Consumer Financial Protection Bureau (CFPB)
CFPB Issues Circular Regarding Deceptive Marketing Practices When Sending Remittance Transfers
The CFPB issued Consumer Financial Protection Circular 2024-02 which warns remittance transfer providers that false advertising about the cost or speed of sending a remittance transfer can violate federal law.
The circular addresses the following practices by remittance providers, including digital wallet providers that offer remittance services, that consumers have complained to the CFPB about and that the CFPB has observed in its market monitoring:
Falsely marketing “no fee” or “free” services: Providers can engage in deceptive acts by marketing remittance transfers as “no fee,” when in fact the remittance transfer provider charges consumers fees to send the remittance transfer. Providers may also engage in deceptive practices by marketing remittance transfers as “free,” if they are not in fact free. With respect to digital wallets or other similar products, it can be deceptive to market a transfer as “free” if the provider imposes costs to convert funds into a different currency or
withdraw funds from the product. It may also be deceptive to market international money transfers as “free” if the provider is imposing costs on consumers through the exchange rate spread.
Burying promotional conditions in fine print: Providers may violate the law by advertising promotional pricing for remittance transfers without clarifying that the offer is only limited or temporary in scope, even if the offer is disclosed in fine print or later in the transaction.
Deceptively advertising how long transfers will take: Remittance transfer providers may violate the CFPA’s prohibition on deceptive acts or practices by marketing remittance transfers as being delivered within a certain time frame, when transfers may actually take longer to reach recipients. Recipients rely on remittance transfers for day-to-day expenses or for time-sensitive emergencies.
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NACHA
NACHA: Risk Management Topics (October 1, 2024)
NACHA has issued rule amendments which will become effective on October 1, 2024. These rule amendments are part of a larger Risk Management package intended to reduce the incidence of successful fraud attempts and improve the recovery of funds after frauds have occurred.
The Risk Management Rule amendments include:
Codifying Expanded Use of Return Reason Code R17,
Expanded Use of ODFI Request for Return/R06,
Additional Funds Availability Exceptions,
Timing of Written Statement of Unauthorized Debit, and
RDFI Must Promptly Return Unauthorized Debit.
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U.S. Department of Treasury (Treasury)
Managing Artificial Intelligence-Specific Cybersecurity Risks in the Financial Sector
The Treasury released a report which focuses on the current state of artificial intelligence (AI) related cybersecurity and fraud risks in financial services, including an overview of current AI use cases, trends of threats and risks, best-practice recommendations, and challenges and opportunities.
The report does not address how AI should be regulated, but stresses coordination and best practices among regulators.
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Financial Crimes Enforcement Network (FinCEN)
FinCEN Issues Request for Information on Customer Identification Program Rule Taxpayer Identification Number Collection Requirement
FinCEN has released a Request for Information (RFI) regarding the Customer Identification Program (CIP) Rule requirement for banks and credit unions to collect taxpayer identification number (TIN) from customers who are U.S. persons prior to opening the account.
In the FRI, FinCEN seeks information to understand the potential risks and benefits, as well as safeguards that could be established, if banks were permitted to collect partial SSN information directly from the customer for U.S. individuals and subsequently use reputable third-party sources to obtain the full SSN prior to account opening.
Comments are due 60 days after publication in the Federal Register.
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Small Business Administration (SBA)
SBA Expansion of PPP Loan Forgiveness Process
At the end of February, the SBA announced an expansion of the Direct Borrower Forgiveness Process.
Until now, PPP borrower access to the DBF Platform has been limited to (1) borrowers with loans of $150,000 or less using the SBA Form 3508S to apply for forgiveness, and (2) borrowers with PPP lenders that affirmatively opted-in to the use of the DBF Platform. The purpose of the Notice is to inform PPP lenders and SBA employees that SBA is expanding the DBF Platform to allow all PPP borrowers that have not yet received forgiveness to submit their loan forgiveness applications through the DBF Platform, regardless of loan amount and PPP lender.
This expansion of the DBF Platform will allow borrowers with loans in excess of $150,000 that are required to use the longer form forgiveness applications, SBA Form 3508 or SBA Form 3508EZ, to submit those forgiveness applications and the borrower forgiveness documentation required to accompany those forgiveness applications through the DBF Platform.
Additionally, SBA is expanding the DBF Platform to provide all PPP lenders with access to the DBF Platform and is no longer requiring that a PPP lender affirmatively opt-in to the use of the DBF Platform. SBA will automatically enroll all PPP lenders that are not currently using the DBF Platform as DBF Platform users. This expansion will allow all PPP borrowers that have not yet received forgiveness to submit their loan forgiveness applications through the DBF Platform regardless of their PPP lender. As a result of this expansion, all PPP lenders are now required to decision forgiveness applications that are submitted by their borrowers through the DBF Platform. Lenders that established an internal PPP forgiveness process may continue using that process for their borrowers who choose
to submit their forgiveness applications through the PPP lender’s internal method; however, PPP lenders must also decision any forgiveness applications submitted by their borrowers who choose to use the DBF Platform. A PPP lender will receive a notice from the DBF Platform when one of their borrowers submits a forgiveness application through the DBF Platform.
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