REGular Blog Weekly Roundup: August 16th

Happy Friday everyone! As we head into the weekend, let's take a look at some recent developments in the world of credit union regulatory compliance.

NCUA

Last Friday the NCUA announced they had approved, by notation vote, an interagency notice of proposed rulemaking that would establish data standards for certain information collections submitted to the NCUA and other financial regulatory agencies.

The NCUA board generally votes on proposed rulemakings during Board meetings. However, they do have the ability to approve proposed rulemakings and take other action through a "notation vote" - essentially an approval outside of a Board meeting. With the NCUA Board skipping an August meeting, as is their standard practice, they may not have wanted to wait until September to approve this proposed rulemaking.

This is an interagency rule, issued by the NCUA, FDIC, OCC, Federal Reserve, CFPB, SEC, CFTC, FHFA, and The Treasury (phew! That's a lot of regulators!). Like other joint rules, this will be open for comment for 60 days after publication in the Federal Register, which won't happen until all of the agencies approve it. This rulemaking is required by the Financial Data Transparency Act of 2022. The law requires the agencies to jointly establish data standards and directs most of the agencies to issue individual rules adopting joint standards for collections of information. This proposed rule is the joint standards, with agency-specific standards to be adopted later. 

CFPB

This week the White House announced a new "Time Is Money" initiative - a "new governmentwide effort to crack down on all the ways that corporations—through excessive paperwork, hold times, and general aggravation—add unnecessary headaches and hassles to people’s days and degrade their quality of life."

As part of the initiative, the CFPB will be initiating rulemaking that would "require companies under its jurisdiction to let customers talk to a human by pressing a single button." The FCC, HHS, and Department of Labor will be launching similar initiatives in their industries. Their goal is to eliminate "doom loops" where consumers must navigate through multi-level  "to do X, press 1" type prompts. 

The CFPB will also issue rules or guidance to "crack down on ineffective and time-wasting chatbots used by banks and other financial institutions in lieu of customer service. The CFPB will identify when the use of automated chatbots or automated artificial intelligence voice recordings is unlawful, including in situations in which customers believe they are speaking with a human being."

We'll be on the lookout for these proposed rules or guidance and will be evaluating their impact on credit unions. 

The Courts

Banking and credit union trade association groups have joined forces to challenge a recently passed Illinois law restricting interchange fees. The Illinois Credit Union League, America's Credit Unions, the Illinois Bankers Assocations and the American Bankers Association have filed a complaint challenging the Illinois Interchange Fee Prohibition Act (IFPA). The IFPA, passed in May as part of the Illinois budget, would ban financial institutions from charging or receiving interchange fees in Illinois on the portion of a credit or debit card transaction attributable to tax or gratuity.

The law, which is currently set to take effect July 1, 2025, would have drastic impacts on the payments system. This case will be one to watch, as will the upcoming year to see if other states make efforts to pass similar legislation.

This is just one of several court cases impacting financial institutions we are monitoring. Last week, the CFPB filed a brief in a Fifth Circuit case involving changes to their UDAAP Exam Manual. In 2022, the Bureau made changes to the manual, announcing that discrimination would fall under the scope of UDAAP. The Chamber of Commerce of the U.S. and others filed suit. In September 2023, a Federal District Court for the Eastern District of Texas sided with the Plaintiffs, vacating the changes to the exam manual. The CFPB has appealed and has now filed its Appellant Brief. The Chamber of Commerce's response is due on September 6th.

Also still in process is the lawsuit challenging the CFPB's credit card late fee rule. This case has had many procedural twists and turns, and the parties are currently battling over not only where the case should be heard, but who should be involved. The CFPB has argued that one of the plaintiffs in the case - the Fort Worth Chamber of Commerce - lacks standing and should be dismissed from the case. If that happens, they argue, the remaining plaintiffs would have an insufficient connection to the Fifth Circuit and the venue should be transferred to the D.C. Circuit. The next hearing in this case will be on August 27th before Judge Pittman, who has tried multiple times to transfer the case to D.C. only to be blocked by the Fifth Circuit Court of Appeals. The case involves an injunction that is keeping the credit card late fee rule - which would lower the safe harbor for credit card late fees to $8 for large card issuers - from fully taking effect.

That's all for this week - have a great weekend, and we'll be back with more regulatory compliance updates next week!