In the final episode of the Payments Pros special two-part series, Jordan Bennett, Nacha’s senior director of network risk management, joins Keith and Carlin to discuss the new rules regarding fraud monitoring.
Kansas Becomes Fourth State to Enact Earned Wage Access Legislation
On April 19, Kansas Governor Laura Kelly signed House Bill (HB) 2560 to regulate earned wage access (EWA) products and services. HB 2560 enacts the Earned Wage Access Services Act that requires EWA providers to be licensed by the state bank commissioner and comply with certain disclosure rules. Kansas follows Nevada, Missouri, and Wisconsin in enacting EWA legislation.
Tackling Credit Push Fraud: Understanding Nacha’s Risk Management Package (Part One)
In this episode of Payments Pros, Carlin and Keith welcome back Jordan Bennett, Nacha’s senior director of network risk management, for a two-part series on the newly approved rules designed to combat credit push fraud. Credit push fraud has been on the rise, and Nacha released a risk management framework to increase awareness and mitigate such frauds.
CFPB Updates Risk-Based Nonbank Supervision Designation Process
Yesterday, the Consumer Financial Protection Bureau (CFPB or Bureau) issued a procedural rule streamlining the designation proceedings for nonbank supervision based on a particular entity posing “risks to consumers.” As discussed in “Our Take” below, the changes are designed to encourage nonbanks to volunteer to be supervised, while making it easier for the CFPB to impose supervisory oversight when companies do not consent.
Navigating the Corporate Transparency Act
In this episode of Payments Pros, Carlin McCrory is joined by Nick St. John, director of regulatory compliance at America’s Credit Unions, to discuss the Corporate Transparency Act (CTA) and related developments from the Financial Crimes Enforcement Network (FinCEN). Enacted in 2021, the CTA aims to combat the use of anonymous legal entities for money laundering. It mandates that legal entities report their beneficial ownership information to FinCEN, which maintains a database accessible to law enforcement, financial institutions, and other entities that meet specific criteria.
Sigue Corporation Ordered to Cease and Desist Operations
On March 22, a group of 39 states, Puerto Rico, and the District of Columbia (participating states) entered an interim consent order against Sigue Corporation, a licensed money transmitter corporation, ordering it to cease operations due to deteriorating financial conditions. Sigue reported approximately $4.9 million in outstanding liabilities related to regulated money transmission transactions originating in the participating states and New York. The corporation is currently in the process of surrendering its money transmission licenses and winding-down.
CFPB Warns Remittance Transfer Providers That Marketing About Speed and Cost Could Violate the CFPA
Can remittance transfer providers be held liable under the Consumer Financial Protection Act (CFPA) when marketing about the speed and cost of their services? According to a March 27 Circular issued by the Consumer Financial Protection Bureau (CFPB or Bureau), the answer to that question is yes, if the marketing is deceptive. Specifically, according to the CFPB, providers may be liable under the CFPA for deceptive marketing practices if they market: remittance transfers as being delivered within a certain time frame when transfers actually take longer; remittance transfers as “no fee” when in fact the provider charges fees; promotional fees or promotional exchange rates for remittance transfers without sufficiently clarifying when an offer is temporary; and remittance transfers as “free” if they are not in fact free.
Nacha Approves New Rules to Combat Credit-Push Fraud
On March 18, Nacha, the organization that governs the ACH network, announced that its members approved a new set of rules aimed at reducing the incidence of frauds, such as business email compromise (BEC), that exploit credit-push payments. These rules establish a base level of ACH payment monitoring for all parties in the ACH Network, excluding consumers. While these rules do not alter the liability for ACH payments, they do, for the first time, assign a defined role to receiving depository financial institutions (RDFIs) in monitoring the ACH payments they receive.
CFPB Director Chopra Delivers Remarks on Standard-Setting for Open Banking
In a recent speech at the Financial Data Exchange Global Summit, Rohit Chopra, Director of the Consumer Financial Protection Bureau (CFPB), discussed the current state of open banking in the United States and emphasized the importance of standard-setting organizations in the transition. He noted that these organizations play a crucial role in ensuring that the system is open and interoperable but warned against the potential of standard-setting to be used in an anti-competitive manner to benefit dominant firms.
Wisconsin Legislature Passes Earned Wage Access Bill
On February 20, the Wisconsin Senate passed House Bill (HB) 574 to regulate earned wage access (EWA) products and services. HB 574 creates a new chapter to the Wisconsin Statutes that requires EWA providers to be licensed by the Division of Banking and imposes substantive and disclosure rules. HB 574 expressly exempts EWA offered by licensees under the new law from the licensed loan company provisions in Wis. Stat. § 138.09 but does not clearly address whether EWA is covered by the Wisconsin Consumer Act. HB 574 will be sent to Governor Tony Evers for signature.