#2022-18, July 8, 2022

CFPB Issues Advisory Opinion on Pay-to-Pay and Convenience Fees

The Consumer Financial Protection Bureau (CFPB) recently issued an advisory opinion that states that the Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from charging “pay-to-pay” or convenience fees unless those fees are expressly authorized by the agreement creating the debt or the amount of the fee is affirmatively permitted by law.  According to the Bureau, the opinion is part of its ongoing efforts to address so-called “junk fees.”

While the FDCPA typically applies to third-party debt collectors, first-party creditors may be subject to the law if applicable state law extends the FDCPA to first-party creditors, and mortgage servicers may fall under the FDCPA definition if a mortgage debt is in default at the time of a service transfer.  The Bureau has also stated that, under its UDAAP authority, it has supervision and enforcement authority over first-party collectors and service providers debt collection activities, even though they are not subject to the FDCPA.

To read more, click here.

Regulators Issue Statement Reiterating Due Diligence Expectations

The federal banking regulators in cooperation with the Financial Crimes Enforcement Network (FinCEN) issued a statement this week reminding banks of the risk-based approach to assessing customer relationships and conducting customer due diligence (CDD).  The statement, which does not change existing regulatory requirements, states that “no customer type presents a single level of uniform risk or a particular risk profile related to money laundering, terrorist financing, or other illicit financial activity,” and that institutions operating in compliance with BSA/AML rules “are neither prohibited nor discouraged from providing banking services to customers of any specific class or type.”

According to the statement, when developing a risk-based approach to CDD, banks should adopt procedures that enable them to understand the nature and purpose of customer relationships for the purpose of developing a customer risk profile and conduct ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information.

To read more, click here.

Regulatory Agencies Hosting Flood Insurance Q&A Webinar July 27

The banking regulators are hosting a free webinar on Wednesday, July 27 at 2:00 p.m. to discuss recent updates to the interagency questions and answers regarding flood insurance compliance.  The revised questions consolidate Q&As that were previously proposed in July 2020 and March 2021.  Questions for the regulators may be submitted via email to fedwebinar@sf.frb.org.

The new Q&As provide guidance related to major amendments to the flood insurance laws with regard to the escrow of flood insurance premiums, the detached structure exemption, force placement procedures, and the acceptance of flood insurance policies issued by private insurers.

To register for the webinar, click here.