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The Conference of State Bank Supervisors has posted an NMLS Blog article reporting the results of a November 2023 survey of over 1,400 NMLS users to measure their satisfaction with the system. The survey consisted of two parts: customer satisfaction and system usability. Survey results suggested that, on average, 85% of users are satisfied with their NMLS experience. However, survey comments indicated there are aspects of the system where the user experience can be improved. This feedback is driving upcoming NMLS enhancements, according to the article.

The overall Customer Satisfaction (“CSAT”) score was 85% for the NMLS experience survey. This suggests that, on average, 85% of customers surveyed expressed satisfaction with NMLS. The highest CSAT scores were from mortgage loan originators (MLOs), and the lowest were from company users. This is expected since MLOs generally spend less time completing tasks and activities in NMLS than company users. An analysis of qualitative feedback revealed users feel NMLS is not user friendly or intuitive, difficult to navigate, and the password process is frustrating.

After completing the CSAT survey, respondents were given the option to complete the System Usability Scale (“SUS”) Survey, a 10-question survey for measuring NMLS usability. There were 981 respondents who completed this section. The total SUS score for the surveyed group was 61.64. This score falls within the “OK to Good” range, suggesting that on average, users find the system to be reasonably usable, but there is room for improvement. The highest scores were recorded for federal MLOs, whose score of 71.71 is slightly above the industry average. There were several ratings below a 20, which, along with the average score itself, should be a key metric to improve in the new system.

The Federal Reserve Board has announced the execution of:

• a cease and desist order issued with the consent of Mode Eleven Bancorp, the holding company of Summit National Bank, both located in Hulett, Wyoming, related to Bancorp's previous strategy focused on providing banking-related services to financial technology companies through certain nonbank subsidiaries
• a written agreement with Steele Bancshares, Inc., Tyler, Texas, and American State Bank, Arp, Texas, related to identified safety and soundness deficiencies at the bank.

The CFPB has issued a report examining the growth of financial transactions in online video games and virtual worlds. These platforms increasingly resemble traditional banking and payment systems that facilitate the storage and exchange of billions of dollars in assets, including virtual currencies. However, consumers report being harmed by scams or theft on gaming platforms and not receiving the protections they would expect under federal law. The CFPB reports it will be monitoring markets where financial products and services are offered, including video games and virtual worlds, to ensure compliance with federal consumer financial protection laws.

The report, Banking in Video Games and Virtual Worlds, looks at the growing use and scale of these assets across the gaming industry, the associated risks to consumers, and the evolution of games and virtual worlds into online marketplaces. American consumers spent nearly $57 billion on gaming in 2023, including on hardware, software, and in-game transactions such as converting dollars to virtual currencies or other gaming assets. These assets are often bought, sold, or traded in virtual markets that allow gaming companies to replicate everyday activities online, including financial payments.

The OCC has reported that Acting Comptroller of the Currency yesterday discussed the importance of fairness in remarks given at the National Community Reinvestment Coalition Just Economy Conference 2024.

Mr. Hsu highlighted bank progress in overdraft protection program reforms since the OCC issued guidance last April and provided an update on Project REACh accomplishments regarding credit invisibles, minority depository institutions and affordable housing. Additionally, he discussed the importance of ensuring fairness as it relates to artificial intelligence and fraud.

The CFPB on Tuesday reported it has joined federal and state agencies in releasing agency-specific action statements on tech capacity. These statements reflect concrete actions to increase tech capacity, including actively hiring technologists, that will help enforce the laws on the book and design remedies that work for consumers, workers, small businesses, and others in the digital era.

The Bureau released a statement from CFPB Director Rohit Chopra and Chief Technologist Eric Meyer and a statement from the Federal Trade Commission.

Yesterday, the Treasury Department reported that OFAC had sanctioned thirteen entities and two individuals for operating in the financial services and technology sectors of the Russian Federation economy including persons developing or offering services in virtual assets that enable the evasion of U.S. sanctions. Five entities were designated for being owned or controlled by OFAC-designated persons.

Treasury also reported that OFAC had sanctioned Wuhan Xiaoruizhi Science and Technology Company, Limited (Wuhan XRZ), a Wuhan, China-based Ministry of State Security (MSS) front company that has served as cover for multiple malicious cyber operations. OFAC also designated Zhao Guangzong and Ni Gaobin, two Chinese nationals affiliated with Wuhan XRZ, for their roles in malicious cyber operations targeting U.S. entities that operate within U.S. critical infrastructure sectors, directly endangering U.S. national security.

For the names and identification information of all the designated parties, see the March 25, 2024, BankersOnline OFAC Update.

The OCC has announced that registration is open for its Project REACh Financial Inclusion Summit on May 29-30, 2024, at its headquarters in Washington, D.C.

The OCC’s Project REACh, or the Roundtable for Economic Access and Change, brings together leaders from the banking industry, national civil rights organizations, business, technology, and community development to identify and reduce specific barriers that prevent underserved and minority communities from full, equal, and fair participation in the nation’s economy.

Registration is required to attend the Summit and is open until May 15, 2024, or until full, whichever occurs first. For security reasons, attendees will be subject to screening and must present a valid government-issued identification to enter the building.

The Summit will be recorded, and the video will be posted to OCC.gov.

Information on how to register to attend the Summit and the agenda are available on the Summit's webpage.

The Federal Housing Finance Agency has announced its second TechSprint, an in-person team-based problem-solving event hosted by its Office of Financial Technology. The FHFA’s Generative Artificial Intelligence (AI) in Housing Finance TechSprint will bring together technology, regulatory, housing, and consumer finance experts to identify use cases (or specific scenarios) and associated control measures to support the responsible use of generative AI in the housing finance system.

The TechSprint will begin on Monday, July 22, in Washington, D.C. The event consists of three days of intensive, in-person collaboration. FHFA will select participants from the applicant pool and place individual participants into TechSprint teams that reflect a diverse set of experiences and expertise. Teams will then work on select problem statements that address the central question: “How might the responsible use of generative AI promote a transparent, fair, equitable, and inclusive housing finance system, while fostering sustainable homeownership and rental opportunities?” The event will culminate in a Demo Day exhibition on Thursday, July 25, when the teams will present their innovative ideas to an independent panel of judges drawn from experts in government, industry, nonprofits, and academia for evaluation and potential recognition.

The Securities and Exchange Commission has announced settled charges against two investment advisers, Delphia (USA) Inc. and Global Predictions Inc., for making false and misleading statements about their purported use of artificial intelligence (AI). The firms agreed to settle the SEC’s charges and pay $400,000 in total civil penalties.

According to the SEC’s order against Delphia, from 2019 to 2023, the Toronto-based firm made false and misleading statements in its SEC filings, in a press release, and on its website regarding its purported use of AI and machine learning that incorporated client data in its investment process. For example, according to the order, Delphia claimed that it “put[s] collective data to work to make our artificial intelligence smarter so it can predict which companies and trends are about to make it big and invest in them before everyone else.” The order finds that these statements were false and misleading because Delphia did not in fact have the AI and machine learning capabilities that it claimed. The firm was also charged with violating the Marketing Rule, which, among other things, prohibits a registered investment adviser from disseminating any advertisement that includes any untrue statement of material fact.

In the SEC’s order against Global Predictions, the SEC found that the San Francisco-based firm made false and misleading claims in 2023 on its website and on social media about its purported use of AI. For example, the firm falsely claimed to be the “first regulated AI financial advisor” and misrepresented that its platform provided “[e]xpert AI-driven forecasts.” Global Predictions also violated the Marketing Rule, falsely claiming that it offered tax-loss harvesting services, and included an impermissible liability hedge clause in its advisory contract, among other securities law violations.

Without admitting or denying the SEC’s findings, Delphia and Global Predictions consented to the entry of orders finding that they violated the Advisers Act and ordering them to be censured and to cease and desist from violating the charged provisions. Delphia agreed to pay a civil penalty of $225,000, and Global Predictions agreed to pay a civil penalty of $175,000.

The Federal Trade Commission yesterday reported it has taken action against two companies – Biz2Credit and Womply – that made false promises to small businesses seeking to take part in the Paycheck Protection Program (PPP), delaying and sometimes preventing them from obtaining funds they needed to keep their businesses afloat during the COVID-19 pandemic.

The companies have agreed to settle the FTC’s charges against them: Biz2Credit will pay $33 million and Womply will pay $26 million to the FTC for small businesses harmed by their deceptive conduct. These are the largest damages amounts ever secured by the agency under Section 19 of the FTC Act, and include money consumers lost because of the companies’ conduct, even if consumers made no payments directly to the companies.

Biz2Credit, Inc., and its subsidiary, Itria Ventures, have agreed to pay $33 million in damages to settle the Commission’s charges that they deceptively advertised that consumers’ emergency PPP loan applications would be processed in an average of 10-14 business days when, in reality, the average processing took well over a month. The FTC’s complaint alleges that Biz2Credit’s application processing was riddled with delays, and the average processing time was double what the defendants claimed, with tens of thousands of consumers waiting more than two months for a final determination. Even though they were aware of these delays, the defendants continued to make their false timing claims to consumers until nearly the end of the program. The FTC’s complaint also says that Biz2Credit unfairly ignored many consumers’ repeated and urgent pleas to withdraw their loan applications. As a result, the defendants delayed and sometimes even prevented these consumers from obtaining PPP funds elsewhere.

[UPDATE Mar. 26, 2024: A spokesperson for Biz2Credit provided a statement regarding its settlement with the FTC saying, in part, that "Biz2Credit demonstrated to the FTC that its 12-14 business day average processing time estimate for PPP loans was accurate for all bona fide PPP loan applications. Fraudulent and ineligible applications, which took longer to process, were included by the FTC in its calculations. Biz2Credit carefully reviewed and ultimately declined applications that it determined were potentially fraudulent or ineligible under PPP program rules. ... Biz2Credit’s decision to enter into the FTC settlement was a pragmatic business decision given the cost and uncertainty of litigation. There was no admission of wrongdoing by Biz2Credit in the settlement."]

Womply and its CEO, Toby Scammell, have agreed to pay $26 million to settle FTC charges they preyed on small businesses in desperate need of PPP funding. The FTC’s complaint alleges they widely advertised that small businesses – particularly one-person businesses like gig workers – could successfully get PPP funding when they applied through Womply. The complaint charges, however, that more than 60 percent of Womply applications never resulted in funding. Womply and Scammell allegedly also advertised that their automated processes and good customer service would help small businesses secure PPP loans fast. In fact, applicants regularly faced significant issues that slowed down or fully hindered their applications and were often unable to receive customer service assistance they were promised, according to the complaint.