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Keith’s experience representing clients in the financial services industry as a litigation, compliance, regulatory, investigations (internal and regulatory), and enforcement attorney spans 20 years. Keith represents clients against government regulators (CFPB, FTC, SEC, CFTC), industry regulators (FINRA), and private litigants in federal courts, state courts, and before arbitration and administrative law panels in the financial services industry.

Recently, three Republican members of the U.S. House of Representatives’ Financial Services Committee, Patrick McHenry, Mike Flood, and French Hill, sent a joint letter to the Consumer Financial Protection Bureau (CFPB or Bureau) urging the agency to reopen the comment period and reconsider its November 2023 proposed rule regarding digital consumer payment applications. As discussed here, the Bureau is seeking to amend existing regulations by adding a new section to define larger participants that offer digital wallets, payment applications, and other services to fall within the CFPB’s supervisory scope. The Congressmen urge the CFPB to open the comment period on the proposed rule for an additional 60 days arguing that “[a]s it currently stands, this rule would introduce more regulatory uncertainty into the payment industry, particularly with respect to third-party service providers and digital asset companies.”

In this episode of Payments Pros, Keith Barnett is joined by James Stevens to discuss the Merchant Acquirer Limited Purpose Bank Charter (MALPB) in Georgia, a unique charter that allows companies to offer merchant payment processing services without a sponsoring partner bank. Despite being enacted 12 years ago, companies have been unable to utilize it due to card networks not allowing direct participation. This could change soon, especially with Fiserv’s recent application.

As the financial landscape continues to evolve, financial institutions and fintech businesses, including payment processors and money transmitters, are facing increased regulatory scrutiny and heightened consumer expectations. Our dedicated Payments team is at the forefront of these changes, actively addressing the full spectrum of legal challenges in this intricate and ever-evolving sector.

Last month, New York Governor Kathy Hochul signed into law Assembly Bill 2672, which both prohibits sellers from charging a credit card surcharge greater than what they are charged by the credit card company and requires sellers to clearly post the price of the credit card surcharge. The law will take effect on February 11, 2024.

On January 17, the Consumer Financial Protection Bureau (CFPB or Bureau) issued a proposed rule with request for public comment to amend exemptions to Regulation Z so the Truth in Lending Act (TILA)/Regulation Z would apply to certain overdraft “credit” provided by insured financial institutions with more than $10 billion in assets, in furtherance of the Bureau’s crusade on “junk fees.” At a highlevel, the CFPB’s proposed rule would provide covered financial institutions with two options for offering overdraft “credit”: (1) a “courtesy” overdraft service with “breakeven” fees exempt from TILA/Regulation Z; or (2) a “covered overdraft credit” line/loan in connection with debit card or routing/account number transactions with “above breakeven” fees subject to TILA/Reg. Z. Under the proposal, an institution subject to the rule would have to provide full TILA disclosures and comply with other substantive TILA requirements for overdraft fees if they exceed costs or a low CFPB safe harbor amount.

On January 9, the California Department of Financial Protection and Innovation (CA DFPI) announced a consent order with Credova Financial, LLC, (Credova) to resolve allegations that, in violation of the California Consumer Financial Protection Law, the company failed to disclose potential third-party fees to consumers. Pursuant to the settlement, Credova is required to pay a $50,000 penalty and disclose potential third-party convenience fees to consumers in the future.

In this episode of Payments Pros, Keith Barnett and Carlin McCrory discuss the Consumer Financial Protection Bureau’s (CFPB) fall supervisory highlights, focusing on “junk fees.” The report covers examinations in areas of deposits, auto servicing, and remittances completed between February and August 2023. The recent report reveals that their efforts have resulted in institutions refunding more than $140 million to consumers. The report primarily focuses on deposits as an area of supervisory observations.