​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​is issued by the Innovative Payments Association twenty times a year as a service to members.
Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA;  Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: [email protected].

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

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

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

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

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

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​is issued by the Innovative Payments Association twenty times a year as a service to members.
Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA;  Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: [email protected].

2023 Innovative Payments Conference 
​The 2023 Innovative Payments Conference will be held on May 7-9th. The IPA’s IPC is the must-attend annual event for the payments community attracting the attention and support of the industry’s most influential players. Benefit from two days of cutting-edge content, discussions and enhanced networking as you engage directly with those leading the way in payments compliance, legislation, regulation and innovation.

Here are some highlights of the agenda:

• Seth Frotman, General Counsel of the CFPB, will discuss Consumer Financial Protection and Payments in the 21st Century;
• Andrew Moss, Director for Minority Outreach at the OCC will discuss Building a New Economy through Financial Inclusion;
• Stu Richards, CEO of Bredin, will present original research on the payments preferences of small businesses;
• Adam Drucker, PayPal’s Sr. Director, Global Law Enforcement Outreach and Response Global Investigations will discuss how PayPal Approaches High-Risk Investigations;
• Dan McCrum of the Financial Times will discuss how his reporting helped uncover the Wirecard Scandal;
• Industry Veterans John Hagy and Karen Garrett, will talk about where the industry has been and where it is going.

​CA Senate Considers Plastic Gift Card Ban
California State Senator Cynthia Limón has introduced SB728, a bill which would ban the sale or distribution of plastic gift cards. The bill passed the Environmental Quality Committee on April 27, 2023, and was amended to define “gift cards” using the statutory definition of “gift certificates” and to exclude open loop gift cards. The bill is eligible to be considered on the Senate floor immediately, but the Senator’s staff has committed to hearing from industry stakeholders, and have met with IPA staff to hear our concerns. We are in the process of drafting a letter in opposition to the bill, and will continue to engage with the bill author’s staff. 
 
CFPB Employee Breaches Data of Over 250,000 Consumers
News broke that a now-former employee of the CFPB forwarded the personal information of more than a quarter-million consumers to a personal email account in March. The employee sent over 50 emails containing personal information on approximately 256,000 consumers at one institution, as well as confidential supervisory information on 45 institutions. A CFPB spokesperson said that there is no evidence the records were shared beyond that former employee’s personal email account. In a statement about the breach, House Financial Services Committee Chair Patrick McHenry said “This breach raises concerns with how the CFPB safeguards consumers’ personally identifiable information. Republicans will ensure any bad actors are held accountable.”
 
Senate Banking Committee Ranking Member Tim Scott and House Financial Services Committee, Subcommittee on Oversight and Investigations Chairman Bill Huizenga have both sent letters to Director Chopra and called for a briefing on the breach and the CFPB’s response. 
 
Financial Services Committee Hold Legislative Markup
The House Financial Services Committee held a markup and reported 14 bills out the Committee. The focus of the bills was strengthening public markets, helping small businesses and entrepreneurs, and creating opportunities for investors. Additionally, the Committee passed by party-line vote the CFPB Transparency and Accountability Reform Act, which would reform the Bureau’s leadership structure, subject the agency to regular appropriations, and create an independent Inspector General for the CFPB. The bill is likely to be considered by the House later this year, but will not be taken up by the Senate. 
 
Federal Reserve Board and FDIC Release Reports on Bank Failures
Both the FDIC and Federal Reserve released the results of their reviews into the failures of Signature Bank, and Silicon Valley bank. The FDIC’s review of Signature Bank found that the collapse was due to poor management, and said bank management did not always heed FDIC examiners concerns, and was not always responsive or timely in addressing their supervisory recommendations. In particular, the report stated that bank management did not fully understand the risks associated with accepting crypto deposits, which comprised more than 20% of its total deposits.
 
In the Federal Reserve’s report on the failure of Silicon Valley Bank, the Fed outlined serious management errors by SVB executives, while also admitting the Fed failed to take sufficient actions to prevent the collapse. Specifically, the report said that “Regulatory standards for SVB were too low, the supervision of SVB did not work with sufficient force and urgency, and contagion from the firm’s failure posed systemic consequences not contemplated by the Federal Reserve’s tailoring framework,” 
 
These reports will be considered by Congress as they continue their investigation of the bank failures and determine what, if any, their legislative response should be. The Senate Banking Committee will hold a hearing this Thursday with academic witnesses to discuss the failures, and we can expect these reports to widely discussed.
 
Federal Reserve and FHN Reports
The Federal Reserve released its 2022 Federal Reserve Payments Study, which studied noncash payment methods used in the United States by consumers, businesses, and governments. The report found that The value of core noncash payments in the United States grew faster from 2018 to 2021 than in any previous FRPS measurement period since 2000.
 
The Financial Health Network released a report using their Financial Health Pulse panel survey, and found that four out of five Americans were financially unhealthy at least once over the last five years.
 
CFPB Statement on Bias in Automated Systems and Advanced Technology
The CFPB, Department of Justice, Federal Trade Commission, and the Equal Employment Opportunity Commission released a joint statement last week expressing their concerns with discrimination and bias in automated systems. The agencies said in the statement that private and public entities use automated systems to make critical decisions that impact individuals’ rights and opportunities, including fair access to jobs, housing, credit opportunities, and other goods and services. the statement also focuses on their potential to perpetuate unlawful bias, automate unlawful discrimination, and produce other harmful outcomes.  The agencies reiterated their intention to monitor the development and use of automated systems and promote responsible innovation, and also to use their collective efforts to protect individual rights regardless of whether legal violations occur through traditional means or advanced technologies.
 
FDIC Supervisory Guidance on Charging Overdraft Fees for Authorize Positive, Settle Negative Transactions
The FDIC issued a Financial Institution Letter (FIL) to supervised institutions to reiterate the consumer compliance risks associated with assessing overdraft fees on a transaction that was authorized against a positive balance, but settled against a negative balance (APSN). Specifically, the FIL noted that APSN transaction overdraft fees may violate Section 1036(a)(1)(B) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Section 5 of the Federal Trade Commission (FTC) Act, and that unanticipated overdraft fees can cause substantial injury to consumers. The FIL also stated that institutions should ensure third party overdraft programs are compliant with all applicable laws and recommendations. More information can be found here.

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

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​is issued by the Innovative Payments Association twenty times a year as a service to members.
Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA;  Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: [email protected].

Upcoming IPA/FBI Events
Webinar: The Value of SARs -- In a Webinar on April 20th the FBI will present on how the information that industry provides in SARs helps law enforcement with their investigations. They will also discuss how the Internet Crime Complaint Center can be a resource for helping your customers affected by cyber-crimes.  Learn more and register here. 
 
2023 Innovative Payments Conference
​The 2023 Innovative Payments Conference will be held on May 7-9th. The IPA’s IPC is the must-attend annual event for the payments community attracting the attention and support of the industry’s most influential players. Benefit from two days of cutting-edge content, discussions and enhanced networking as you engage directly with those leading the way in payments compliance, legislation, regulation and innovation.

Here are some highlights of the agenda:

• Seth Frotman, General Counsel of the CFPB, will discuss Consumer Financial Protection and Payments in the 21st Century;
• Andrew Moss, Director for Minority Outreach at the OCC will discuss Building a New Economy through Financial Inclusion;
• Stu Richards, CEO of Bredin, will present original research on the payments preferences of small businesses;
• Adam Drucker, PayPal’s Sr. Director, Global Law Enforcement Outreach and Response Global Investigations will discuss how PayPal Approaches High-Risk Investigations;
• Dan McCrum of the Financial Times will discuss how his reporting helped uncover the Wirecard Scandal;
• Industry Veterans John Hagy and Karen Garrett, will talk about where the industry has been and where it is going.

SBC Republicans Send Letter to CFPB on Overdraft and Credit Card Late Fees
Senate Banking Committee Ranking Member Tim Scott joined every Republican member of the Senate Banking Committee with the exception of Sens. John Kennedy and J.D. Vance, and sent a letter to CFPB Director Rohit Chopra criticizing efforts to further regulate overdraft fees and credit card late fees. The Senators state in the letter that the efforts are misguided and will cause harm particularly to low- and middle-income consumers with limited credit history. 
 
The letter specifically criticizes the Director’s statements concerning so-called “junk fees” and said CFPB efforts to ban responsible financial incentives such as overdraft and credit card late fees by labeling them “junk fees” is deceptive. 
 
CA DFPI Extends Comment Deadline for EWA Proposal   
The California Department of Financial Protection and Innovation has extended the public comment deadline for its proposal to create a regulatory framework for Earned Wage Access services. The original deadline of May 2nd has been extended to May 17th. The IPA is in the process of drafting our response and we appreciate our members’ participation and feedback in this effort.
 
CFPB Fines Portfolio Recovery Associates for Continued Illegal Debt Collection Practices
The CFPB announced that it is fining Portfolio Recovery Associates, one of the largest debt collectors in the nation, more than $24 million for violating a 2015 CFPB order. Specifically, the fine would require Portfolio Recovery Associates to pay more than $12 million to consumers and a $12 million penalty to be deposited into the CFPB’s victim relief fund. According to the CFPB, Portfolio Recovery Associates collected on unsubstantiated debt, collected on debt without providing required documentation and disclosures to consumers, sued or threatened legal action against consumers without offering or possessing required documentation, and sued to collect on debt outside the statute of limitations. 
 
Congressional Hearings on Bank Failures
The House Financial Services Committee and Senate Banking Committee held the first of what will likely be many oversight/investigative hearings into the failures of Silicon Valley Bank and Signature Bank, and the federal regulatory response. Witnesses at both hearings included FDIC Chair Martin Gruenberg, Fed Vice Chair for Supervision Michael Barr, and Treasury Under Secretary for Domestic Finance Nellie Liang. 
 
Senate Banking Committee was up first, and there was bipartisan frustration with financial regulators and their apparent inaction leading up to the bank failures. Chairman Brown and Ranking Member Scott were in agreement on many points, and blamed executives at SVB and Signature, who they say will be testifying before the Committee at some point in the future. Chairman Brown, in particular, criticized the venture capitalists who were SVB’s key clientele and helped drive the run when they encouraged companies to pull their money. Senators also laid blame at the feet of regulators, particularly the Federal Reserve, and asked why the Fed was unable to see the crisis coming. There was partisan disagreement, however, on who was more to blame, the current board of Trump-era leaders. 
 
In his opening statement, Chairman Brown also took aim at brokered deposits, saying “The officials sitting before us today know that their predecessors rolled back protections like capital and liquidity standards, stress tests, broker deposit limits, and even basic supervision. They greenlighted those banks to grow and grow and grow, too big, too fast.”
 
The issue of CFPB funding was not discussed at all during the hearing, except in Chairman Brown’s final remarks: “It’s interesting, many of my Republican colleagues are now so eager for bank regulators to crack down on banks for taking on too many risks. I hope they remember that when it comes time to empower regulators and strengthen guardrails including protecting the independent funding of financial regulators. The events of last month have shown why we need independent regulators funding and stability for all our financial watchdogs, but now as the Supreme Court considers whether the CFPB’s funding is constitutional, these independent watchdogs’ ability to keep our financial system stable faces an existential threat. U.S financial regulators, as we know, are independently funded so they can quickly respond when crises happen. On this and every issue I’ll continue to fight to protect American workers from Wall street arrogance and greed.”
 
During the HFSC hearing the following day, members from both sides of the aisle questioned the regulators’ competency and said examiners were asleep at the wheel. Ranking Member Waters questioned regulators’ actions leading up to the crisis and said the repeated warnings delivered to SVB about their balance sheet and long-term interest risks were insufficient. Fed Vice Chair Barr did not disagree with this opinion and said he expects changes to how supervisors use the tools they have more promplty at banks under their supervision. 
 
Chair McHenry slammed the witnesses for a lack of transparency over the initial weekend, noting there are no publicly-available notes from the emergency meetings. In another notable exchange, Rep. Brad Sherman asked “Are there any banks out there, and roughly how many, that have capital of under 5% if you subtract from their stated capital their unhedged, unrealized losses on long-term debt?” FDIC Chair Gruenberg was unable to answer the question. 
 
This was the first of many hearings on SVB and Signature Bank. Members on both committees have expressed interest in hearing from former-bank CEOs, and Republicans said they’d like to hear from California regulators. 
 
Both the Fed and FDIC are expected to publish reports on the failures of SVB and Signature Bank by May 1st. These reports will not doubt affect the direction of future Congressional inquiries into the failures and regulatory responses.
 
Second Circuit Rules CFPB Funding is Constitutional
In a decision issued on March 23, the Second Circuit ruled that the CFPB’s independent funding through the Federal Reserve is constitutional. The plaintiff in the case is a New York debt collection firm attempting to escape a civil subpoena the CFPB issued in June 2017. This decision comes ahead of the Supreme Court oral arguments of CFSA v. CFPB, to be held later this year, in which the CFPB is appealing an October 2022 ruling in the Fifth Circuit that held the CFPB’s funding violates the constitution.
 
Democratic Senators Press CFPB on BNPL
Senate Banking Committee Chairman Sherrod Brown (D-OH), and Senators Jack Reed (D-RI) and Tammy Duckworth (D-IL) have sent a letter to the CFPB urging the Bureau to bring the largest BNPL providers under more direct federal supervision. Specifically, the three Senators remind CFPB Director Rohit Chopra that, in spite of the widespread popularity of BNPL products, it remains subject only to a patchwork of state regulations. The letter suggests on-site examinations to review lenders’ books and recommendations and evaluation of compliance systems; issuing related reports and compliance ratings; and the aggressive enforcement of consumer financial protection laws.

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

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​is issued by the Innovative Payments Association twenty times a year as a service to members.
Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA;  Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: [email protected].

Upcoming IPA/FBI Events
​Webinar: The Value of SARs -- In a Webinar on April 20th the FBI will present on how the information that industry provides in SARs helps law enforcement with their investigations. They will also discuss how the Internet Crime Complaint Center can be a resource for helping your customers affected by cyber-crimes.  Learn more and register here. 
 
2023 Innovative Payments Conference
The 2023 Innovative Payments Conference will be held on May 7-9th. The IPA’s IPC is the must-attend annual event for the payments community attracting the attention and support of the industry’s most influential players. Benefit from two days of cutting-edge content, discussions and enhanced networking as you engage directly with those leading the way in payments compliance, legislation, regulation and innovation.

Here are some highlights of the agenda:

• Andrew Moss, Director for Minority Outreach at the OCC will discuss Building a New Economy through Financial Inclusion;
• Stu Richards, CEO of Bredin, will present original research on the payments preferences of small businesses;
• Adam Drucker, PayPal’s Sr. Director, Global Law Enforcement Outreach and Response Global Investigations will discuss how PayPal Approaches High-Risk Investigations;
• Dan McCrum of the Financial Times will discuss how his reporting helped uncover the Wirecard Scandal;
• Industry Veterans John Hagy and Karen Garrett, will talk about where the industry has been and where it is going.

GAO Publishes Report on Fintech Products/EWA
The GAO published a report entitled “Financial Technology: Products Have Benefits and Risks to Underserved Consumers, and Regulatory Clarity is Needed.” In the report, the GAO studied fintech products such as digital deposit accounts, credit builder products, small-dollar fintech loans, and earned wage access. 
 
Notably, on the very first page of the report, the GAO recommended that “CFPB issue clarification on the application of the Truth in Lending Act’s definition of “credit” for earned wage access products not covered by its November 2020 advisory opinion. CFPB agreed with this recommendation.”
 
The full GAO report can be found here, and a one-pager can be found here.
 
FDIC Press Releases, Financial Institution Letters on Silicon Valley Bank and Signature Bank
With the failures and subsequent resolutions of Silicon Valley Bank and Signature Bank, the Federal Deposit Insurance Corporation (FDIC) has issued a number of press releases and Financial Institution Letters (FILs) that IPA members should take note of, regardless of their exposure to recent events. On the morning of Monday, March 13th, the first business day after the failure of Silicon Valley Bank, the FDIC released a press release announcing that all deposits of Silicon Valley Bank-both insured and uninsured- would be transferred to a “bridge bank,” and that depositors would have full access to their funds. This historic action is a departure from traditional federally-backed deposit insurance in which only deposits up to $250,000 would be insured. A similar press release was issued in regards to Signature Bank. 
 
The following day, Tuesday, March 14th, the FDIC issued a Financial Institution Letterinforming all vendors and counterparties with contracts with the bridge banks of both Silicon Valley Bank and Signature Bank that they are legally obligated to perform under those contracts, and that the bridge banks have the full ability to make timely payments to vendors and counterparties and otherwise to perform its obligations under the contracts.
 
Biden FY24 Budget Proposal- EWA
The Biden Administration released its FY24 Budget Proposal, and the Treasury released its General Explanations. Both documents contained the same proposal that was included in the FY23 Budget Proposal on “clarifying the tax treatment of on-demand pay arrangements.” The Treasury’s General Explanations, specifically, contained a word-for-word repetition of the FY23 explanation.
 
The IPA held a call with Treasury staff about this proposal last year and was told the proposal only applied to wholly-integrated providers (i.e. providers that do not work with a third party). Treasury stressed at the time that they would prefer legislation, but also said they could technically regulate on their own.
 
California DFPI Proposes EWA Regulation
The California Department of Financial Protection and Innovation (CA DFPI) filed a Notice of Proposed Rulemaking and invited public comments on an EWA registration proposal. We are still working through the proposal itself and encourage our members to do the same. Note that the press release includes three links for a Notice of Proposed Action, Text of Proposed Rulemaking, and Initial Statement of Reasons. The press release gives a deadline of May 2, 2023 (45 days) for public comments. The IPA will be submitting a comment, and we ask our members to review all three linked documents and send any feedback to Brian Tate ([email protected]) or Chris Stromberg ([email protected]). 
 
HFSC and SBC Announce First Hearings on Silicon Valley Bank and Signature Bank Failures
The House Financial Services Committee and Senate Banking Committee have announced their first hearings on the Silicon Valley Bank and Signature Bank failures. On Tuesday, March 28th, the Senate Banking Committee will hold its hearing, and on Wednesday, March 29th, the House Financial Services Committee will hold theirs. Both hearings will feature testimonies from FDIC Chairman Martin Gruenberg, Vice Chair for Supervision of the Federal Reserve Michael Barr, and Undersecretary for Domestic Finance, U.S. Treasury, Nellie Lang.
 
Joint Regulator Statement on Actions to Stabilize First Republic Bank.
The Department of the Treasury, Federal Reserve, FDIC, and OCC issued a press releaseon an influx of bank deposits to stabilize First Republic Bank. Other media sources are reporting that JPMorgan Chase, Bank of America, and Citigroup will each contribute $5 billion in deposits, along with smaller deposits from other institutions.
 
CFPB Issues Supervisory Highlight on Junk Fees
The CFPB released a Supervisory Highlight that reports on “unlawful junk fees uncovered in deposit accounts and in multiple loan servicing markets, including in mortgage, student, and payday lending.” More information can be found in this press release.

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

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​is issued by the Innovative Payments Association twenty times a year as a service to members.
Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA;  Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: [email protected].

Upcoming IPA/FBI Events
Meet the New York Field Office -- If you or your colleagues are in New York City, we will be hosting a session with the FBI at MasterCard's Tech hub on March 27.  FBI agents from the New York field office will present on cyber-crime and financial crimes trends. This follows on a similar event that we did last year in Atlanta. The goal is to introduce payments teams to their local field offices to help foster cooperation. You can learn more and register here.

Webinar: The Value of SARs -- In a Webinar on April 20th the FBI will present on how the information that industry provides in SARs helps law enforcement with their investigations. They will also discuss how the Internet Crime Complaint Center can be a resource for helping your customers affected by cyber-crimes.  Learn more and register here.  
​
2023 Innovative Payments Conference
The 2023 Innovative Payments Conference will be held on May 7-9th. The IPA’s IPC is the must-attend annual event for the payments community attracting the attention and support of the industry’s most influential players. Benefit from two days of cutting-edge content, discussions and enhanced networking as you engage directly with those leading the way in payments compliance, legislation, regulation and innovation.

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

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​is issued by the Innovative Payments Association twenty times a year as a service to members.
Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA;  Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: [email protected].

U.S. Court of Appeals for the D.C. Circuit Releases PayPal v. CFPB Decision
The U.S. Court of Appeals for the D.C. Circuit released its highly anticipated decision in PayPal v. CFPB. The court overturned PayPal’s victory the in lawsuit challenging the CFPB’s model disclosures that companies could use to comply with the agency’s prepaid card regulation.
 
According to the ruling, The CFPB’s prepaid card regulation didn’t mandate specific fee disclosures for digital wallet products offered by companies like PayPal. The three- judge panel ruled unanimously that the agency only provided a model that companies could use while giving them the option to develop their own, similar disclosures, bringing the regulation in line with the requirements in the Electronic Fund Transfer Act.
The Court concluded at the end of its decision that “[o]n remand, the district court may consider PayPal’s other challenges to the Rule, including the APA and constitutional claims, which remain to be addressed.”
 
Virginia Legislature Passes HB1921 and SB1217
The Virginia State Senate passed SB1917 unanimously, while the Virginia State House passed a HB1921, a companion bill, by a vote of 53-46. The House bill would create a regulatory framework for earned wage access providers in the state, while the Senate bill replaced the regulatory framework with a proposed study on earned wage access. The bills must now be reconciled before being sent back to each chamber for a final vote. The reconciled bill could include only the study, only the regulatory framework, or some type of combination of the two.  
 
CFPB Seeks Public Input on Consumer Credit Card Market
The CFPB issued a request for information seeking public input on the consumer credit card market as part of a biennial review mandated by the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act). Specifically, the request is seeking information on: 

• Terms of credit card agreements and the practices of credit card issuers
• Effectiveness of disclosure of terms, fees, and other expenses of credit card plans
• Adequacy of protections against unfair or deceptive acts or practices relating to credit card plans
• Cost and availability of consumer credit cards
• Safety and soundness of credit card issuers
• Use of risk-based pricing for consumer credit cards
• Consumer credit card product innovation

The comment period closes on April 24, 2023. 
 
White House Published RFI on Digital Asset Research
The White House Office of Science and Technology Policy (OSTP) published a request for information (RFI) seeking feedback on a proposed National Digital Assets Research and Development Agenda. Broadly speaking, they are seeking public comments to help identify priorities for research and development related to digital assets, including various underlying technologies such as blockchain, distributed ledgers, decentralized finances (DeFi), smart contracts, and related issues such as cybersecurity and privacy. Specifically, the RFI seeks feedback on six topics:

1. Goals, sectors, or applications that could be improved with digital assets and related technologies
2. Goals, sectors, or applications where digital assets introduces risks or harms
3. Federal research opportunities that could be introduced or modified to support efforts to mitigate risks from digital assets
4. R&D that should be prioritized for digital assets
5. Opportunities to advance responsible innovation in the broader digital assets ecosystem
6. Other information that should inform the R&D Agenda

 
Comments are due March 3, 2023.
 
Fed Promotes Level Playing Field Regardless of Deposit Insurance Status
The Federal Reserve Board issued a policy statement to promote a level playing field for all banks with a federal supervisor, regardless of deposit insurance status. The statement clarifies that uninsured and insured banks supervised by the Board will be subject to the same limitation on activities, including novel banking activities, such as crypto-asset-related activities. The statement also makes clear that uninsured and insured banks supervised by the Federal Reserve will be subject to the same limitations on certain activities imposed on national banks that are supervised by the OCC. Through this policy, the Federal Reserve aims to promote a level playing field and limit regulatory arbitrage.

White House Issues Statement on Cryptocurrency Risk
The White House released a statement describing the risks that cryptocurrencies pose to retail and institutional investors, and outlined the Administration’s roadmap to mitigating those risks while preventing harm to the broader financial system. The Administration laid out a framework for developing digital assets in a safe, responsible manner while addressing inherent risks, and encouraged federal agencies to use their authority to increase enforcement and issue guidance where needed. 
 
The statement also encouraged Congressional action to expand regulatory authority to protect customers’ assets, strengthen penalties for violating illicit finance rules, and address the risks of stablecoins. 
 
The statement closed by highlighting that the Administration supports responsible technological innovation, but that there must be safeguards to ensure they are secure and beneficial to all.
 
FDIC Announces Extension of Comment Period for Proposed Changes to its Regulation Regarding Misrepresentations of Deposit Insurance
The FDIC announced a 45-day extension of the comment period for the proposed changes to regulations relating to the FDIC’s official sign, advertising statement, misrepresentation of deposit insurance coverage, and misuse of the FDIC’s name or logo. The original due date for comments was February 21, 2023, but has now been extended to April 7, 2023. 
 
More information can be found in the original notice of proposed rulemaking.
 
IPA/EPC Joint Letter on North Dakota SB 2217
The IPA has signed a joint letter at the invitation of the Electronic Payments Coalition (including ABA, ICBA, CUNA, etc…) to oppose North Dakota State Senate bill SB.2217, which was recently passed by the ND Senate. If enacted, SB 2217 would prohibit the collection of interchange on the sales tax portion of electronic transactions. This bill is similar to other bills the IPA has opposed that have been introduced in several other states over the last couple of years.
 
Luetkemeyer Sends Letter to DOJ on BSA Reporting
Rep. Blaine Luetkemeyer (R-MO), Chairman of the National Security, Illicit Finance, and International Financial Institutions Subcommittee, sent a letter to Attorney General Merrick Garland regarding the Department of Justice’s fulfillment of Section 6201 of the 2021 National Defense Authorization Act (NDAA), which requires the DOJ to report metrics on its use of Bank Secrecy Act (BSA) data and on the use of data derived from financial institution reports. 
 
According to Chairman Luetkemeyer’s letter, the DOJ’s report did not include statistics required under the act, including statistics on the use and impact of BSA reports. Luetkemeyer criticizes the lack of transparency into the usefulness of BSA data, and asks if burdensome BSA reporting is even worthwhile. The letter includes several questions for response on the DOJ’s process for fulfilling the requirements laid out in Section 6201 of the NDAA.

New Federal Bills
None
 
Pending Federal Bills
None

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​is issued by the Innovative Payments Association twenty times a year as a service to members.
Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA;  Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: [email protected].

The 2023 Innovative Payments Conference will be held on May 7-9th. The IPA’s IPC is the must-attend annual event for the payments community attracting the attention and support of the industry’s most influential players. Benefit from two days of cutting-edge content, discussions and enhanced networking as you engage directly with those leading the way in payments compliance, legislation, regulation and innovation.

CFPB Files Amicus Brief in Prepaid Card Case
The CFPB filed an amicus brief in the U.S. Court of Appeals for the Fourth Circuit as part of Mohamed v. Bank of America, N.A., No. 22-1954 (4th Cir.). In the case, the plaintiff sued Bank of America for violations of the Electronic Fund Transfer Act (EFTA) when he received a prepaid government benefits card that had been fraudulently depleted of its entire $15,000 balance before he received it. Bank of America argued that EFTA does not apply to accounts loaded with unemployment assistance related to the pandemic.
 
The CFPB’s amicus brief explains that EFTA’s protections clearly apply to prepaid card accounts used to distribute certain types of government benefits, including unemployment assistance related to the pandemic, and that to hold otherwise would be to create a new exception to the law’s regulations.
 
More information can be found in this CFPB blog post, authored by general counsel Seth Frotman.
 
CFPB Proposes Rule to Establish Public Registry of Contract Terms
The CFPB proposed a rule which would establish a public registry of supervised nonbanks’ terms and conditions that are included in form contracts with their customers and users. According to the press release, the rule would require nonbanks to submit information on terms and conditions in form contracts that they use to waive or limit individuals rights and legal protections. The information would then be posted in an online registry that will be open to the public. The IPA is currently involved in a Chamber of Commerce coalition that is examining the effects the potential rule may have on pre-dispute arbitration clauses. The main concern seems to be the compliance burden on institutions that have many different contracts, sometimes more than one per state, the effect the registry would have on their ability to include pre-dispute arbitration clauses, and what next steps the CFPB may take after they have compiled this information.
 
CFSA Files Brief in CFPB Funding Case
The Community Financial Services Association of America (CFSA) filed its brief to the Supreme Court in their case against the CFPB. In the brief, the CFSA argued that the Supreme Court has the ability to address the validity of the CFPB’s payday lending rule without addressing the issue of the CFPB’s controversial funding mechanism. The Supreme Court is scheduled to consider the request for certiorari in a February 17th conference, after which we will know whether or not the Court will hear the case this term or next term, or will deny the request entirely.
 
CFPB Issues Report on TransUnion, Experian, and Equifax
The CFPB released its annual report on the three major credit reporting bureaus – Equifax, TransUnion, and Experian. In brief, the report analyzes how the credit bureaus respond to consumer complaints and implement aspects of the Fair Credit Reporting Act.  Accordingly, the report acknowledges that the credit bureaus have taken affirmative steps to address consumer concerns and provide more substantive responses to consumer inquiries.  However, the CFPB expects continued improvement in the next year and has recommended the credit bureaus implement the following changes: consider consumer burden when implementing automated processes; recognize that technology is also improving for consumers; and consider how to transition the market from control and surveillance to consumer participation
 
Agencies Issue Joint Statement on Crypto-Asset Risks to Banking Organizations
The Federal Reserve, FDIC, and OCC issued a joint statement on digital assets, expressing their concerns for banks and the use of digital assets including cryptocurrency and stablecoins.

The statement describes several key risks they see associated with crypto-assets and the crypto-asset sector, including: uncertainties related to custody practices, redemptions, and ownership rights; misleading or false representations of disclosures; volatility, run risks on stablecoins; a lack of maturity and robustness in the risk management and governance practices; heightened risks associated with open or DeFi networks; and the risk of fraud.

The statement also notes that the banking regulators are carefully reviewing any proposals from banking organizations to engage in activities that involve crypto-assets.
 
OCC Releases 2022 Annual Report
The OCC released its 2022 Annual Report in which they provide an overview of the condition of the federal banking system and discusses the OCC’s strategic priorities and initiatives. Specifically, the report found that the banking system remains resilient despite a recent dip in profitability with the phasing out of pandemic-related economic aid, and said that banks are still able to support their customers and the national economy. 
 
The report also highlighted the efforts of the OCC related to third-party risk management, financial inclusion, and the risks and benefits of cryptocurrency and digital assets.
 
CFPB Blog Post on Supervision Process
The CFPB published a blog post entitled “What new supervised institutions need to know about working with the CFPB”. In the blog, the CFPB outlines the supervisory activities that they conduct, the process they follow when conducting examinations, and what supervised institutions can expect following an exam or other supervisory activity. The blog post also included a link to the CFPB’s Supervision Program, and encourages supervised institutions to become more familiar with the program.
 
House Financial Services Committee Subcommittee Chairs

• Capital Markets — Rep. Ann Wagner
• Financial Institutions and Monetary Policy — Rep. Andy Barr 
• National Security, Illicit Finance and International Financial Institutions — Rep. Blaine Luetkemeyer 
• Oversight and Investigations — Rep. Bill Huizenga 
• Housing and Insurance —Rep. Warren Davidson
• Digital Assets – Rep. French Hill

New Federal Bills
None
 
Pending Federal Bills
None

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​is issued by the Innovative Payments Association twenty times a year as a service to members.
Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA;  Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: [email protected].

Fifth Circuit Ruling on CFPB Funding 
A three-judge panel from the U.S. Court of Appeals for the Fifth Circuit has ruled that the CFPB’s independent funding through the Federal Reserve violates the Constitution’s separation of powers clause. The ruling also invalidated the remaining portions of the CFPB’s 2017 Payday Lending Rule.
 
While it will take weeks, if not months, for the full implications of the Court’s decision to be clear, it is important to remember that in the short term the ruling affects only the issues raised by the plaintiffs in the present case. 
 
In light of this ruling, West Virginia Attorney General Patrick Morrisey sent a letter  to CFPB Director Rohit Chopra and argued that the CFPB cannot discharge its duties in a constitutionally permissible way due to the decision. He also wrote that “we cannot see how the Bureau intends to move on with its ‘business as usual’ attitude given that most of its operating funds derive from an unconstitutional funding scheme.” The letter requests answers to a series of questions, with a deadline for replying no later than tomorrow.

​CFPB Files Petition in Supreme Court
The CFPB filed a petition to the Supreme Court, requesting the Court review the recent Fifth Circuit Court of Appeals ruling which held that the CFPB’s funding mechanism was unconstitutional. In the petition, the CFPB asked the Court to find the Fifth Circuit errored in their holding, and to hear the case this term. Notably, in the petition, the CFPB highlighted recent legal challenges to the CFPB’s regulations following the Fifth Circuit’s decision and said:
“Those legal consequences have major practical effects. The CFPB’s critical work administering and enforcing consumer financial protection laws will be frustrated. And because the decision below vacates a past agency action based on the purported Appropriations Clause violation, the decision threatens the validity of all past CFPB actions as well. That threat raises grave concerns not just for the CFPB and consumers, but for the entire financial industry.”
The Community Financial Services Association of America (CFSA) filed a request last week with the Supreme Court for a 30-day extension of filing the Brief of Opposition to the CFPB’s petition until January 13, 2023. The CFPB has not indicated any opposition to this later filing deadline.  It’s not clear at the moment, but it does appear that the Court is likely to grant the extension based on recent developments.  
 
Because the Supreme Court will review the Brief of Opposition before ruling on the CFPB’s writ of certiorari, if granted, it will be at least late January until we hear if the Court will hear the case.
 
Treasury Report on Bank-Fintech Partnerships
The U.S. Department of the Treasury, in consultation with the White House Competition Council, has released a report entitled “Assessing Impacts of New Entrant Non-bank Firms on Competition in Consumer Finance Markets.”  The report is a product of President Biden’s July 2021 Executive Order, “Promoting Competition in the American Economy.” In brief, the report calls for enhanced oversight of the consumer financial activities of non-bank firms due to increased risks, including risks related to data security and privacy. Notably, in a section on competition trends in lending, the report did a good job in distinguishing between employer-sponsored EWA programs and direct-to-consumer models, which it referred to as “Early Wage Access.” The report was not as clear on the credit implications of EWA as we would have liked, or as they have in the past. Specifically, the report stated that “the state or federal lending laws applicable to an EWA product may vary based on structure and terms.” This statement seems to conflict with the Treasury Budget Proposal that was released in March, which stated more clearly that EWA products are not a form of credit. This is just a report and not a regulatory proposal, but is something that the IPA will monitor closely.
 
Rep. Perlmutter Draft EWA Bill 
Democratic Rep. Perlmutter is circulating a draft bill to regulate EWA providers. Our initial reading seems to indicate the focus of the bill is direct to consumer EWA providers. We have reviewed the bill extensively, discussed its potential implications with our members, and met with House Financial Services Committee Republican staff to relay our concerns. At the moment, we are confident the bill will not advance during the Lame Duck session, and is not likely to be introduced at all. With the upcoming Republican Majority, any proposal to regulate EWA next Congress will look vastly different than the Perlmutter proposal, and the IPA will be involved in its crafting.
 
Party Leadership Changes for the 118th Congress
Republican representatives have nominated Rep. Kevin McCarthy (R-CA-23) as Speaker of the House for the 118th Congress by a vote of 188-31. Rep. Andy Biggs (R-AZ-5), a member of the conservative House Freedom Caucus, challenged Rep. McCarthy for the nomination. Although a few House races are still undecided, Republicans have control of 218 seats- enough for a majority in the next Congress. 
 
On the Democratic side, House Speaker Nancy Pelosi announced she’ll step down as House Democratic leader after leading House Democrats for over 2 decades under 4 presidents, and becoming the first woman to serve as Speaker. Pelosi said she would remain in Congress, and Rep. Hakeem Jeffries of New York is widely considered the front runner to lead the House Democrats, potentially making him the first African-American to lead a party in Congress. 
 
Chair Waters Announces Hearing on FTX Failure
Chairwoman Waters of the House Financial Services Committee announced a bipartisan hearing into the collapse of FTX and the broader consequences for the digital asset ecosystem. The Committee plans to hear from Sam Bankman-Freid, now-former CEO of FTX, as well as representatives from Alameda Research, Binance, and other related entities. It’s estimated the FTX failures has affected over one million account holders, including individual and retail investors and pension funds. Estimates are that between $1-2 billion in funds was lost, including around $600 million that vanished in an apparent insider hack.  
 
HFSC Fintech Task Force Sends Letter to OCC
HFSC Ranking Member Patrick McHenry and Republican members of the FinTech Task Force sent a letter to Acting Comptroller Michael Hsu seeking clarification on the OCC’s position on bank-fintech partnerships. The letter included several questions for response on the growth of bank-fintech partnerships, the digitization of banking, regulatory burdens, and the examination of third-party risk management. 
 
Acting Comptroller Hsu Remarks at DC Fintech Week
OCC Acting Comptroller Michael Hsu delivered remarks at DC Fintech Week 2022, a gathering of academics, officials, and practitioners focused on fintech and regulatory issues. Hsu focused his remarks exclusively on cryptocurrency, both through the lens of his leadership at the OCC, and as a member of FSOC. Hsu noted that although the language and online experience of owning and trading crypto may mimic that of traditional financial assets, the foundational questions of “what exactly do I own?” and “what’s the difference between possession and ownership?” must be answered by the crypto industry if they expect to mature and scale. He also noted the important differences, that some are only now learning, between deposits stored on crypto platforms and FDIC insured bank accounts.
 
US Supreme Court Unclaimed Property Case
Last month, the US Supreme Court heard the first oral arguments in an unclaimed property case in over 30 years. In Delaware v. Pennsylvania, potentially hundreds of millions of dollars of unclaimed MoneyGram funds are at stake, with Delaware claiming the funds under common law priority rules because that’s where Moneygram is incorporated, and the plaintiffs, Pennsylvania and 29 other states, arguing the checks are subject to the 1974 Federal Disposition Act which provides that unclaimed funds are to be escheated to the state where they were purchased. During the arguments many of the questions concerned skepticism about DE’s narrow reading of the priority rules. Although the case is limited to the treatment of money orders, it also implicates the rules governing which state’s unclaimed property laws apply. While we don’t expect a ruling until April, May, or June of next year, this is an issue the IPA will continue to monitor.  
 
HFSC, E&C letter to Paypal on Acceptable Use Policy
Reps. McHenry, McMorris Rogers, Emmer, and Griffith, Republican leaders on the House Committees on Financial Services and Energy and Commerce, sent a letter to Paypal as a follow up to a briefing that was previously provided to the Committees on changes to Paypal’s Acceptable Use Policy that prohibited users from transactions that were “fraudulent, promote misinformation, or are unlawful.” A Paypal spokesperson has since stated the updated user agreement was an error and the reference to promoting misinformation was removed.
 
The letter raised questions of restrictions of free speech and presented several questions for response concerning the Paypal’s process for the approval and publication of updates to their user agreement.
 
Director Chopra Money 20/20 Remarks; CFPB Begins Rulemaking on Personal Financial Data Rights
Director Chopra spoke at the Money 20/20 conference in Las Vegas and discussed the CFPB’s new approach to regulations and how, according to Director Chopra, a move away from complicated rulemakings could increase competition in the financial services marketplace. 
 
He also previewed the CFPB’s rulemaking process under Section 1033 of the Consumer Financial Protection Act that would require financial institutions offering deposit accounts, credit cards, digital wallets, prepaid cards, and other transaction accounts to set up secure methods, like APIs, for data sharing; and said the CFPB will be working to stop institutions from restricting access when consumers seek to control and share their data. 
 
Only a few days after his remarks, the CFPB released their Section 1033 personal financial data rights rulemaking proposals. A link is included in today’s agenda, and they are requesting stakeholder feedback no later than January 23rd.
 
CFPB Seeks Public Comment on Big Tech Payment Platforms
The CFPB announced it is reopening a public comment period to gather additional information on the risks that consumers face while using faster payment systems. This is a follow up to a CFPB order last October that requested information from Amazon, Apple, Facebook, Google, PayPal, and Square on their data collection and use, consumer protection, and policies for removing individuals and businesses from their platforms. In this comment period, the CFPB is seeking additional input on companies’ acceptable use policies and their use of fines, liquidated damages provisions, and other penalties. More information can be found in the press release or the Federal Register Notice.  
 
CFPB Publishes Bulletin on Crypto-Asset Scams
The CFPB released a compliance bulletin detailing an increase in consumer complaints related to crypto-assets. Specifically, the Bureau warned consumers of increased cases of fraud, theft, account hacks, and scams, and said other risks include romance scams, difficulty obtaining restitution after a fraud or hack, fraudulent transactions, risk of identification, and high asset volatility. The bulletin also noted that older consumers and servicemembers can be disproportionately impacted by problems with financial products and services, and can face special concerns or constraints when attempting to solve these problems. 
 
The CFPB encourages consumers to be aware of commons scams, report suspicious FDIC insurance claims, and submit complaints to the CFPB if they have an issue with a consumer financial product or service, or feel they are the victim of a scam.
 
Nonbank Supervision Transparency Rule
The CFPB finalized changes to their nonbank supervision procedural rule to increase transparency to the public and clarify which standard will applied when deciding what information is appropriate for public release. Specifically, the finalized rule states the CFPB will not publish confidential commercial information, or information which may violate personal privacy. They will also avoid publishing information which may reveal specific violations of law or specific compliance management deficiencies. 
 
The final rule will also extend the amount of time available to nonbank entities to provide input to the CFPB about what information should be released from 7 to 10 business days.
 
Gruenberg Nominated as FDIC Chair
President Biden has announced his intent to nominate Martin Gruenberg as Chair and Member of the Board of Directors of the FDIC, according to a recently released White House statement. Gruenberg joined the FDIC Board of Directors in 2005 and has served as Acting Chairman since the resignation of Jelena McWilliams at the end of last year. He previously served on the staff of the Senate Banking Committee, as Senior Counsel of the full Committee and Staff Director of the Subcommittee on International Finance and Monetary Policy.

​New Federal Bills
None
 
Pending Federal Bills
S. 4760 - Digital Commodities Consumer Protection Act of 2022
 
Summary: The bill would give the CFTC the authority to regulate digital commodities.
 
Status: Introduced on August 8, 2022 and referred to the Senate Committee on Agriculture, Nutrition and Forestry.
 
Sponsor: Rep. Debbie Stabenow (D-MI)
 
Financial Data Privacy Bill Discussion Draft
 
Summary: The bill would modernize financial data privacy laws and give consumers more control over how their personal information is collected and used.
 
Status: Discussion Draft released. Not officially introduced.
 
Sponsor: Rep. Patrick McHenry (R-NC)
 
S. 4356 Responsible Financial Innovation Act
 
Summary: The bill would create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law.
 
Status: Introduced in Senate on June 7, 2022, Referred to the Committee on Finance.
 
Sponsors: Senators Kristen Gillibrand (D-NY) and Cynthia Lummis (R-WY)
 
The Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act 
 
Summary: The bill would require that payment stablecoin issuers choose from one of three regulatory regimes: a traditional bank charter; a new federal license designed specifically for stablecoin issuers; or a state-based money transmitter or similar license under state law. The bill would also subject all payment stablecoin issuers to standardized disclosure, redemption, and audit requirements; and would clarify that stablecoins that do not offer interest are not securities.
 
Status: Proposed, but not yet introduced.
 
The Stablecoin Innovation and Protection Act
 
Summary: This bill would require stablecoin issuers to either become a bank or to partner with a bank and be subject to bank-like regulation. The bill also requires nonbank stablecoin issuers to maintain collateral in an amount equal to 100 percent of the value of outstanding stablecoin.
 
Status: Proposed, but not yet introduced.
 
Sponsor: Rep. Josh Gottheimer (D-NJ)
 
H.R. 6415 To amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, and for other purposes.
 
Summary: This bill amends the Federal Reserve Act to prohibit the Federal Reserve banks from offering banking products and services, including CBDC, directly to consumers.
 
Status: Introduced in the House and referred to the Financial Services Committee on January 18, 2022.
 
Sponsor: Rep. Tom Emmer (R-MN)
 
H.R. 4773 – Consumer Financial Protection Commission Act
 
Summary: This bill removes the CFPB from the Federal Reserve System, converts the Bureau into an independent commission, and modifies its leadership structure. Specifically, the bill eliminates the position of director and deputy director and establishes a five-person commission appointed by the President and confirmed by the Senate.
 
Status: Introduced in the House and referred to the Financial Services Committee on July 28, 2021.
 
Sponsor:  Rep. Blaine Luetkemeyer (R-MO)
 
H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act
 
Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute.
 
Status: The bill passed the House on 3/17/2022 by a vote of 222-209 and was received in the Senate on 3/21/22.
 
Sponsor: Rep. Hank Johnson (D-GA)
 
H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purposes.
 
Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement.
 
Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21.
 
Sponsor: Rep. David Scott (D-GA)
 
H.R. 1996 – SAFE Banking Act
 
Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system.
 
Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21.
 
Sponsor: Rep. Ed Perlmutter (D-CO)
 
H.R. 3968 - Municipal IDs Acceptance Act
 
Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer.
 
Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23.
 
Sponsor: Rep. Richie Torres (D-NY)
 
H.R. 4277 – Overdraft Protection Act of 2021
 
Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs.
 
Status: Introduced and referred to the House Financial Services Committee on 6/30/21.
 
Sponsor: Rep. Carolyn Maloney (D-NY)

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​is issued by the Innovative Payments Association twenty times a year as a service to members.
Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA;  Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: [email protected].

Money 20/20 Reception
Please join Stinson LLP, Baird Holm LLP, The American Transaction Processors Coalition and the IPA on Monday, October 24th, for a reception during the Money 20/20 Conference. Drinks and hors d'oeuvres will be served beginning at 5 p.m. Registration information can be found here. 

​Federal Reserve Finalizes Updates to Reg II
The Federal Reserve Board has finalized updates to Reg II, the Board’s rule concerning debit card transactions. According the Federal Reserve the final rule is “substantially similar” to their 2021 proposed rule in which the IPA submitted a comment.  The final rule will be effective July 1, 2023.
 
In brief, the final rule specifies that debit issuers should enable at least two payment card networks to process all debit card transactions, including “card-not-present” transactions, such as online payments. According to the statement that accompanied the final rule, the Federal Reserve believes this new regulation will encourage competition between networks and incentivize them to improve fraud-prevention capabilities. The Federal Reserve also noted that many debit card issuers are already compliant with the final rule.  More information, including a press release, Board memo, and dissenting statement by Governor Bowman, can be found here.
 
CFPB Orders Regions Bank to Pay $191 Million for Overdraft Fees
The CFPB announced it is ordering Regions Bank to pay $50 million into the CFPB’s victims relief fund and to refund at least $141 million to customers harmed by its surprise overdraft fees. According to the CFPB, between August 2018 and July 2021, Regions Banks charged surprise overdraft fees on certain ATM and debit card transactions, even after telling customers they had sufficient funds at the time of the transaction. Specifically, the CFPB asserts Regions Bank employed “complex and counter-intuitive overdraft practices and manipulations.” More information can be found here.
 
CFPB Sues MoneyLion for Overdraft Charges
The CFPB announced it is suing MoneyLion for violations of the Military Lending Act. Specifically, the CFPB alleges that MoneyLion violated the Military Lending Act by charging more than the legally allowable 36% rate cap on loans to servicemembers and their dependents through a combination of stated interest rates and monthly membership fees. The CFPB also alleges MoneyLion required customers to join a membership program to access certain low interest loans, but did not allow them to cancel their memberships until their loans were paid. 
 
In a public response after the CFPB’s announcement, MoneyLion stated they have been cooperating with the CFPB for over three years regarding their membership offering, and accused them of prioritizing headlines over constructive dialogue.
 
Notably, this is the CFPB’s fourth enforcement action related to the Military Lending Act in the past two years. More information can be found here.
 
Sen. Elizabeth Warren Issues Report on Zelle Fraud
Sen. Elizabeth Warren (D-MA) issued a report on fraud on the Zelle platform. The report follows letters to Early Warning Services and the bank-owners of Zelle, including JPMorgan Chase, Wells Fargo, U.S. Bank, PNC, Capital One, Bank of America, and Truist; and the recent Senate Banking Committee hearing during which Warren questioned bank CEOs about reimbursing customers who are victims of fraud on the platform.
 
As expected, the report was highly critical of Zelle, Early Warning Services, the bank-owners of Zelle, and their fraud prevention and reimbursement policies. Notably, the report highlights that an estimated $440 million was lost by Zelle users through frauds and scams in 2021. It is also worth noting that Sen. Warren was the sole sponsor of the report, which was published through her office and not through the Banking Committee, and she was not joined in the report by Sen. Robert Menendez, who had previously co-authored letters to EWS and the bank-owners of Zelle.
 
FSOC Report on Digital Asset Financial Stability Risks and Regulation
The Financial Stability Oversight Council released its Report on Digital Asset Financial Stability Risks and Regulations in response to President Biden’s executive order, Ensuring Responsible Development of Digital Assets. The report outlines the specific financial stability risks and regulatory gaps posed by various types of digital assets and provides recommendations to address such risks. 
 
Specifically, the report identified three gaps in the regulation of crypto-asset activities in the United States:

1. Spot markets for crypto-assets that are not securities are subject to limited direct federal regulation.
2. Crypto-asset businesses do not have a consistent or comprehensive regulatory framework and can engage in regulatory arbitrage. 
3. Financial stability and investor protection implications may arise from retail investors’ exposure to certain practices commonly proposed by vertically integrated trading platforms, such as automated liquidation. 

 
The FSOC makes several recommendations in the report including regulatory principles, continued enforcement of existing regulatory structures, steps to address each of the above-mentioned regulatory gaps, and bolstering member agencies’ capacities related to crypto-asset data and expertise.
 
President Biden Announces Two FDIC Nominations
President Biden announced his intention to nominate Jonathan McKernan as a Member of the Board of Directors and Travis Hill as a Member and Vice Chair of the Board of Directors at the FDIC.
 
McKernan is currently on detail from the FHFA to the Senate Banking Committee and Hill most recently served as Senior Advisor to the Chairman and Deputy to the Chairman for Policy at the FDIC.
 
Nacha Releases Report on New Risk Management Framework
Nacha released a report on its new Risk Management Framework. The report outlines a new strategy for industry participants in both the ACH Network as well as other payment systems in an effort to address fraud that increasingly make use of credit-push payments, including vendor impersonation, business email compromise, and payroll impersonation. 
 
Nacha’s strategy identifies three themes in payment risk management:

1. The most significant fraud threats to bank account holders involve fraud and scams that result in money being sent out of their accounts using credit payments, including ACH credits, wires, cards, and other instant and digital payments.
2. The financial institutions that receive these credit payments should have an active role in fraud detection, prevention, and recovery. These institutions are often in the best position to identify potentially fraudulent credit payments sent to accounts at their institution.
3. Success in fighting credit-push fraud requires cooperation and information sharing among financial institutions and other stakeholders.

 
Federal Reserve Governor Jefferson Highlights Benefits of Payments Technology
This week at the Technology-Enabled Disruption conference, organized by the Federal Reserve Banks of Atlanta, Dallas, and Richmond, Federal Reserve Governor Philip Jefferson highlighted the benefits of innovations in the payments system, particularly during the Covid-19 pandemic:
 
“The payments system has also seen an acceleration in alternative online and mobile payment methods as well as contactless payment options. We all remember the onset of the pandemic, when social distancing became imperative and delivery and curbside pickup became the norm for many. Remote card payments naturally rose as in-person use fell. As stores reopened while the fear factor was still considerable, the contactless payment options that were available on cards and mobile devices received more attention. Such changes, coupled with the growing prominence of person-to-person money transfer apps, provided consumers with remote and touchless cash substitutes in their daily lives. The expanded use of those various payment options rested on the foundation of an intricate, robust payments ecosystem. That system supported a migration from in-person payment options to no-contact alternatives, helping restart the economy during a time of deep stress.”
​
His full remarks can be found here.

​New Federal Bills
None
 
Pending Federal Bills
S. 4760 - Digital Commodities Consumer Protection Act of 2022
 
Summary: The bill would give the CFTC the authority to regulate digital commodities.
 
Status: Introduced on August 8, 2022 and referred to the Senate Committee on Agriculture, Nutrition and Forestry.
 
Sponsor: Rep. Debbie Stabenow (D-MI)
 
Financial Data Privacy Bill Discussion Draft
 
Summary: The bill would modernize financial data privacy laws and give consumers more control over how their personal information is collected and used.
 
Status: Discussion Draft released. Not officially introduced.
 
Sponsor: Rep. Patrick McHenry (R-NC)
 
S. 4356 Responsible Financial Innovation Act
 
Summary: The bill would create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law.
 
Status: Introduced in Senate on June 7, 2022, Referred to the Committee on Finance.
 
Sponsors: Senators Kristen Gillibrand (D-NY) and Cynthia Lummis (R-WY)
 
The Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act 
 
Summary: The bill would require that payment stablecoin issuers choose from one of three regulatory regimes: a traditional bank charter; a new federal license designed specifically for stablecoin issuers; or a state-based money transmitter or similar license under state law. The bill would also subject all payment stablecoin issuers to standardized disclosure, redemption, and audit requirements; and would clarify that stablecoins that do not offer interest are not securities.
 
Status: Proposed, but not yet introduced.
 
The Stablecoin Innovation and Protection Act
 
Summary: This bill would require stablecoin issuers to either become a bank or to partner with a bank and be subject to bank-like regulation. The bill also requires nonbank stablecoin issuers to maintain collateral in an amount equal to 100 percent of the value of outstanding stablecoin.
 
Status: Proposed, but not yet introduced.
 
Sponsor: Rep. Josh Gottheimer (D-NJ)
 
H.R. 6415 To amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, and for other purposes.
 
Summary: This bill amends the Federal Reserve Act to prohibit the Federal Reserve banks from offering banking products and services, including CBDC, directly to consumers.
 
Status: Introduced in the House and referred to the Financial Services Committee on January 18, 2022.
 
Sponsor: Rep. Tom Emmer (R-MN)
 
H.R. 4773 – Consumer Financial Protection Commission Act
 
Summary: This bill removes the CFPB from the Federal Reserve System, converts the Bureau into an independent commission, and modifies its leadership structure. Specifically, the bill eliminates the position of director and deputy director and establishes a five-person commission appointed by the President and confirmed by the Senate.
 
Status: Introduced in the House and referred to the Financial Services Committee on July 28, 2021.
 
Sponsor:  Rep. Blaine Luetkemeyer (R-MO)
 
H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act
 
Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute.
 
Status: The bill passed the House on 3/17/2022 by a vote of 222-209 and was received in the Senate on 3/21/22.
 
Sponsor: Rep. Hank Johnson (D-GA)
 
H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purposes.
 
Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement.
 
Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21.
 
Sponsor: Rep. David Scott (D-GA)
 
H.R. 1996 – SAFE Banking Act
 
Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system.
 
Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21.
 
Sponsor: Rep. Ed Perlmutter (D-CO)
 
H.R. 3968 - Municipal IDs Acceptance Act
 
Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer.
 
Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23.
 
Sponsor: Rep. Richie Torres (D-NY)
 
H.R. 4277 – Overdraft Protection Act of 2021
 
Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs.
 
Status: Introduced and referred to the House Financial Services Committee on 6/30/21.
 
Sponsor: Rep. Carolyn Maloney (D-NY)
 
IV. U.S. Congress Members Not Seeking Re-Election in 2022
The current structure of the U.S. Senate is 48 Democrats, 50 Republicans, and 2 Independents. Currently 1 Democratic and 5 Republican Senators have announced they will not be running for reelection in 2022. The current structure of the U.S. House is 222 Democrats and 211 Republicans. Currently 31 Democratic and 18 Republican House members have announced they will not be running for reelection in 2022. More information about Congressional retirements can be found here. 

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​is issued by the Innovative Payments Association twenty times a year as a service to members.
Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA;  Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: [email protected].

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

Money 20/20 Reception
Please join Stinson LLP, Baird Holm LLP, The American Transaction Processors Coalition and the IPA on Monday, October 24th, for a reception during the Money 20/20 Conference. Drinks and hors d'oeuvres will be served beginning at 5 p.m. Registration information can be found here. 

Senate Democrats Send Letter to CFPB on P2P Fraud
Senators Casey (D-PA), Blumenthal (D-CT), Warren (D-MA), Gillibrand (D-NY), all members of the Senate Special Committee on Aging, along with Sen. Cortez Masto (D-NV), sent a letter to CFPB Director Rohit Chopra expressing concern with the increased prevalence of fraud on P2P payment platforms such as Venmo, Cash App, PayPal, and Zelle, particularly targeted toward older adults. According to the letter, the CFPB is currently considering guidance to broaden the definition of unauthorized transactions, which would shift some of the burden of these losses from consumers to banks and P2P apps. The Senators encouraged the CFPB to move forward in issuing guidance to provide seniors with better tools to protect themselves and their families.
 
Acting Comptroller Hsu Remarks on Safeguarding Trust in Banking
Acting Comptroller Michael Hsu delivered remarks at The Clearing House and Bank Policy Institute’s Annual Conference. His remarks were intended to provide an update on his priorities as Acting Comptroller- guarding against complacency, addressing inequality, adapting to digitalization, and managing climate-related risk. 
 
Notably, in his remarks, Acting Comptroller Hsu compared the increase in bank-fintech partnerships to the run up to the 2008 financial crisis and said:
 
“The “de-integration” of banking services that is taking place now has its roots in technology, data, and operations and is affecting all banks, not just the large, money center banks. My strong sense is that this process, if left to its own devices, is likely to accelerate and expand until there is a severe problem or even a crisis. Like the globalization of manufacturing and the disintermediation of credit, the efficiency gains of these changes can be enjoyed immediately, while the most material risks do not manifest for some time.”
 
FDIC-FinCEN Digital Identity Tech Sprint
FinCEN has published key takeaways on their digital identity-focused Tech Sprint, available here. Through the Tech Sprint, the FDIC and FinCEN challenged teams to develop solutions to measure the effectiveness of digital identity credentials. Specifically, the Tech Sprint asked teams to answer the following question: “What is a scalable, cost-efficient, risk-based solution to measure the effectiveness of digital identity proofing to ensure that individuals who remotely (i.e., not in person) present themselves for financial activities are who they claim to be?” More information on the FDIC-FinCEN Tech Sprint Program can be found here.
 
Senate Banking Committee Hearing on New Consumer Financial Products
The Senate Banking Committee held a hearing entitled “New Consumer Financial Products and the Impacts to Workers.” A recording of the hearing and witness statements can be found here. 
 
Witness statements and member questions focused on BNPL, Training Repayment Programs, student loans, and EWA. When EWA was discussed, members and witnesses focused mostly on direct-to-consumer and tip-based models. In his opening statement, Chairman Sherrod Brown was critical of tip-based models, but acknowledged that “employer-based earned wage advances with strong consumer protections can, in fact, help workers cover unexpected expenses or emergencies.” 
 
In his opening statement, Ranking Member Toomey described EWA as “an appealing alternative to payday loans for workers who want an advance on their wages. Many people don’t have savings available to pay for unexpected expenses that can arise in between pay periods….EWA can help consumers to meet such expenses and others…” He also noted that market competition is the best way to achieve consumer protection and warned against burdensome regulation that could stifle innovation.  
 
The IPA met with senior Committee staff in advance of the hearing to educate them on EWA. We were pleased to see that during the hearing members differentiated between direct-to-consumer and employer-sponsored programs and there were no overt criticisms of employer-sponsored programs.
 
CFPB Releases Market Report on BNPL
The CFPB released a market report as a follow up to its December 2021 market monitoring orders to five Buy Now Pay Later lenders. The market report summarizes the data, individual and organizational submissions to the CFPB, and publicly available sources to provide a review of the BNPL marketplace and consumer impacts. The report identifies both financial and operational benefits of BNPL loans over legacy credit products and outlines three categories of potential consumer risks: discrete consumer harms, data harvesting, and borrower overextension. CFPB Director Chopra’s remarks on the release of the BNPL market report can be found here.
 
Treasury Releases Reports on Digital Assets
As assigned in President Biden’s Executive Order on “Ensuring Responsible Development of Digital Assets, the Treasury released three reports on digital assets, individually focused on the future of money and payment systems, consumer and investor protection, and illicit finance risks. The White House also released a Fact Sheet this morning outlining the reports and announcing further steps to protecting consumers and ensuring fair play in digital assets.
 
The reports and their recommendations can be accessed below:

• The Future of Money and Payments
• Implications for Consumers, Investors, and Businesses
• Action Plan to Address Illicit Financing Risks of Digital Assets

​New Federal Bills
None
 
New Federal Bills
None
 
Pending Federal Bills
S. 4760 - Digital Commodities Consumer Protection Act of 2022
 
Summary: The bill would give the CFTC the authority to regulate digital commodities.
 
Status: Introduced on August 8, 2022 and referred to the Senate Committee on Agriculture, Nutrition and Forestry.
 
Sponsor: Rep. Debbie Stabenow (D-MI)
 
Financial Data Privacy Bill Discussion Draft
 
Summary: The bill would modernize financial data privacy laws and give consumers more control over how their personal information is collected and used.
 
Status: Discussion Draft released. Not officially introduced.
 
Sponsor: Rep. Patrick McHenry (R-NC)
 
S. 4356 Responsible Financial Innovation Act
 
Summary: The bill would create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law.
 
Status: Introduced in Senate on June 7, 2022, Referred to the Committee on Finance.
 
Sponsors: Senators Kristen Gillibrand (D-NY) and Cynthia Lummis (R-WY)
 
The Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act 
 
Summary: The bill would require that payment stablecoin issuers choose from one of three regulatory regimes: a traditional bank charter; a new federal license designed specifically for stablecoin issuers; or a state-based money transmitter or similar license under state law. The bill would also subject all payment stablecoin issuers to standardized disclosure, redemption, and audit requirements; and would clarify that stablecoins that do not offer interest are not securities.
 
Status: Proposed, but not yet introduced.
 
The Stablecoin Innovation and Protection Act
 
Summary: This bill would require stablecoin issuers to either become a bank or to partner with a bank and be subject to bank-like regulation. The bill also requires nonbank stablecoin issuers to maintain collateral in an amount equal to 100 percent of the value of outstanding stablecoin.
 
Status: Proposed, but not yet introduced.
 
Sponsor: Rep. Josh Gottheimer (D-NJ)
 
H.R. 6415 To amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, and for other purposes.
 
Summary: This bill amends the Federal Reserve Act to prohibit the Federal Reserve banks from offering banking products and services, including CBDC, directly to consumers.
 
Status: Introduced in the House and referred to the Financial Services Committee on January 18, 2022.
 
Sponsor: Rep. Tom Emmer (R-MN)
 
H.R. 4773 – Consumer Financial Protection Commission Act
 
Summary: This bill removes the CFPB from the Federal Reserve System, converts the Bureau into an independent commission, and modifies its leadership structure. Specifically, the bill eliminates the position of director and deputy director and establishes a five-person commission appointed by the President and confirmed by the Senate.
 
Status: Introduced in the House and referred to the Financial Services Committee on July 28, 2021.
 
Sponsor:  Rep. Blaine Luetkemeyer (R-MO)
 
H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act
 
Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute.
 
Status: The bill passed the House on 3/17/2022 by a vote of 222-209 and was received in the Senate on 3/21/22.
 
Sponsor: Rep. Hank Johnson (D-GA)
 
H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purposes.
 
Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement.
 
Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21.
 
Sponsor: Rep. David Scott (D-GA)
 
H.R. 1996 – SAFE Banking Act
 
Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system.
 
Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21.
 
Sponsor: Rep. Ed Perlmutter (D-CO)
 
H.R. 3968 - Municipal IDs Acceptance Act
 
Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer.
 
Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23.
 
Sponsor: Rep. Richie Torres (D-NY)
 
H.R. 4277 – Overdraft Protection Act of 2021
 
Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs.
 
Status: Introduced and referred to the House Financial Services Committee on 6/30/21.
 
Sponsor: Rep. Carolyn Maloney (D-NY)
 
IV. U.S. Congress Members Not Seeking Re-Election in 2022
The current structure of the U.S. Senate is 48 Democrats, 50 Republicans, and 2 Independents. Currently 1 Democratic and 5 Republican Senators have announced they will not be running for reelection in 2022. The current structure of the U.S. House is 222 Democrats and 211 Republicans. Currently 31 Democratic and 18 Republican House members have announced they will not be running for reelection in 2022. More information about Congressional retirements can be found here. 
 

S. 4760 - Digital Commodities Consumer Protection Act of 2022
 
Summary: The bill would give the CFTC the authority to regulate digital commodities.
 
Status: Introduced on August 8, 2022 and referred to the Senate Committee on Agriculture, Nutrition and Forestry.
 
Sponsor: Rep. Debbie Stabenow (D-MI)
 
Financial Data Privacy Bill Discussion Draft
 
Summary: The bill would modernize financial data privacy laws and give consumers more control over how their personal information is collected and used.
 
Status: Discussion Draft released. Not officially introduced.
 
Sponsor: Rep. Patrick McHenry (R-NC)
 
S. 4356 Responsible Financial Innovation Act
 
Summary: The bill would create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law.
 
Status: Introduced in Senate on June 7, 2022, Referred to the Committee on Finance.
 
Sponsors: Senators Kristen Gillibrand (D-NY) and Cynthia Lummis (R-WY)
 
The Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act 
 
Summary: The bill would require that payment stablecoin issuers choose from one of three regulatory regimes: a traditional bank charter; a new federal license designed specifically for stablecoin issuers; or a state-based money transmitter or similar license under state law. The bill would also subject all payment stablecoin issuers to standardized disclosure, redemption, and audit requirements; and would clarify that stablecoins that do not offer interest are not securities.
 
Status: Proposed, but not yet introduced.
 
The Stablecoin Innovation and Protection Act
 
Summary: This bill would require stablecoin issuers to either become a bank or to partner with a bank and be subject to bank-like regulation. The bill also requires nonbank stablecoin issuers to maintain collateral in an amount equal to 100 percent of the value of outstanding stablecoin.
 
Status: Proposed, but not yet introduced.
 
Sponsor: Rep. Josh Gottheimer (D-NJ)
 
H.R. 6415 To amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, and for other purposes.
 
Summary: This bill amends the Federal Reserve Act to prohibit the Federal Reserve banks from offering banking products and services, including CBDC, directly to consumers.
 
Status: Introduced in the House and referred to the Financial Services Committee on January 18, 2022.
 
Sponsor: Rep. Tom Emmer (R-MN)
 
H.R. 4773 – Consumer Financial Protection Commission Act
 
Summary: This bill removes the CFPB from the Federal Reserve System, converts the Bureau into an independent commission, and modifies its leadership structure. Specifically, the bill eliminates the position of director and deputy director and establishes a five-person commission appointed by the President and confirmed by the Senate.
 
Status: Introduced in the House and referred to the Financial Services Committee on July 28, 2021.
 
Sponsor:  Rep. Blaine Luetkemeyer (R-MO)
 
H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act
 
Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute.
 
Status: The bill passed the House on 3/17/2022 by a vote of 222-209 and was received in the Senate on 3/21/22.
 
Sponsor: Rep. Hank Johnson (D-GA)
 
H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purposes.
 
Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement.
 
Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21.
 
Sponsor: Rep. David Scott (D-GA)
 
H.R. 1996 – SAFE Banking Act
 
Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system.
 
Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21.
 
Sponsor: Rep. Ed Perlmutter (D-CO)
 
H.R. 3968 - Municipal IDs Acceptance Act
 
Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer.
 
Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23.
 
Sponsor: Rep. Richie Torres (D-NY)
 
H.R. 4277 – Overdraft Protection Act of 2021
 
Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs.
 
Status: Introduced and referred to the House Financial Services Committee on 6/30/21.
 
Sponsor: Rep. Carolyn Maloney (D-NY)
 
IV. U.S. Congress Members Not Seeking Re-Election in 2022
The current structure of the U.S. Senate is 48 Democrats, 50 Republicans, and 2 Independents. Currently 1 Democratic and 5 Republican Senators have announced they will not be running for reelection in 2022. The current structure of the U.S. House is 222 Democrats and 211 Republicans. Currently 31 Democratic and 18 Republican House members have announced they will not be running for reelection in 2022. More information about Congressional retirements can be found here.