March 30, 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 Op-Ed in the American Banker
The American Banker published an op-ed written by IPA President Brian Tate. The op-ed is entitled “Prepaid cards have real value. Don't be fooled by isolated incidents,” and is in response to the recent American Banker article which painted an inaccurate picture of the prepaid card community.

American Banker article on Paypal v. CFPB feat. Brian Tate
The American Banker published an article on the Paypal v. CFPB case in which IPA President Brian Tate was quoted. 

IPA Welcomes B4B as a New Member
The IPA is pleased to welcome B4B Payments as a new member to the association. Learn more about the company in their new member profile on our blog.  
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IPA Podcast: San Francisco Seeks New Financial Partner for Student Savings
In the latest episode of the IPA Payments Pod, we talk with the San Francisco Office of Financial Empowerment about its search for anew financial services provider for its Kindergarten to College student savings program. We talk about what they are looking for in a partner and its planned RFP process. You can find the podcast here.

​President Biden's On-Demand Pay Tax Proposal
The Department of the Treasury has published the General Explanations of the Administration’s Fiscal Year 2023 Revenue Proposals as part of the President Biden’s budget proposal. Of particular interest to the IPA is a section that would clarify the tax treatment of on-demand pay arrangements. The section appears to indicate that the Administration is in full support of EWA and does not believe EWA products are loans. Further, it states that even if you receive your wages before payday, “on-demand” pay will be treated as paid on payday for tax purposes.
 
CFPB Issues Report on Credit Card Late Fees
The CFPB issued a report showing that credit card issuers charged $12 billion in late fees in 2020. The report also found that 18 of 20 issuers set late fees at or near the maximum allowable level, subprime and private label cardholders were particularly susceptible to late fees, late fee volume fell during time periods when households were receiving stimulus checks, and low-income areas were particularly hit with late fees.
 
GAO Access to Banking Services Report
The GAO released a report studying household use of banking services and the effect of regulatory action on financial products and services. The IPA was consulted for a substantial section on the use of prepaid card products. The report examines factors associated with households’ use of basic banking services; statutory and regulatory factors affecting service availability and cost; the use of prepaid cards and trends in the prepaid card market; and the efforts of selected federal financial regulators to address these issues.
 
CFPB Targets Unfair Discrimination in Consumer Finance
The CFPB has issued a press release announcing changes to its supervisory operations to protect against illegal discrimination. The Bureau will now rely not only on the Equal Credit Opportunity Act (ECOA), but also the Consumer Financial Protection Act (CFPA) when targeting discriminatory practices in consumer finance markets, including credit servicing, collections, consumer reporting, payments, remittances, and deposits.
 
Washington Passes Payroll Card Unclaimed Property Bill
The Washington State Legislature has passed WA SB5531, which would treat payroll cards as unclaimed property and subject to escheatment one year after issuance, and has been delivered to the Governor for his signature.
 
The IPA sent a letter with suggested changes to the bill, specifically that payroll card accounts be treated like checking, savings, and other similar deposit accounts covered by Regulation E. It does not appear they made any of our recommended changes, but we have heard from multiple sources that the legislature is going to reconsider and make changes next session, including to the provisions related to payroll cards.
 
House Passes FAIR Act
The House passed the FAIR Act (H.R. 963) by a vote of 222-209. The bill bans pre-dispute arbitration clauses in employment, consumer, antitrust, or civil rights disputes. All Democratic Representatives and one Republican, Rep. Matt Gaetz (FL-1), voted in favor of the legislation. All other Republican Representatives voted against the legislation.
 
The Fitzgerald Amendment, the only amendment that was made in order, was rejected by a vote of 184-246. The amendment would have removed the union carveout, and the AFL-CIO expressed their strong opposition to this amendment in their letter supporting the FAIR Act. In addition, the Biden Administration has issued a Statement of Administration Policy (SAP) in support of the FAIR Act and has said it would sign the bill into law if it were to be passed through the Senate. The IPA will be joining other financial industry trade associations in proactively advocating against the bill. 
 
CFPB Issues Policy On Contractual ‘Gag’ Clauses And Fake Review Fraud
The CFPB issued policy guidance on “gag” clauses and fake review fraud. In the guidance, the CFPB affirms a customer’s right to post online reviews related to financial services and products and highlights that practices such as posting fake reviews or inserting clauses that forbid customers from posting honest reviews may violate the Consumer Financial Protection Act.
 
A press release describing the guidance is available here.
 
FDIC Request for Information on Bank Merger Act
The FDIC released a request for information (RFI) soliciting comments regarding the application of the laws, practices, rules, regulations, guidance, and statements of policy that apply to merger transactions involving one or more insured depository institutions, including the merger between an insured depository institution and a noninsured institution. The FDIC is interested in receiving comments regarding the effectiveness of the existing framework in meeting the requirements of section 18(c) of the Federal Deposit Insurance Act (known as the Bank Merger Act).  The RFI has a 60-day comment period.

New Federal Bills
None.
 
Pending Federal Bills
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 Democrat 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 30 Democrat and 16 Republican House members have announced they will not be running for reelection in 2022. More information about Congressional retirements can be found here.