expiration of the LIBOR index, which the UK Financial Conduct Authority has stated that it cannot guarantee the publication of beyond June 2023. They issued a issued a proposed rule in June 2020 and expect to issue a final rule in January 2022.
• Reviewing existing regulations 
• Market monitoring

 
FEDERAL DEPOSIT INSURANCE COPORATION (FDIC)
 
FDITECH Launches Tech Sprint to Reach More Unbanked People
 
On June 16, the FDIC announced a ‘tech sprint’ entitled, “Breaking down Barriers: Reaching the Last Mile of Unbanked U.S. Households”, which is designed to explore new technologies and techniques that would help expand the capabilities of banks to meet the needs of unbanked individuals and households. This tech sprint will challenge participants to identify better resources and tools to help banks get unbanked households into the banking system and to keep them banked. Banks, non-profit organizations, academic institutions, private sector companies, and others are invited to participate. 
 
Additional information can be found in the email below and on the FDIC’s website.
 

Democratic House Members Send Letter to JP Morgan Chase on Overdraft
 
On June 16, Representatives Carolyn B. Maloney (D-NY), Kathleen Rice (D-NY), Gregory Meeks (D-NY), and Tom Suozzi (D-NY) sent a letter to JPMorgan Chase & Co. (JPM) Chairman and Chief Executive Officer Jamie Dimon urging him to refund overdraft fees that JPM charged to consumers during the COVID-19 pandemic and to stop charging these fees going forward. 
 
The full letter can be accessed here.
 
Waters Announces Digital Assets Working Group
 
On June 16, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, announced that she has organized a Digital Assets Working Group of Democratic Members. According to the Committee, the Digital Assets Working Group will focus on making sure there is responsible innovation in the cryptocurrency and digital asset space. Further, Members are meeting regularly with experts and government officials to learn about the challenges and promise of digital assets. Finally, Members plan to work together on legislation and policy solutions on such matters as cryptocurrency regulation, the use of blockchain and distributed ledger technology, and the possible development of a U.S. Central Bank Digital Currency.
 
Additional information can be found here.
 
Capital Clues
 
Below is latest intelligence the IPA has received on recent activity on Capitol Hill:

• The House Financial Services Committee (HFSC) will hold its monthly markup on Wednesday of next week.  The committee has no additional activity scheduled.   

• House leaders will attempt to roll back the OCC’s True Lender rule in what could turn out to be a tight vote.  
• Federal Reserve Chairman Jerome Powell is expected to testify on consecutive July days for Humphrey-Hawkins hearings.    
• Despite Lina Kahn’s confirmation, there are no imminent plans to move Rohit Chopra’s CFPB nomination this month.  Leader Schumer has filed cloture on two nominees and on the For the People Act wrap up the Senate's work before the Independence Day recess. 

 
New Jersey Senate Bill 3498 Favorably Reported from Committee
 
On June 16, the New Jersey Senate Commerce Committee amended and favorably reported Senate Bill 3498 (Gift Cards). Updated bill text can be found here and an updated summary can be found below. In addition, the IPA sent our letter of opposition, which had been previously submitted to the bill’s sponsor, to the full Committee in advance of the hearing. 
 
SB 3498 Summary
 
Requires that gift card issuers: 

• Immediately freeze the funds on a gift card upon receiving a report of fraud; 
• Provide a full refund to the purchaser after the conclusion of a fraud investigation, if fraud was reported by the purchaser within two weeks of purchase or issuance of the gift card, provided, however, the gift card issuer shall conclude its investigation not more than two weeks after the date the instance of fraud was reported; and
• Comply with new record keeping and disclosure requirements.

New Federal Laws
 
None.
 
Pending Federal Bills
 
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: 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)
 
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: Introduced and referred to the House Committee on Financial Services on 6/17/21. Scheduled for mark up on 6/23/21.
Sponsor: Rep. Richie Torres (D-NY)

​​​​​​​​​​​​​​​​​​​​​​​​​​​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: A Pandemic Can Change All the Rules When it Comes to Fraud Prevention
 
Over the last 18 months, the dramatic changes in the ways that people live, work, and pay have meant that fraud prevention rules that were once very effective have lost some of their power.  
 
In the latest episode of the IPA Payments Pod, we talk with Brian Grech, vice president of sales and marketing for Deep Labs, which uses persona-based artificial intelligence to predict behavior and prevent fraud. We cover how the pandemic created new risks that were not covered by old models, so what once looked like fraud could be a legitimate transaction, and what once looked legitimate could be fraud.  
We also talk about what artificial intelligence is and how it can help companies adapt to rapidly changing environments. As we come out of the pandemic, the business environment is evolving rapidly. So, as we adjust to a new normal, companies will once again need to think ahead and figure out what lessons still apply, and what has changed now that the pandemic is over.  
 
Listen now!
​

FEDERAL RESERVE (THE FED)
 
Federal Reserve Board Invites Public Comment on Proposed FedNow Rule
On June 1, the Federal Reserve Board issued a request for comment on a proposed rule to govern funds transfers over the Federal Reserve Banks' FedNow℠ Service. The FedNow Service will support instant payments in the United States and is expected to be available in 2023.
 
The proposed rule would establish a new and comprehensive set of rules governing funds transfers over the FedNow Service and set out the legal rights and obligations of the Reserve Banks and FedNow Service participants. Many of the concepts in the proposed rule are similar to existing provisions that govern the Fedwire Funds Service, which is the payments service currently operated by the Federal Reserve System.
 
Comments are due within 60 days of the proposal's publication in the Federal Register. Additional information can be found here.
 
CONSUMER FIANCIAL PROTECTION BUREAU (CFPB)
 
Scheduling Order in PayPal Case Appeal Issued by DC Appeals Court
The United States Court of Appeals for the District of Columbia Circuit has issued a scheduling order for the appeal filed by the CFPB in the PayPal case. The order lays out the timeline of filings for the appeal. As a reminder, the CFPB filed notice with the United States District Court for the District of Columbia on March 1st that they appeal Judge Richard Leon’s ruling in the case. 
 
In summary, the scheduling order requires that the CFPB files its initial brief by August 2, 2021, and that PayPal files its initial brief by September 29, 2021. Additional documents will be due in early-mid November, with final briefs being due on November 24, 2021. 
 
A copy of the scheduling order can be found here. 
 
CFPB issues Electronic Fund Transfers FAQs on compliance aid webpage
On June 4, the CFPB issued Electronic Fund Transfers Frequently Asked Questions (FAQs). The FAQs address the unauthorized transfer and error resolution provisions under the Electronic Fund Transfer Act and Regulation E, including situations when a consumer is fraudulently induced by a third party to provide their account information or private network rules conflict with the regulation.

The FAQs can be accessed here. 

OFFICE OF THE COMPTROLLER OF THE CURRENCY (OCC)
 
Appeals Court Issues Ruling in OCC FinTech Charter Lawsuit
 
On June 3, the U.S. Court of Appeals for the Second Circuit issued a ruling in the New York Department of Financial Services’ (DFS) suit challenging the Office of the Comptroller of the Currency’s (OCC) decision to begin accepting applications for special-purpose national bank charters from FinTechs engaged in the “business of banking,” including those that do not accept deposits. In brief, the Court ruled in favor of the OCC and reversed a lower court ruling that blocked the OCC from issuing charters to FinTechs on the grounds that the DFS failed to show that the OCC’s decision caused it to suffer an actual or imminent injury and that DFS’s claims are constitutionally unripe for substantially the same reason.
 
The full decision can be accessed here. 

June Congressional Hearings of Note
 

• June 9 at 2:30 PM ET: The Senate Banking Subcommittee on Economic Policy will convene for a virtual hearing entitled, “Building A Stronger Financial System: Opportunities of a Central Bank Digital Currency.”
• June 15 at 10:00 AM ET: The House Financial Services Task Force on Financial Technology will convene for a virtual hearing entitled, “Digitizing the Dollar: Investigating the Technological Infrastructure, Privacy, and Financial Inclusion Implications of Central Bank Digital Currencies.” 
• June 30 at 10:00 AM ET: The House Financial Services Subcommittee on Oversight and Investigations will convene for a virtual hearing entitled, “America on “FIRE”: Will the Crypto Frenzy Lead to Financial Independence and Early Retirement or Financial Ruin?”

 
Capital Clues
 
Below is latest intelligence the IPA has received on recent activity on Capitol Hill:
 

• The Senate returns this week while the House remains in a committee work period. Both the House and the Senate will begin a busy period with dozens of hearings and markups scheduled between now and the start of the July Fourth recess. 
• Negotiations on a comprehensive infrastructure proposal continue between Senate Republicans and the Biden Administration. While both sides have expressed some degree of optimism towards achieving a bipartisan compromise, there is still a considerable amount of daylight between what House and Senate Republicans would be willing to agree to and where the Biden Administration currently stands. 
• The Democrats expanded their slim majority in the House last Tuesday with the election of Melanie Stansbury to New Mexico’s 1st Congressional District.  Stansbury defeated State Senator Mark Moores (R) in a special election for the seat previously held by Interior Secretary Deb Haaland.  As a result, the Democrats now maintain a 220-211 majority.  There are currently four vacant seats in the House.

​New Federal Laws
 
None.
 
Pending Federal Bills
 
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: 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: 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)

​​​​​​​​​​​​​​​​​​​​​​​​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.

Cash, Crypto and Cocktails – The Innovative Payments Conference Continues to Educate the Industry
 
Even though it is too soon to get the industry together in person, the IPA continues to help payments professionals keep up with trends in the industry at its online Innovative Payments Conference. 
 
The conference kicked off with a discussion of Banking as a Service, which forms the underpinning of many fintechs. IPA member Metabank led a discussion that included Visa, NetSpend, and Modern Treasury. 
 
We discussed data sharing with Consumer Reports and the Financial Data Exchange. The FDIC presented results from its household banking survey. 
 
Wednesday wrapped up with a cocktail class that featured the head mixologist of Old Elk distillery who explained how to make a Manhattan and discussed payments in the service industry during the pandemic. We also presented our Skiba volunteer awards and the Terrence P. Maher Prepaid Influencer Award.
 
Skiba volunteer awards were presented to the following members for their work on the IPA Fintech Glossary.
 

• Lori Breitzke, Vice President – Product Management, Prepaid & EBT, Commercial & Data Products, FIS    
• Don Becker, VP Prepaid Card Partnerships, CommercePayments, Commerce Bank   
• Liz Nutting, Executive Relationship Manager, Prepaid Business Development, Discover Global Network   

 
For her help with member recruitment and her service on the IPA Board and finance committee, a Skiba was awarded to:
 

• Joan Herman, Chief Operating Officer, Paysign

 
The IPA presented the annual Terrence P. Maher Prepaid Influencer Award to IPA Board Member Emeritus Nora Arpin.
 
As we look forward to the coming week, we will delve deeper into some of the topics that could shape the future of payments, including more on fraud, Postal Banking, and cannabis payments. We also will be looking at how the payments industry can help shape the world for the better in sessions on racial equity in financial services and in a session on payments during crisis. 

If you’d like to attend these and get access to the recordings of previous sessions, you can still register. Visit IPC 2021 - Innovative Payments Association (ipa.org)
​

INTERNAL REVENUE SERVICE (IRS)
 
IRS, Treasury disburse 2 million more Economic Impact Payments under the American Rescue Plan; VA beneficiaries bring total to approximately 159 million as payments continue
 
On April 14, the Internal Revenue Service, the U.S. Department of the Treasury and the Bureau of the Fiscal Service announced they are disbursing nearly 2 million payments in the fifth batch of Economic Impact Payments from the American Rescue Plan.
 
This announcement brings the total disbursed so far to approximately 159 million payments, with a total value of more than $376 billion, since these payments began rolling out to Americans in batches as announced on March 12.
 
The fifth batch of payments began processing on Friday, April 9, with an official payment date of April 14, 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 nearly 2 million payments with a value of more than $3.4 billion.
• More than 320,000 payments, with a total value of $450 million, went to Veterans Affairs (VA) beneficiaries who receive Compensation and Pension (C&P) benefit payments but who don't normally file a tax return and didn't use the Non-Filers tool last year.
• Nearly 850,000 payments, with a total value of nearly $1.6 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 700,000 of these "plus-up" payments, with a total value of more than $1.2 billion.
• Another 72,000 payments went to Social Security beneficiaries who didn't file a 2020 or 2019 tax return and didn't use the Non-Filers tool last year.
• Overall, this fifth batch of payments contains nearly 1.2 million direct deposit payments (with a total value of just under $2 billion) and nearly 800,000 paper check payments (with a total value of over $1.4 billion).
•  Additional information is available on the first four batches of Economic Impact Payments from the American Rescue Plan, which began processing on April 2, March 26, March 19 and March 12.
   
  A larger percentage of payments was made electronically during this round of payments than during previous rounds. This accelerated the delivery of payments to millions of American families whose payments would otherwise have been sent by mail. Over 95% of all Social Security beneficiaries have been paid electronically during this round of payments, compared to 70% in the first round and 72% in the second round.
   
  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.
   
  More information can be found here. 
   
  CONSUMER FINANCIAL PROTECTION BUREAU (CFPB)
   
  Initial Documents Filed in PayPal Case Appeal
   
  As laid out in the scheduling order issued last month by the United States Court of Appeals for the District of Columbia Circuit, initial documents were filed in the appeal in the PayPal case on April 9. These documents are largely procedural and serve as introductory documents in the appeal. 
   
  In addition to the initial documents, the scheduling order requires that dispositive motions be filed by April 26, 2021 for both parties. These filings will likely be the first substantive filings in the appeal.
   
  The scheduling order can be accessed here. The IPA will make all documents filed in the case available to members as soon as they are released to the public. 
   
  FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC)
  Agencies Seek Wide Range of Views on Financial Institutions’ Use of Artificial Intelligence
  On March 31, five federal financial regulatory agencies announced they are gathering insight on financial institutions’ use of artificial intelligence (AI). The agencies are seeking information on how financial institutions use AI in their activities, including fraud prevention, personalization of customer services, credit underwriting, and other operations. 
  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) announced the request for information (RFI) to gain input from financial institutions, trade associations, consumer groups, and other stakeholders on the growing use of AI by financial institutions. 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; challenges in developing, adopting, and managing AI; and whether any clarification would be helpful. 
  
  Additional information can be found here. 
  
  

Agencies Issue Statement and Request for Information on Bank Secrecy Act/Anti-Money Laundering Compliance
On April 9, the federal banking agencies, in consultation with the Financial Crimes Enforcement Network and the National Credit Union Administration, issued a joint statement addressing how risk management principles described in the “Supervisory Guidance on Model Risk Management” relate to systems or models used by banks to assist in complying with the requirements of Bank Secrecy Act (BSA) laws and regulations. The statement further notes that it does not alter existing BSA/anti-money laundering (AML) legal or regulatory requirements or establish new supervisory expectations, and that no specific model risk management framework is required.

The agencies, along with the National Credit Union Administration and the Financial Crimes Enforcement Network, also announced a request for information (RFI) on the extent to which the principles discussed in the guidance support compliance by banks and credit unions with BSA/AML and Office of Foreign Assets Control requirements. The agencies are seeking comments and information to better understand bank practices and determine whether additional explanation or clarification may be helpful.

Responses are due by June 11th. Additional information can be found here. 

FDIC Seeks Input on How to Modernize Sign and Advertising Requirements for Banks
On April 9, the Federal Deposit Insurance Corporation (FDIC) announced that it is again seeking the public’s input on potential modernization of its sign and advertising requirements to better reflect how banks and savings associations operate and how consumers use banking services.
On February 19, 2020, the FDIC published a notice in the Federal Register soliciting public input regarding potential changes to its official sign and advertising rules. However, given the challenges associated with the COVID-19 pandemic, the agency temporarily postponed this effort on April 16, 2020. As banks continue to innovate, the FDIC is renewing its effort to revise and clarify its official sign and advertising rules related to FDIC deposit insurance. Read the FDIC’s Request for Information.

Additional information can be found here. The IPA previously submitted comment in response before the RFI was postponed in 2020, which can be accessed here. 

Financial Crimes Enforcement Network (FinCEN)
FinCEN Launches Regulatory Process for New Beneficial Ownership Reporting Requirement
On April 1, the Financial Crimes Enforcement Network (FinCEN) issued an Advance Notice of Proposed Rulemaking (ANPRM) to solicit public comment on a wide range of questions related to the implementation of the beneficial ownership information reporting provisions of the Corporate Transparency Act (CTA). 
​
This ANPRM is the first in a series of regulatory actions that FinCEN will undertake to implement the CTA, which is included within the Anti-Money Laundering Act of 2020 (AML Act).  The AML Act is part of the FY 2021 National Defense Authorization Act, which became law on January 1, 2021.  

The CTA amended the Bank Secrecy Act to require corporations, limited liability companies, and similar entities to report certain information about their beneficial owners (the individual natural persons who ultimately own or control the companies).  This new reporting requirement will enhance the national security of the United States by making it more difficult for malign actors to exploit opaque legal structures to launder money, finance terrorism, proliferate weapons of mass destruction, traffic humans and drugs, and commit serious tax fraud and other crimes that harm the American people.

The CTA requires FinCEN to maintain the reported beneficial ownership information in a confidential, secure, and non-public database.  Furthermore, the CTA authorizes FinCEN to disclose beneficial ownership information subject to appropriate protocols and for specific purposes to several categories of recipients, such as federal law enforcement.  Finally, the CTA requires FinCEN to revise existing financial institution customer due diligence regulations concerning beneficial ownership to take into account the new direct reporting of beneficial ownership information.
Comments are due by May 5, 2021. Additional details can be found here. 

Tester casts doubts on Brown's plan for Fed-run bank accounts
 
At a virtual conference last week Sen. Jon Tester, a Democrat of Montana and member of the Senate Banking Committee, was asked about FedAccounts and said, “I honestly don't think they're going to have a lot of traction.” He went on to say, "What we've seen is a healthy banking sector. We should talk about how to get more un- and under-banked folks access to financial services.... But quite frankly, I think to pull off the post offices or the Federal Reserve banking policies — I don't think it's going to have much life.”
 
Sen. Tester is a moderate Democrat and while, we haven’t heard directly from other Dems on the panel, it is possible that other moderate Dems on Senate Banking could take the same view as him.
 
Additional information on Sen. Tester’s comments can be found here. 
 
Recap of House Financial Services Committee Hearing on Charters
 
On April 15, the House Financial Services Subcommittee on Consumer Protection and Financial Institutions held a hearing entitled, “Banking Innovation or Regulatory Evasion? Exploring Trends in Financial Institution Charter.”
 
The majority of the discussion was focused on Industrial Loan Companies (ILCs) and the separation of banking and commerce. Specifically, the safety and soundness, data privacy, and competition concerns that could arise if commerce and banking are intermingled were discussed a number of times and attracted interest from members on both sides of the aisle. 
 
There also was some discussion of the OCC’s True Lender Rule and cryptocurrency as well. Former Acting Comptroller of the Currency Brian Brooks was a witness and got the most airtime. He got a number of questions about actions he took while in charge at the OCC, like the payments charter, Valid When Made and True Lender Rules, and action to allow banks to offer crypto custody services. Mr. Brooks defended his record and largely repeated the messaging on these issues from when he was in office.
 
Additional information and a recording of the hearing can be found here. 
 
House Financial Services Committee Approves FinTech & AI Tasks Forces for 117th Congress
 
During a markup on April 20, the House Financial Services Committee approved resolutions to re-establish the FinTech and AI Task Forces in the 117th Congress. 
 
According to the resolution, the FinTech Task Force shall, “…conduct hearings and investigations relating to financial technology within the Committee’s Rule X jurisdiction and may issue reports to the Committee detailing its findings and recommendations.” 
 
In addition, the AI Task Force shall, “…conduct hearings and investigations relating to artificial intelligence within the Committee’s Rule X jurisdiction and may issue reports to the Committee detailing its findings and recommendations.” 

Reps. Stephen Lynch (D-MA) and Tom Emmer (R-MN) will serve as chair and ranking member of the FinTech Task Force respectively. In addition, Reps. Bill Foster (D-IL) and Anthony Gonzalez (R-OH) will serve as chair and ranking member of the AI Task Force respectively. 
 
The resolutions can be accessed here. 
 
Kaptur, Gillibrand, Ocasio-Cortez, Pascrell Call on Congress to implement Postal Banking Pilot Programs
 
On April 15, Congresswoman Marcy Kaptur (D-OH), alongside U.S. Senator Kirsten Gillibrand (D-NY), and U. S. Representatives Alexandria Ocasio-Cortez (D-NY) and Bill Pascrell (D-NJ) called on Congress to implement postal banking pilot programs in rural and urban communities across the country as part of the Fiscal Year 2022 (FY22) Senate and House Financial Services and General Government Appropriations (FSGG) Appropriations Bill and eventual final conference agreement. The lawmakers also pushed for $6 million in funding for USPS in FY22 to carry out the pilot programs to expand non-bank financial services offerings.
 
Additional information can be found here. 
 
House Financial Service Committee Republicans Release Report on FinTech Task Force 
 
On April 20, the Republican staff of the House Financial Services Committee released a report entitled, The Cutting Edge of Finance: An Examination of the Work of Republicans on the House Financial Services Committee’s Task Forces on Financial Technology and on Artificial Intelligence. This report summarizes the work of Republicans on the House Financial Services Committee’s two task forces focused on financial innovation: the Task Force on Financial Technology and the Task Force on Artificial Intelligence. The task forces were intended to help the Committee on Financial Services better understand the latest technology developments in financial services.
 
This report summarizes the key topics on which Committee Republicans focused, the themes that emerged over the course of the Congress, and policy recommendations for regulators and Congress. The key takeaways are that Congress must (1) promote greater financial inclusion and expanded access to financial services, and (2) ensure that the federal government does not hamper the U.S.’ role as a global leader in financial services innovation. 
 
The full report can be found here. 

​None.

​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)
 

​​​​​​​​​​​​​​​​​​​​​​​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.

Innovative Payments Conference Coming Online in April 2021
 
The IPA’s Innovative Payments Conference is the must-attend annual event for the payments community. Benefit from two weeks of cutting-edge content, discussions and enhanced networking as you engage directly with those leading the way in prepaid compliance, legislation, regulation and innovation!
 
​​The IPC program is designed to keep you ahead of an ever-changing industry and position you to succeed in tomorrow's payments environment. The IPA has reimagined its IPC as a two-week virtual event featuring 27 concurrent sessions that are most relevant to the community in the COVID-19 environment, chats and Q&A with presenters and attendees, and a moderated virtual happy hour. Year after year, the event is an unqualified success, attracting hundreds of attendees from across the country. Download the brochure today to learn more about what to expect at IPC 2021!
 
Click here for additional information.

IPA Podcast: Step by Step Cyber Security With Consumer Reports


As people’s lives become more digital and they add more connected devices to their lives, their risks for identity theft, fraud, and other cyber-crime grows. Everything from computers to smart phones to baby monitors to fitness trackers can all introduce risks. 

The average person is often unaware of these risks, and so they are unprepared to manage them. To help address this issue, Consumer Reports, a nonprofit focused on consumer protection and education, has created the Security Planner. The site helps individuals create a personal plan for protecting themselves and their devices by asking them a series of questions about their devices and any security concerns they might have.  Based on the answers, the planner creates a checklist of steps to take to defend against the risks identified. While it can’t provide perfect security, it can increase people’s overall security.

In the latest episode of the IPA Payments Pod, we speak with Yael Grauer, the lead content creator for the planner, about how it was created, who it is designed to help, and how it works. We also talk about some of the best practices that people can follow while navigating cyberspace.  

The planner is a free resource, and one that companies can share with their customers if they want to provide resources on protecting against fraud.  
​
You can listen to the podcast here. Please make sure to subscribe, share this with your friends, and leave us a review on your favorite podcast app.  

INTERNAL REVENUE SERVICE (IRS)
 
IRS, Treasury disburse more Economic Impact Payments under the American Rescue Plan; total tops 130 million with more to come
 
On April 1, the Internal Revenue Service, the U.S. Department of the Treasury and the Bureau of the Fiscal Service announced they are disbursing several million more payments in the third batch of Economic Impact Payments from the American Rescue Plan. This brings the total disbursed so far to more than 130 million payments worth approximately $335 billion.
 
As announced on March 12, Economic Impact Payments continue to roll out in batches to millions of Americans. The third batch of payments began processing on Friday, March 26, with an official payment date of March 31, with some people receiving direct payments in their accounts earlier as provisional or pending deposits. Here is additional information on this batch of payments:
 
This batch includes the first of ongoing supplemental payments for people who earlier in March 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. These "plus-up" payments could include a situation where a person's income dropped in 2020 compared to 2019, or a person had a new child or dependent on their 2020 tax return, and other situations.
 
The payments announced also include payments for people for whom the IRS previously did not have information to issue a payment but who recently filed a tax return and qualify for an Economic Impact Payment. Payments to this group -- and the "plus-up" payments noted above -- will continue on a weekly basis going forward, as the IRS continues processing tax returns from 2020 and 2019.
 
In total, this third batch includes more than 4 million payments, with a total value of more than $10 billion.
 
This batch of payments contains more than 2 million direct deposit payments (with a total value of more than $5 billion) and approximately 2 million paper check payments (with a total value of nearly $5 billion).

In addition, on April 2, a large set of payments were sent to Social Security and other federal beneficiaries who didn't file a 2020 or 2019 tax return and didn't use the Non-Filers tool last year. These payments will go to Social Security retirement, survivor or disability (SSDI), Supplemental Security Income (SSI), and Railroad Retirement Board (RRB) beneficiaries. The projection is that the majority of these payments will be sent electronically and received on April 7.
 
More information can be found here. 
 
CONSUMER FINANCIAL PROTECTION BUREAU (CFPB)
 
Initial Documents in PayPal Case Appeal Due by April 9 
 
As laid out in the scheduling order issued last month by the United States Court of Appeals for the District of Columbia Circuit, initial documents are required to be filed by April 9, 2021 in the appeal filed by the CFPB in the PayPal case. 
 
The scheduling order can be accessed here. The IPA will make all documents filed in the case available to members as soon as they are released to the public. 
 
CFPB Rescinds Temporary Policy Statements
 
On March 31, the CFPB announced it is rescinding seven policy statements issued last year that provided temporary flexibilities to financial institutions in consumer financial markets including mortgages, credit reporting, credit cards and prepaid cards. The seven rescissions, effective April 1, provide guidance to financial institutions on complying with legal and regulatory obligations.
 
Of note, the CFPB is rescinding its March 2020 “Statement on Supervisory and Enforcement Practices Regarding Bureau Information Collections for Credit Card and Prepaid Account Issuers”, which provided that the Bureau, until further notice, did not intend to cite in an examination or initiate an enforcement action against any entity for failure to submit to the Bureau certain information collections relating to credit card and prepaid accounts required by TILA, Regulation Z, and Regulation E. The rescission also provides guidance as to how entities should now meet the specified information collections requirements relating to credit card and prepaid accounts.
 
Additional details can be found here. 
 
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC)
FDIC Launches Webpage with Information on Brokered Deposits Regulation
On April 1, the FDIC’s Brokered Deposits Final Rule took effect. To facilitate the implementation of the new regulations, the FDIC announced the addition of a Brokered Deposits webpage to the Banker Resource Center to provide information about the new Brokered Deposits regulation, including filing instructions for the notice and application process. 
As a reminder, the Final Rule, issued in December 2020, establishes a new framework for analyzing the primary purpose exception (“PPE”) that includes a notice process for certain designated exceptions and an application process for entities that wish to invoke the PPE but do not meet one of the designated exceptions. The full compliance date with respect to the Final Rule is January 1, 2022.

Additional information can be found here. The IPA thanks all of our members for making this update to the Brokered Deposits regime possible.

Financial Crimes Enforcement Network (FinCEN)
FinCEN Announces Acting Director and New Deputy Director
On April 2, Financial Crimes Enforcement Network (FinCEN) Director Kenneth A. Blanco announced several leadership changes impacting the bureau. Director Blanco announced he will depart FinCEN on April 9, after serving as the organization’s director since December 2017. Michael Mosier, former FinCEN Deputy Director and current Counselor to the Deputy Secretary of the Treasury, will return to FinCEN as Acting Director. AnnaLou Tirol, former Associate Director of FinCEN’s Strategic Operations Division, is serving as FinCEN Deputy Director.

​Additional details can be found here. 

House Financial Services Committee April Hearing Schedule
 
On March 31, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, announced the Committee’s hearing schedule for April. Notably, on April 15 at 10:00 AM ET, the Subcommittee on Consumer Protection and Financial Institutions will convene for a virtual hearing entitled, “Banking Innovation or Regulatory Evasion? Exploring Trends in Financial Institution Charters.”
 
The full hearing schedule can be found here. 

IPA Letter Opposing Gift Card Bill in New Jersey
 
IPA has drafted a letter opposing New Jersey Senate Bill 3498 (Gift Cards). In brief, the IPA’s draft letter discusses how the limitations aimed at combating gift card fraud in the bill would be harmful to New Jerseyans. In addition, it highlights current federal anti-money laundering laws that protect consumers, as well as the payments industry’s efforts to combat fraud. The letter closes by offering to work with the bill’s sponsor to improve SB 3498 so that it protects consumers and allows gift card providers to continue to provide a safe and popular product in New Jersey.
 
As a reminder, the bill requires that gift card issuers: 
 

• Prohibit the use or validation of a gift card worth more than $100 for 48 hours following the purchase or issuance of the gift card;
• Immediately freeze the funds on a gift card upon receiving a report of fraud; and
• Provide a full refund to the purchaser after 48 hours of the purchase or issuance of the gift card if fraud is reported by the purchaser within 48 hours of purchase or issuance of the gift card.

The bill would impose new record keeping and disclosure requirements as well. It was introduced on March 9th and referred to the Commerce Committee. The bill’s sponsor, Sen. Nellie Pou, is the chair of the Commerce Committee. 
 
The IPA is working with the IPA Executive Committee to finalize the letter. Thank you to all who provided feedback. 
 
IPA Draft Template Letter Opposing High-Volume Seller Bills
 
The IPA has drafted a template letter opposing bills that have been introduced in various states, which would require online marketplaces to verify certain information with respect to high-volume third-party sellers, to include bank account information. In particular, the bills generally require the online marketplace to confirm the accuracy of bank account information directly, or through a payment processor or other third-party contracted by the online marketplace. Arkansas Senate Bill 470 is attached as an example.

In brief, the IPA’s draft letter outlines that the inclusion of the term “payment processor” is unnecessary as the bill authorizes the online marketplace to verify such information through a third-party which has contracted with the marketplace to confirm the accuracy of the required information. The letter further discusses that the IPA does not believe that payment processors will have access to the information described in the bill, and that the inclusion of any reference to such entities will only lead to uncertainty as to the roles and responsibilities for verification set forth in the bills.
 
The IPA is working with the IPA Executive Committee to finalize the letter. Thank you to all who provided feedback.

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)

​​​​​​​​​​​​​​​​​​​​​​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.

​Innovative Payments Conference Coming Online in April 2021
 
The IPA’s Innovative Payments Conference is the must-attend annual event for the payments community. Benefit from two weeks of cutting-edge content, discussions and enhanced networking as you engage directly with those leading the way in prepaid compliance, legislation, regulation and innovation!
 
​​We’re looking forward to putting on another great event for you. And even better, if you already know you’d like to attend, subscribe to our updates today so you will be one of the first to hear when our Early Bird rate launches.
 
The IPC program is designed to keep you ahead of an ever-changing industry and position you to succeed in tomorrow's payments environment. Year after year, the event is an unqualified success, attracting hundreds of attendees from across the country. Download the brochure today to learn more about what to expect at IPC 2021!
 
Click here for additional information.

​IPA Podcast: When Direct Deposit is not an Option, Prepaid Cards Come to the Rescue for Stimulus Funds
 
When the U.S. government decided to provide funds to struggling Americans in the pandemic, it needed a way to move a lot of money to a lot of people quickly. While direct deposit information from tax returns helped, some people who most needed assistance weren’t in the system. 

So, the Department of Treasury used a combination of paper checks and prepaid cards from a program it calls the U.S. Debit Card. That program was part of an existing contract that allowed the government to use prepaid cards for disbursements.  

IPA members Fiserv and Metabank are instrumental in that program, and in this episode, we talk with Kim Ford, Senior Vice President for Government Relations at Fiserv about how the cards work and how they came to be used for stimulus funds. 
​
Prepaid cards have been a tool for benefits distribution for years, and the Economic Impact Payments show how they can quickly be implemented for new programs when the need arises.  

You can listen to the podcast here. Please make sure to subscribe, share this with your friends, and leave us a review on your favorite podcast app.  
 
IPA Podcast: What is the most important question in virtual exams?
 
When the COIVD19 pandemic forced businesses to operate virtually, bank examinations moved into cyberspace.  

This change likely will last beyond the pandemic, so bankers need to figure out how to be effective in this new environment. For institutions involved in non-traditional businesses like prepaid issuing, the problems of effectively conveying information and answering questions from examiners can be more complicated if they need to explain a new type of business. 

IPA member Bancorp has successfully navigated virtual exams, and in this episode, we talk with Mandi Lermond, the director and chief of staff, and Mike Althouse, the chief compliance officer about the lessons they have learned, and the best practices they have uncovered. For them, the most important exam question, both internally and externally has been “how goes it?” Find out why. 
​
They have also written an article for the ABA Compliance Journal that explores these topics in more detail. You can find that article here: Navigating Virtual Examinations | ABA Banking Journal 
 

INTERNAL REVENUE SERVICE (IRS)
 
More Economic Impact Payments set for disbursement in coming days; taxpayers should watch mail for paper checks, debit cards
 
On March 22, the Internal Revenue Service announced that the next batch of Economic Impact Payments will be issued to taxpayers, with many of these coming by paper check or prepaid debit card.
 
For taxpayers receiving direct deposit, this batch of payments began processing on Friday, March 19 and will have an official pay date of Wednesday, March 24, with some people seeing these in their accounts earlier, potentially as provisional or pending deposits. A large number of this latest batch of payments will also be mailed, so taxpayers who do not receive a direct deposit by March 24 should watch the mail carefully in the coming weeks for a paper check or a prepaid debit card, known as an Economic Impact Payment Card, or EIP Card.

No action is needed by most people to obtain this round of Economic Impact Payments (EIPs). People can check the Get My Payment tool on IRS.gov on to see if the their payment has been scheduled.
 
"The IRS continues to send the third round of stimulus payments in record time," said IRS Commissioner Chuck Rettig. "Since this new set of payments will include more mailed payments, we urge people to carefully watch their mail for a check or debit card in the coming weeks."
 
Following enactment of the American Rescue Plan Act on March 11, the IRS moved quickly to start delivering the third round of Economic Impact Payments. The IRS initiated the first batch of the $1,400 stimulus payments, mostly by direct deposit, on March 12.
 
Today marks the second batch of payments, with additional payments anticipated on a weekly basis going forward. The vast majority of taxpayers receiving EIPs will receive it by direct deposit. In addition, the IRS and the Bureau of the Fiscal Service leveraged data in their systems to convert many payments to direct deposits that otherwise would have been sent as paper checks or debit cards. This accelerated the disbursement of these payments by weeks.
 
More information can be found here and an update IRS Fact Sheet can be found here. 
 
CONSUMER FINANCIAL PROTECTION BUREAU (CFPB)
 
Scheduling Order in PayPal Case Appeal Issued by DC Appeals Court
 
On March 10, the United States Court of Appeals for the District of Columbia Circuit issued a scheduling order for the appeal filed by the CFPB in the PayPal case. The order lays out the timeline of motions/filings for the appeal. As a reminder, the CFPB filed notice with the United States District Court for the District of Columbia on March 1st that they appeal Judge Richard Leon’s ruling in the case. 
 
The scheduling order requires that both parties file initial documents by April 9, 2021. Dispositive motions would subsequently be due by April 26, 2021 for both parties. In addition, the order defers briefing in this case pending further order of the court.
 
The scheduling order can be accessed here. 
 
CFPB Rescinds 2020 Abusiveness Policy Statement
 
On March 11, the Consumer Financial Protection Bureau (CFPB) announced it is rescinding its January 24, 2020 policy statement, “Statement of Policy Regarding Prohibition on Abusive Acts or Practices.” The Bureau says the 2020 Policy Statement was inconsistent with its duty to enforce Congress’s standard and rescinding it will better serve the CFPB’s objective to protect consumers from abusive practices. Going forward, the CFPB intends to consider good faith, company size, and all other factors it typically considers as it uses its prosecutorial discretion. 
 
The full recission document can be accessed here.

Senate Banking Committee Vote on CFPB Director Nominee 
 
On March 10, the Senate Banking Committee voted on advancing Rohit Chopra’s nomination to be the next director of the Consumer Financial Protection Bureau. The vote ended in a 12-12 tie. According to Senate rules, Chairman Brown will transmit a notice of the tie vote to the Secretary of the Senate. This gives the Majority or Minority Leader the authority to make a motion to discharge the nomination from the Committee and, if approved, bring it to the floor for consideration by the full Senate.

SAFE Banking Act Introduced in 117th Congress
 
On March 18, Rep. Ed Perlmutter (D-CO) reintroduced his legislation to reform federal cannabis laws. H.R. 1996, the Secure and Fair Enforcement (SAFE) Banking Act of 2021 - sponsored by Reps. Nydia M. Velázquez (D-NY-07), Steve Stivers (R-OH-15), and Warren Davidson (R-OH-08) and cosponsored by more than 100 members – would allow marijuana-related businesses in states with some form of legalized marijuana and strict regulatory structures to access the banking and payments system.
 
The bill has 109 co-sponsors, with 15 of them being Republican. The bill got a floor vote in the 116th Congress and passed in 321-103 vote.

None. 

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)

​​​​​​​​​​​​​​​​​​​​​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.

​Innovative Payments Conference Coming Online in April 2021
 
The IPA’s Innovative Payments Conference is the must-attend annual event for the payments community. Benefit from two weeks of cutting-edge content, discussions and enhanced networking as you engage directly with those leading the way in prepaid compliance, legislation, regulation and innovation!
 
​​We’re looking forward to putting on another great event for you. And even better, if you already know you’d like to attend, subscribe to our updates today so you will be one of the first to hear when our Early Bird rate launches.
 
The IPC program is designed to keep you ahead of an ever-changing industry and position you to succeed in tomorrow's payments environment. Year after year, the event is an unqualified success, attracting hundreds of attendees from across the country. Download the brochure today to learn more about what to expect at IPC 2021!
 
Click here for additional information.

Card Forum Contactless
 
There is only one week left to register for CARD FORUM: Contactless, taking place on March 16, it is the first in a three-event series. This premier forum brings together senior industry leaders from organizations such as: Checkout.com, Best Buy, Wells Fargo, Visa, Astera Credit Union and more to explore how banks and credit unions can stay at the forefront of the contactless movement. View the agenda →
 
IPA Members: Register by March 15 to claim your complimentary pass →
Use promo code: IPAVIP
​

​FEDERAL RESERVE
 
IPA Letter to Fed on Durbin Amendment
 
A notice was recently added to the Federal Reserve’s website regarding a letter from/meeting with The Clearing House Association on the Durbin Amendment. In brief, TCH raised strong concerns about how small issuers are evading Durbin by partnering with FinTechs/program managers and, in some cases, how the 3rd parties are bigger than the issuer.  
 
After receiving approval from our Executive Committee, on March 4, the IPA submitted its final letter to the Federal Reserve regarding Regulation II (Durbin Amendment). In brief, the letter highlights the growth and importance of prepaid account products to the financial services industry, that changes to Regulation II have the potential negatively impact consumers and financial services providers, and finally urges the Federal Reserve to ensure that any revisions to Regulation II or its interpretation are made pursuant to a transparent process that includes open and public debate.
 
Thank you to all who provided feedback throughout the drafting process. 
 
CONSUMER FINANCIAL PROTECTION BUREAU (CFPB)
 
CFPB Files Notice of Appeal in PayPal Case
 
On March 1, the Consumer Financial Protection Bureau (CFPB) filed notice with the United States District Court for the District of Columbia that they are appealing Judge Richard Leon’s ruling in the PayPal case to the United States Court of Appeals for the District of Columbia Circuit. The notice reads as follows:

NOTICE OF APPEAL
 
The Consumer Financial Protection Bureau and David Uejio, in his official capacity as Acting Director of the Consumer Financial Protection Bureau, Defendants in the above-captioned case, hereby give notice that they appeal this Court’s Memorandum Opinion and Order of December 30, 2020 (Documents 27 and 28), granting Plaintiff’s Motion for Summary Judgement, to the United States Court of Appeals for the District of Columbia Circuit.

​This notice is the only filing that the CFPB submitted to the court. We expect a more substantive filing to come from the CFPB in the future.
 
CFPB Files Suit Against Payment Processor for Supporting Internet-Based Technical-Support Scams
 
On March 3, the Consumer Financial Protection Bureau (CFPB) filed a lawsuit in federal court against BrightSpeed Solutions Inc. and its founder and former chief executive officer, Kevin Howard, for knowingly processing payments for companies engaged in internet-based technical-support fraud. Chicago-based BrightSpeed was a privately owned, third-party payment processor founded and operated by Howard in 2015 and wound down business operations in March 2019.
 
The CFPB alleges that between 2016 and 2018, Howard and BrightSpeed knowingly processed payments for client companies that purported to offer technical-support services and products over the internet, but instead tricked consumers into purchasing expensive and unnecessary antivirus software or services.
 
Additional information can be found in the press release below and a copy of the complaint can be accessed here.

Update on COVID Relief Package
 
After initial passage in the House on February 27, the Senate passed its version of the American Rescue Plan on Saturday after about 45 hours of consideration. There were some changes made the package in the Senate, so it will now head back to the House for final passage this week. One of the changes made to the package relates to EIPs. The $1,400 payments the phase-outs will start at $75,000 and $150,000 respectively and will now phase out completely at $80,000 per year for individuals and $160,000 for joint filers.
 
Recap of Rohit Chopra Nomination Hearing
 
On March 2, the Senate Banking Committee held a nomination hearing for Consumer Financial Protection Bureau (Bureau) Director nominee Rohit Chopra. Mr. Chopra mentioned student loan servicers, debt collectors, credit reporting, and mortgages a number of times as specific issues he believes need attention. He also mentioned that he believes it’s important that the Bureau examine at how big tech is entering financial services and what impact that will have on consumer privacy. He was asked by Sen. Cotez Masto about his views on restitution for UDDAP violations. He responded that restitution is a critical element of the Bureau’s enforcement work and that he has pushed hard against no fault, no money settlements at the FTC. He also said that it does not make sense not to provide restitution when a consumer is ripped off.
 
On the subject of enforcement, he also said that the Bureau should be focused on fixing harms and letting market participants know what’s expected of them, pursuant its statutory authority. He was also asked about the use of guidance, Mr. Chopra responded that he believes that transparency and clear communication through the proper channels are key. Finally, he was asked by Sen. Jon Ossoff about Walmart’s entry into the banking/fintech space. Mr. Chopra said that it’s not a core issue of the CPFB but that generally, he believes dominant players should not be able to squash out competition and that he does not want to see a marketplace where new entrants are blocked. 
 
Mr. Chopra’s nomination is scheduled for a vote in the Banking Committee on March 10th, after which his nomination will make its way to the full Senate for consideration. A recording of the hearing can be accessed here. 
 
Senate Banking Committee Subcommittee Assignments Announced
 
On March 1, Senate Banking Committee Chairman Sherrod Brown (D-OH) and Ranking Member Pat Toomey (R-PA) announced the panel’s subcommittee assignments for the 117th Congress. The roster for the Financial Institutions and Consumer Protection Subcommittee can be found below. 
 
FINANCIAL INSTITUTIONS AND CONSUMER PROTECTION
Senator Raphael Warnock (D-GA) Chair
Senator Robert Menendez (D-NJ)
Senator Jon Tester (D-MT)
Senator Mark R. Warner (D-VA)
Senator Elizabeth Warren (D-MA)
Senator Catherine Cortez Masto (D-NV)
Senator Chris Van Hollen (D-MD)
Senator Kyrsten Sinema (D-AZ)
 
Senator Thom Tillis (R-NC) Ranking Member
Senator Tim Scott (R-SC)
Senator Mike Rounds (R-SD)
Senator Bill Hagerty (R-TN)
Senator Cynthia Lummis (R-WY)
Senator Jerry Moran (R-KS)
Senator Kevin Cramer (R-ND)
Senator Richard Shelby (R-AL)
 
The full list can be found here. 

​Brookings Overdraft Study
 
On March 1, the Brookings Institution published an examination of overdraft fee revenue of community banks. It specifically focuses on a handful of larger community banks whose overdraft revenue is more than half their net income and lays out policy recommendations. Please find topline highlights below. 
 
Topline Summary

• For six banks overdraft revenues accounted for more than half their net income
• Three had overdraft revenues greater than total net income
• Three rely on overdraft fees for more than half their profit
• Calls on regulators to collect and publicize overdraft data for all banks and credit unions regardless of size
• Calls for any institution for which overdraft is more than 50 percent of their total profit to be put under strict consent decree
• Calls for regulators to reconsider whether the overdraft product is really a loan, not a fee
• Calls for all banks and credit unions to be required to offer a basic, low-cost, no overdraft fee product

 
The full study can be found here.

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