February 2, 2022

​​​​​​​The Government Update 

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​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].

IPA Media Engagements
 
The IPA is frequently cited in the media on issues important to our members. Below are the most recent examples:

• American Banker: Can regulators keep pace with fintech innovation?
• Forbes: Extending The Durbin Amendment To The Credit-Card Market Will Harm Consumers
• Digital Transactions: Visa’s Latest Debit Card Perk Is Eligibility for ReadyLink, its Prepaid Reload Network
• American Banker: How regulators worldwide aim to rein in buy now/pay later
• Bloomberg Law: It’s Time to Give Workers Easier Access to Their Pay
• Law360: CFPB Official Floats Revisiting Earned-Wage Access Guidance
• Newsweek: 15 Transitional Strategies to Use When a Key Leader Leaves
• Digital Transactions: Plaid’s Portal Looks to Give Consumers More Control Over Data Shared Via Apps And Fintechs
• Digital Transactions: Payments 3.0
• BankDive.com: Early Wage Payments Draw Scrutiny
• Pymnts.com: Capitol Hill Hearing: BNPL Has Benefits But Risks are ‘Growing’
• American Banker: How shifting consumer habits are driving change in payments
• NerdWallet: How Purchase Plans and Pay Advances Could Change in 2022

CFPB Issues Letter on EWA; Promises Greater Clarity
CFPB Acting General Counsel Seth Frotman said in a letter to New Jersey consumer advocates that the CFPB’s November 2020 advisory opinion regarding EWA products has caused confusion among those trying to apply the opinion to a wider range of products than initially intended, and is being misinterpreted.
 
The 2020 advisory opinion said that EWA products offered for free through an employer should not be regulated as consumer credit under the Truth in Lending Act. Consumer advocates, including the recipients of Frotman’s letter, have called for the opinion to be rescinded. Frotman noted that the 2020 advisory opinion was limited to a narrow set of facts and was not intended to apply to all EWA products. Frotman indicated that he is recommending to CFPB Director Rohit Chopra that the CFPB provide greater clarity on EWA products.
 
Federal Reserve Releases CBDC Report
The Federal Reserve released its long-awaited report on central bank digital currency (CBDC), entitled “Money and Payments: The U.S. Dollar in the Age of Digital Transformation.” As expected, the Fed avoided taking a position on the creation and implementation of a CBDC, and instead laid out pros and cons, and posed questions that will shape the debate going forward. 
 
Notably, the Fed emphasized they would not move forward without congressional approval, stating “The Federal Reserve does not intend to proceed with issuance of a C.B.D.C. without clear support from the executive branch and from Congress, ideally in the form of a specific authorizing law.” The Fed also dismissed the possibility that a CBDC could be implemented alongside consumer bank accounts at the Fed, stating “The Federal Reserve Act does not authorize direct Federal Reserve accounts for individuals, and such accounts would represent a significant expansion of the Federal Reserve’s role in the financial system and the economy,” 
 
The Federal Reserve’s initial analysis suggests that a potential U.S. CBDC, if one were created, would best serve the needs of the United States by being privacy-protected, intermediated, widely transferable, and identity-verified.
 
FinCEN Issues Proposed Rule for SAR Sharing Pilot Program
The Financial Crimes Enforcement Network (FinCEN) issued a Notice of Proposed Rulemaking (NPRM) that proposed and solicited public comment on the establishment of a pilot program for sharing suspicious activity reports (SARs). The pilot program would permit a financial institution with a SAR reporting obligation to share SARs and information related to SARs with the institution’s foreign branches, subsidiaries, and affiliates for the purpose of combating illicit finance risks. Currently institutions may only share SARs with foreign head offices (not branches) controlling companies (whether foreign or domestic), and domestic affiliates.
 
Department of Commerce Releases Results from Semiconductor Supply Chain RFI
The Department of Commerce has released the results from the Risks in the Semiconductor Supply Chain Request for Information (RFI) issued in September 2021. The RFI showed that median inventory held by chips consumer fell from 40 days in 2019 to 5 days in 2021, while semiconductor demand is 17 percent higher in 2021 than in 2019, indicating the potential for a major disruption if COVID, a natural disaster, or political instability affects a foreign semiconductor facility. As a reminder, the IPA joined a joint trade association letter in response to Department of Commerce RFI, and has joined a Semiconductor Shortage coalition with other financial trades to conduct proactive outreach on Capitol Hill.
 
CFPB issues RFI Regarding Excessive Fees
The CFPB issued a press release announcing a Request for Information (RFI) aimed at reducing fees charged by banks and other financial companies. Specifically, they are asking for consumers’ experiences with unexpected, unclear, duplicative, and excessive fees related to their bank, credit union, prepaid or credit card account, mortgage, loan, or payment transfer.
 
Fienstein Asks Treasury, IRS to Investigate Traffickers' Use of Cryptocurrency
Last week, in a letter to the Treasury Department and IRS, Sen. Dianne Feinstein (D-CA) asked for information on how digital currencies are being used in human and drug trafficking. Feinstein specifically asked what steps Treasury and the IRS are taking in response to a recent GAO report which stated the agencies may not have all the data they need to determine the extent to which cryptocurrencies are being used to aid human and drug trafficking. She asked the agencies what steps they are taking to better capture the needed data, what other actions they are taking to improve the tracking, sharing, and use of information regarding the illicit use of cryptocurrencies, and whether they require additional legislative authorities to implement GAO’s recommendations.

Notable State Issues
 
NY Gift Card bill Passes Assembly
NY State Bill A266 passed the Assembly and was referred to the Senate last week. The bill would require any businesses who display gift cards for sale to post notices alerting customers of gift card scams. One of our members who has a presence in New York has been communicating with the sponsor of the bill, and she is open to working with the industry, to make improvements and/or amendments.
 
WA Payroll Card Bill in Senate Committee
 
Last week, Washington Senate bill 5531 was introduced. It would amend the Uniform Unclaimed Property Act to consider payroll cards abandoned property one year after it was issued and made payable. IPA continues to follow the bill, but there has been no action on the bill since it was introduced.

New Federal Bills
 
None.
 
Pending Federal Bills
 
H.R. 6415
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 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 House 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 Judiciary Committee on November 3.
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)