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Keith J. Barnett

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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.

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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.

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.

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.

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.

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.

In this episode of Payments Pros, co-hosts Keith Barnett and Carlin McCrory discuss the Consumer Financial Protection Bureau’s (CFPB) latest proposed rule. This rule aims to prohibit covered financial institutions from charging consumers nonsufficient funds (NSF) fees on transactions that are declined instantaneously or near instantaneously.

On February 15, Massachusetts became the latest state to introduce legislation to regulate earned wage access (EWA) products and services. House Bill (HB) 4456 would create a new chapter to the Massachusetts Code explicitly stating that EWA services offered under the new chapter are not loans or other form of credit or debt, and voluntary tips or gratuities are not interest or finance charges. It further requires EWA providers to be licensed and provide mandatory disclosures to consumers. The bill is pending before the Joint Financial Services Committee.

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.”