Consumer Financial Services Law Monitor

Consumer Financial Services Law Monitor

monitoring the financial services industry to help companies navigate through regulatory compliance, enforcement, and litigation issues

Payment Processing & Cards

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Federal Court Strikes CFPB’s Counts Against Payment Processors for Violating Discovery Order

Posted in ALL CFS Blog Entries, Payment Processing & Cards, State Attorneys General, CFPB, & FTC
On August 25, the United States District Court for the Northern District of Georgia struck four counts of a complaint filed by the Consumer Financial Protection Bureau because it failed to abide by the Court’s discovery order. This matter began on March 26, 2015, when the CFPB filed a complaint against 12 debt collectors, four… Continue Reading

New Jersey Legislator Introduces Bill to Prevent Prepaid Account Fees

Posted in ALL CFS Blog Entries, Payment Processing & Cards, State Attorneys General, CFPB, & FTC
On June 8, Assemblyman Troy Singleton (D) introduced New Jersey Assembly Bill 4965, which, if enacted, would closely mirror the Consumer Financial Protection Bureau’s Prepaid Rule, but also would prohibit prepaid account issuers in New Jersey from charging a number of fees to prepaid account holders.  Singleton co-sponsored a similar bill in 2012 that eventually… Continue Reading

CFPB Seeks Commentary on Proposed Changes to Prepaid Rule

Posted in ALL CFS Blog Entries, Payment Processing & Cards, State Attorneys General, CFPB, & FTC
The Consumer Financial Protection Bureau has issued a formal request for public commentary on proposed changes to the Prepaid Rule, which was issued in October 2016.  According to the Bureau, the proposed changes address those concerns raised by prepaid card issuers about potential problem areas for compliance.  The Bureau’s suggested changes would adjust error resolution… Continue Reading

CFPB Encourages Retail Credit Card Companies to Consider More Transparent Promotions

Posted in ALL CFS Blog Entries, Payment Processing & Cards, State Attorneys General, CFPB, & FTC
The Consumer Financial Protection Bureau (“CFPB”) sent letters to the top retail credit card companies at the beginning of June, encouraging the companies to use more transparent promotions, citing a major retailer’s decision to end deferred-interest programs associated with its credit card.  In the letter, the Bureau outlined its concerns that temporary promotions – such… Continue Reading

CFPB Prioritizes Redlining, Loan Servicing, and Small Business Lending

Posted in ALL CFS Blog Entries, Payment Processing & Cards, State Attorneys General, CFPB, & FTC
In its fifth annual fair lending report, the Consumer Financial Protection Bureau highlighted redlining, mortgage and student loan servicing, and small business lending as areas of focus for 2017.  CFPB Director Richard Cordray specifically noted these areas for enhanced enforcement actions, describing them as “significant or emerging fair lending risk to consumers.” “In 2017 we… Continue Reading

CFPB Releases Snapshot of Complaints Submitted by Senior Citizens

Posted in ALL CFS Blog Entries, Payment Processing & Cards, State Attorneys General, CFPB, & FTC
On May 31, the Consumer Financial Protection Bureau released a report summarizing the complaints the Bureau received from senior citizens since the CFPB opened its doors in July 2011.  In its nearly six years of operation, the Bureau has handled approximately 1,163,200 complaints, with 103,100 complaints coming from consumers 62 years of age and older.… Continue Reading

District Court Rules SeaWorld Breached Customer Contracts and Violated Electronic Funds Transfer Act

Posted in ALL CFS Blog Entries, Payment Processing & Cards
A federal district court in Florida entered summary judgment against SeaWorld in a class action case, finding the theme park violated the Electronic Funds Transfer Act (EFTA)  by renewing class members’ contracts during their one-year term and collecting unauthorized payments after the contracts expired. Lead Plaintiff Jason Herman commenced the action in December 2014, alleging… Continue Reading

Chipotle Discloses Data Security Breach Related to Network Supporting Payment Processing for Restaurant

Posted in ALL CFS Blog Entries, Cyber Security, Information Governance & Privacy, Payment Processing & Cards
In its Form 10-Q dated April 25, 2017 for the quarterly period that ended on March 31, 2017, Chipotle Mexican Grill, Inc. announced that it had detected a data security breach in its electronic processing and transmission of confidential customer and employee information.  Specifically, Chipotle’s information security team detected unauthorized activity on the network that… Continue Reading

State Banking Regulators File Suit Challenging OCC Fintech Charter

Posted in ALL CFS Blog Entries, Featured Posts, Payment Processing & Cards, State Attorneys General, CFPB, & FTC
On April 26, a group of state bank regulators filed a lawsuit to block the Office of the Comptroller of the Currency from issuing special charters to fintech firms.  The regulators argue that the OCC fintech charter will improperly displace already effective state laws regulating fintech companies, that the OCC lacks the authority to issue… Continue Reading

CFPB Publishes Guide to Prepaid Card Rule, Delays Rule’s Effective Date

Posted in ALL CFS Blog Entries, Payment Processing & Cards, State Attorneys General, CFPB, & FTC
At the end of January, the Consumer Financial Protection Bureau published its Prepaid Rule – Small Entity Compliance Guide.  The Bureau intends for the Guide to provide a user-friendly summary of the Prepaid Rule, issued in October, but cautions that the Guide is not a substitute for reviewing the Rule, Regulation E, or Regulation Z. … Continue Reading

U.S. District Court Dismisses CFPB Case Against Payment Processor

Posted in ALL CFS Blog Entries, Payment Processing & Cards, State Attorneys General, CFPB, & FTC
On March 17, the U.S. District Court for the District of North Dakota granted Intercept Corporation (“Intercept”), Bryan Smith, and Craig Dresser’s Motion to Dismiss the Consumer Financial Protection Bureau’s (“CFPB”) Complaint in the case between the CFPB and Intercept. The decision to grant the Motion to Dismiss marks the first time that the Bureau… Continue Reading

Join Troutman Sanders at the Third Party Payment Processors Annual Conference in Washington, DC

Posted in ALL CFS Blog Entries, CFS Events, Payment Processing & Cards
We are pleased to announce that Troutman Sanders partners Keith Barnett, Ashley Taylor and David Anthony will be featured speakers at the 2017 Third Party Payment Processors Association (“TPPPA”) Annual Conference taking place May 17-19 at The Westin Washington, DC City Center. Keith and Ashley will participate in a panel to address the current legal landscape in… Continue Reading

CFPB Releases Monthly Report Highlighting Credit Card Complaints

Posted in ALL CFS Blog Entries, Payment Processing & Cards, State Attorneys General, CFPB, & FTC
On March 28, the Consumer Financial Protection Bureau released its monthly complaint snapshot, with a specific focus on credit cards.  Since its inception in July 2011, the Bureau has handled 1,136,000 consumer complaints across all products, with 116,200 complaints related to credit cards.  The CFPB received 26,300 complaints in February 2017, with 2,299 of those… Continue Reading

Join Us on March 23 for a Complimentary Webinar on Electronic Fund Transfer Act (EFTA) – Latest Trends and Developments

Posted in ALL CFS Blog Entries, CFS Events, Payment Processing & Cards
Over the past few years, Regulation E, which implements the Electronic Fund Transfer Act, has been cited by federal regulators in rulemaking, enforcement actions and bulletins. The CFPB has not only used the EFTA in its rulemaking concerning prepaid accounts, but it has filed enforcement actions for alleged violations of EFTA and issued bulletins concerning… Continue Reading

Republicans Move to Roll Back CFPB Prepaid Card Rules

Posted in ALL CFS Blog Entries, Payment Processing & Cards, State Attorneys General, CFPB, & FTC
Republicans in Congress have moved to repeal recently issued Consumer Financial Protection Bureau regulations governing the prepaid card industry.  Rep. Tom Graves (R-Ga.) introduced a bill in the House in early February that would submit the rules to a vote of disapproval under the Congressional Review Act.  A group of Republicans filed a similar measure… Continue Reading

CFPB Asks FL District Court to Approve $107M Settlement

Posted in ALL CFS Blog Entries, Payment Processing & Cards, State Attorneys General, CFPB, & FTC
On February 24, the Consumer Financial Protection Bureau asked a federal district court in Florida to approve a $107 million settlement to resolve claims against Orion Processing LLC.  The Bureau alleged the bankrupt company engaged in a debt-relief scheme that cost consumers millions.  The CFPB filed suit against Orion in August 2015, alleging that the… Continue Reading

Federal Court Transfers Payment Processor’s Case Seeking Collection of $4.5M Judgment

Posted in ALL CFS Blog Entries, Payment Processing & Cards
A New York payment processor successfully defended one personal jurisdiction challenge, but lost the other in the Northern District of Texas.  The case represents an attempt by TransFirst Group, Inc. to collect a $4.5 million judgment it obtained against Dominic “Nick” Magliarditi in 2013 related to the group’s purchase of Magliarditi’s payment processing company, Payment… Continue Reading

CFPB Orders MasterCard and UniRush to Pay $13 Million

Posted in ALL CFS Blog Entries, Payment Processing & Cards
On February 1, the Consumer Financial Protection Bureau ordered payment card companies MasterCard and UniRush to pay $10 million in restitution and a $3 million fine related to service breakdowns that left customers unable to access their funds.  “MasterCard and UniRush’s failures cut off tens of thousands of vulnerable consumers from their own money, and… Continue Reading

OCC Releases Semiannual Risk Perspective – January 2017

Posted in ALL CFS Blog Entries, Payment Processing & Cards
The Office of the Comptroller of the Currency’s National Risk Committee, which is tasked with monitoring the overall condition of the federal banking system and any emerging threats to the system’s safety and soundness, released its “Semiannual Risk Perspective for Fall 2016” on January 5.  Using data from the first half of 2016, the publication… Continue Reading

Join Us on February 22-24 for the NACHA Payments Innovation Alliance Meeting in Los Angeles

Posted in ALL CFS Blog Entries, CFS Events, Payment Processing & Cards
We are proud to announce that Troutman Sanders partner Keith Barnett will be a featured speaker at the upcoming National Automated Clearing House Association’s (“NACHA”) Payments Innovation Alliance Meeting at the Omni Los Angeles Hotel at California Plaza on February 24. Keith will speak on a panel titled, Regulatory Landscape for 2017 – What Can You Expect?,… Continue Reading

Join Us on February 9 for the ETA & BAFT for International Payments Policy Day in Washington, DC

Posted in ALL CFS Blog Entries, CFS Events, Payment Processing & Cards
We are proud to announce that Troutman Sanders partner Keith Barnett will be a featured speaker at the upcoming Electronic Transactions Association (“ETA”) and Bankers Association for Finance and Trade (“BAFT”) International Payments Policy Day, “A New World: The Changing Policy Landscape for International Payments and Financial Technology,” at the Washington, DC offices of Troutman Sanders on… Continue Reading

Ninth Circuit Agrees to Remand Action to State Court Based on Spokeo

Posted in ALL CFS Blog Entries, Credit Reporting & Data Brokers, Cyber Security, Information Governance & Privacy, Payment Processing & Cards
The Ninth Circuit in Medellin v. IKEA U.S. West Inc. recently remanded a plaintiff’s appeal to the district court with instructions to dismiss the case after the plaintiff admitted that she lacked Article III standing to proceed in federal court.  As background, Rita Medellin’s class action complaint alleged that IKEA violated the Song-Beverly Credit Card… Continue Reading

Payment Processing Marketer Seeks Sanctions Against CFPB

Posted in ALL CFS Blog Entries, Payment Processing & Cards, State Attorneys General, CFPB, & FTC
On January 4, a defendant in a Fair Debt Collections Practices Act case moved for sanctions against the Consumer Financial Protection Bureau, arguing that it never had proof that the defendant acted wrongfully when it filed suit in early 2015.  In support of its Motion, Pathfinder Payment Solutions, Inc. stated that the Bureau “knowingly exceeded… Continue Reading

District Court Rejects TILA Suit as “Litigation Out of Control”

Posted in ALL CFS Blog Entries, Payment Processing & Cards
On December 22, the United States District Court for the Eastern District of Pennsylvania entered judgment in favor of the defendant in an action involving a Truth in Lending Act claim, and issued a stern rebuke to the plaintiff and his counsel, instituting Rule 11 proceedings and describing the case as “litigation out of control.”   … Continue Reading