Top Story Compliance Related

Yesterday, the Treasury Department reported that OFAC has designated one individual and one entity who support a corrupt patronage network in Bosnia and Herzegovina (BiH) that is attempting to evade U.S. sanctions.

For the names and identification information of the designated individual and entity, see yesterday's BankersOnline OFAC Update.

The Federal Trade Commission yesterday announced it has filed a complaint against Dave, Inc., a Delaware corporation behind the "Dave" online cash advance app, for allegedly using misleading marketing to deceive consumers about the amount of its cash advances, charging consumers undisclosed fees, and charging so-called “tips” to consumers without their consent.

Dave describes the consumers it targets as being “financially vulnerable” or “financially coping,” including those whose spending exceeds their income, who have minimal savings, and who overdraft their bank accounts frequently. Dave’s advertising is dominated by claims that consumers can receive “up to $500” by using Dave, and that they can do so “instantly.” According to the FTC’s complaint, though, Dave’s service failed to live up to its promises. Despite promising “instant” or “on the spot” access to advances, Dave requires users to pay an “Express Fee” to get instant access to that money that is not disclosed until after the sign-up process is complete and the user has given Dave access to their bank account, according to the complaint. This fee ranges from $3 to $25, and consumers who do not pay the fee have to wait two to three business days to receive their advance.

Dave’s undisclosed charges go beyond this Express Fee, though, according to the complaint. Consumers who take advances from Dave are often charged a surprise fee of 15% of their advance that’s described by Dave as a “tip.” Many consumers are either unaware that Dave is charging them or unaware that there is any way to avoid being charged. Dave’s interface leads consumers to believe that, for every percentage of tip they are giving, Dave is donating an actual healthy meal to a needy child. But, according to the complaint, Dave donates just 10 cents for each percentage in “tip” the consumer clicks on and keeps the rest of the “tip” amount. Dave’s donation does not pay for the food required to actually provide a meal. Dave has reported receiving more than $149 million in revenue for these "tips" alone from 2022 through the first half of 2024. Dave also charges a poorly disclosed $1 monthly "membership fee" charged directly to members' bank accounts, and makes it difficult for consumers to cancel their membership.

The FTC's complaint seeks a permanent injunction, a monetary judgment, and other relief.

The FDIC has announced it will introduce a new online tool to help financial institutions, investors, and other interested groups to identify neighborhoods that could benefit from banking services. The FDIC’s new Minority Banking Opportunity Explorer will be presented at a meeting of the agency’s Minority Depository Institutions (MDI) Subcommittee to the Advisory Committee on Community Banking today.

This new tool supports FDIC’s statutory mission to promote and encourage the creation of new minority depository institutions by assisting financial institution organizing groups with exploring potential business opportunities in areas that may meet the "community served" part of an MDI designation. The tool can also support existing MDIs’ growth by identifying new branch locations or advertising opportunities.

The FDIC has issued Financial Institution Letters with guidance to help financial institutions and facilitate recovery in areas affected by severe weather.

• FIL-78-2024 for financial institutions in areas of South Dakota affected by the Cheyenne River Sioux Tribe severe storm, straight-line winds, and flooding on July 13 and 14, 2024
• FIL-79-2024 for financial institutions in areas of New Mexico affected by a severe storm and flooding on October 19 and 20, 2024

The Federal Trade Commission yesterday announced it has taken action against Global Circulation, Inc. (GCI), a Georgia-based debt collector that tricked consumers into paying more than $7.6 million in bogus debt by threatening them with jail time, harassing their family members, and other unlawful actions. In response to a federal court complaint filed against GCI and its owner, Kenneth Redon III, the court agreed to temporarily halt the company’s operation and ordered it to turn its assets over to a court-appointed receiver.

In its complaint, the FTC alleges that GCI and Redon contacted consumers under a number of fictitious company names, including Total Mediation Solutions, Total Consumer Solutions, and Consumer Impact Recovery. The company’s collectors call consumers out of the blue and threaten them with arrest, wage garnishment, and lawsuits if they don’t pay a supposed debt. However, the debts GCI is attempting to collect either don’t exist at all or are not debts GCI can legally collect. The company’s calls to consumers can be incessant, with some receiving calls multiple times a day, leaving voicemails saying to call about an urgent legal matter. When consumers answer, they’re told that, unless they pay the bogus debts on that phone call using a credit or debit card, they’ll face legal peril.

The complaint alleges that GCI’s deceptive statements and the urgency behind them have helped convince thousands of consumers to pay at least $7.6 million in bogus debts to the company.

FinCEN recently announced that certain victims of Hurricane Milton, Hurricane Helene, Hurricane Debby, Hurricane Beryl, and Hurricane Francine will receive an additional six months to submit beneficial ownership information reports, including updates and corrections to prior reports.

FinCEN has issued the five Notices below extending the filing deadlines for reporting companies that 1) have an original reporting deadline beginning one day before the date the specified disaster began and ending 90 days after that date, and 2) are located in an area that is designated both by the Federal Emergency Management Agency as qualifying for individual or public assistance and by the Internal Revenue Service as eligible for tax filing relief.

Notice regarding—

• Hurricane Milton
• Hurricane Helene
• Hurricane Debby
• Hurricane Beryl
• Hurricane Francine

The FDIC has released a list of 51 banks examined for Community Reinvestment Act compliance whose evaluations were recently made public. Forty-seven of the banks on the list received ratings of Satisfactory. Three banks received Needs to Improve ratings.

We congratulate NorthEast Community Bank, White Plains, New York, on its receipt of a rating of Outstanding.

The Internal Revenue Service on Friday announced that the amount individuals can contribute to their 401(k) plans in 2025 has increased to $23,500, up from $23,000 for 2024. The IRS also issued technical guidance regarding all cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2025 in Notice 2024-80.

The limit on annual contributions to an IRA remains $7,000. The IRA catch‑up contribution limit for individuals aged 50 and over was amended under the SECURE 2.0 Act of 2022 (SECURE 2.0) to include an annual cost‑of‑living adjustment but remains $1,000 for 2025.

The CFPB has announced it has filed a Proposed final judgment and order to resolve its case against Townstone Financial for discriminatory lending practices and redlining African American neighborhoods in Chicago.

If entered by the court, the proposed order would prohibit Townstone from taking any actions that violate the Equal Credit Opportunity Act (ECOA) and require the company to pay a $105,000 penalty to the CFPB’s victims relief fund. Today’s action follows lengthy contested litigation and a unanimous July 2024 decision from the United States Court of Appeals for the Seventh Circuit that stated that the ECOA prohibits lenders from discouraging prospective applicants on a prohibited basis from applying for loans.

The Seventh Circuit’s decision held unanimously that “an analysis of the text of the ECOA as a whole makes clear that the text prohibits not only outright discrimination against applicants for credit, but also the discouragement of prospective applicants for credit,” which is consistent with the Bureau’s regulation (Regulation B) interpreting ECOA.

• 2020 Complaint
• 2020 Amended Complaint
• U.S. Court of Appeals Opinion
• Stipulated final judgment and order
• Stipulated dismissal - Sturner

The Securities and Exchange Commission has announced it has charged J.P. Morgan Securities LLC (JPMS) and J.P. Morgan Investment Management Inc. (JPMIM) – both affiliates of JPMorgan Chase & Co. (JP Morgan) – in five separate enforcement actions for failures including misleading disclosures to investors, breach of fiduciary duty, prohibited joint transactions and principal trades, and failures to make recommendations in the best interest of customers.

Without admitting or denying the findings in the SEC’s orders, the two affiliates agreed to pay more than $151 million in combined civil penalties and voluntary payments to investors to resolve four of the ­actions. The SEC did not impose a penalty in one of the actions, taken against JPMS, because JPMS cooperated in the investigation and undertook remedial measures.

SEC Orders:

• J.P. Morgan Securities LLC - 1
• J.P. Morgan Securities - 2
• J.P. Morgan Securities - 3
• J.P. Morgan Investment Management Inc. - 1
• J.P. Morgan Investment Management Inc. - 2