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The Federal Trade Commission has announced it has stopped a scheme that allegedly bilked millions of dollars out of consumers burdened with student loan debt by pretending to be affiliated with the U.S. Department of Education in violation of the FTC’s Impersonation Rule, collecting illegal advance fees, and making other deceptive claims. A federal court temporarily halted the scheme and froze its assets at the request of the Commission.

According to the FTC’s complaint, since at least January 2023, Nevada-based Superior Servicing, LLC and its operator Dennise Merdjanian made telemarketing calls and sent personalized mailers to borrowers falsely claiming that consumers enrolled in defendants’ program could obtain benefits such as loan consolidation, reduced interest rates on their student loans, reduced monthly student loan payments, or loan forgiveness. The operators collected illegal advance fees of up to $899 as an initial payment followed by monthly payments that defendants falsely represented were going towards consumers’ student loan debt.

To convince borrowers that their claims were legitimate, the operators allegedly pretended to “work with” or be affiliated with the Department of Education or its approved loan servicers and, in some instances, even advised consumers to stop making payments to their existing loan servicers. The operators then falsely claimed that they would take over responsibility for servicing consumers’ loans, collect monthly student loan payments for a term of up to 20 years, and said that upon completion of those monthly payments, the consumers’ federal student loan debt would be forgiven. Contrary to Superior Servicing’s false promises, borrowers have reported that they never received loan consolidation, lowered payments, or loan forgiveness, according to the complaint. The FTC noted that at most, and if anything at all, the defendants filled out simple applications for debt relief that are available for free from the Department of Education.

The FTC charged that the scheme’s operators violated the Impersonation Rule by claiming to be affiliated with the Department of Education, as well as the FTC Act’s prohibition on deceptive practices, the Telemarketing Sales Rule, and the Gramm-Leach-Bliley Act.

The CFPB has announced it has sued Comerica Bank for "systematically failing its 3.4 million Direct Express cardholders — primarily unbanked Americans receiving federal benefits" on Direct Express prepaid debit cards. The CFPB alleges that Comerica deliberately disconnected 24 million customer service calls, impeding cardholders from exercising their rights under the law, charged illegal ATM fees to over 1 million cardholders, and mishandled fraud complaints while providing federal benefits through the Direct Express prepaid debit card program. The CFPB is asking the court to order Comerica to halt these practices, provide refunds to affected customers, and pay civil penalties that would go to the CFPB's victim relief fund.

The Bureau's complaint against Comerica seeks to stop Comerica’s unlawful conduct, to provide redress for harmed borrowers, and the imposition of a civil money penalty, which would be paid into the CFPB’s victims relief fund.

[Editor's Note:The Treasury Department's Bureau of the Fiscal Service recently announced it has selected Bank of New York Mellon Corporation to be the Financial Agent of the Direct Express program for five years starting January 3, 2025.]

The Federal Reserve Board has released results of a survey of senior financial officers at banks about their strategies and practices for managing reserve balances. The Senior Financial Officer Survey is used by the Board to obtain information about banks' reserve balance management strategies and practices, their deposit pricing strategies, their expectations for potential changes in both the size and composition of their balance sheets, and their views regarding Federal Reserve facilities.

The CFPB on Friday announced it has published an order establishing supervisory authority over Google Payment Corp. While Google Payment Corp. is already subject to CFPB’s enforcement jurisdiction, the CFPB has determined that Google Payment Corp. has met the legal requirements for supervision. The CFPB is making this order public to provide transparency about how it assesses risks using consumer complaints and other factors.

The CFPB's order does not constitute a finding that the entity has engaged in wrongdoing and does not require the CFPB to conduct a supervisory examination.

CNN reported on Friday that Google has filed suit against the CFPB, challenging the Bureau's decision to place Google Payment Corp. under federal supervision. A Google spokesman was quoted as saying "This is a clear case of government overreach involving Google Pay peer-to-peer payments, which never raised risks and is no longer provided in the U.S., and we are challenging it in court.”

On Friday, the Financial Stability Oversight Council unanimously approved its 2024 annual report, which reviews developments in financial markets, identifies vulnerabilities and emerging threats to U.S. financial stability, and makes recommendations to mitigate those vulnerabilities and threats. The report also details the activities of the Council and summarizes significant regulatory developments. The report was developed collaboratively by Council members and their agencies and staffs. Overall, the Council finds that the U.S. financial system remains resilient, though vulnerabilities warrant ongoing vigilance.

The report made recommendations in the following areas:

• Cybersecurity
• Depository institutions
• Third-party service providers
• Commercial real estate credit risk
• Digital assets
• Investment funds

The Department of Housing and Urban Development has announced that the Federal Housing Administration is extending through April 11, 2025, its foreclosure moratoriums for FHA-insured Single Family Title II forward and Home Equity Conversion Mortgages in Presidentially Declared Major Disaster Areas (PDMDAs) declared as a result of this past summer’s Hurricanes Helene and Milton. This extension provides borrowers affected by these catastrophic events with additional time to access federal, state, or local housing resources; to consult with a HUD-approved housing counselor; and/or to rebuild their homes.

FHA is extending the foreclosure moratoriums for all Hurricanes Helene and Milton PDMDAs, regardless of their declaration date, through April 11, 2025. FHA is also extending the deadline dates for servicers to perform certain legal actions related to foreclosure for an additional 180 days following the end of the foreclosure moratoriums.

The CFPB has reported it has taken action against student lender Climb Credit and its investors, including 1/0 (“One Zero”), filing a proposed final judgment and order that, if entered by the court, will require the companies to stop making representations in their advertising about the quality of the training programs at their partner schools and graduates’ hiring rates and salaries.

The CFPB sued Climb Credit in October 2024 [see earlier Top Story] for offering loans for educational programs that often were not vetted for quality and job placement success or that failed the vetting, despite Climb Credit making representations to the contrary. The CFPB's complaint also names wholly owned subsidiaries Climb Investco and Climb GS Loan Fund. If entered, the final judgment and order will require the defendants to stop making certain representations about their educational offerings in their advertising and pay a $950,000 civil money penalty into the CFPB’s victims relief fund. A judgment for redress of $6.618 million will be suspended based on a demonstrated inability to pay.

The CFPB yesterday announced it is distributing $1.8 billion to 4.3 million consumers charged illegal advance fees or subjected to allegedly deceptive bait-and-switch advertising by a group of credit repair companies including Lexington Law and CreditRepair.com. Together, the payments constitute the largest-ever distribution from the CFPB’s victims relief fund, which is funded by civil penalties paid by companies that violate consumer protection laws.

In August 2023, the CFPB secured a legal judgment against the credit repair conglomerate, after a district court ruled that the companies had violated the Telemarketing Sales Rule’s advance fee prohibition. Under federal law, credit repair companies that engage in telemarketing cannot collect fees until they provide documentation showing they have achieved the promised results for consumers, at least six months after the results were achieved.

Following the district court’s ruling, the companies filed for Chapter 11 bankruptcy protection, shuttering approximately 80 percent of their business operations, including their telemarketing call centers. The CFPB’s $1.8 billion distribution to consumers harmed by the credit repair companies is a result of the agency’s enforcement action.

• CFPB 12/5/2024 Blog article for affected consumers: "CreditRepair.com and Lexington Law refund checks: What you need to know"

The Appraisal Subcommittee (ASC) of the Federal Financial Institutions Examination Council (FFIEC) published in today's Federal Register a notice of proposed rulemaking to implement a framework to govern the ASC’s enforcement authority regarding the effectiveness of Appraiser and Appraisal Management Company (AMC) Programs overseen by State Appraiser Regulatory Agencies. The proposed rule would codify the existing compliance review process with modifications. The proposed rule would require an analysis to assess program effectiveness, outline requirements for maintaining effective programs, and authorize the ASC to bring enforcement actions against such agencies that fail to maintain effective programs.

Comments on the proposal will be accepted through February 4, 2025.

The ABA Banking Journal reports a judge at the U.S. District Court for the Eastern District of Texas has issued a preliminary injunction blocking enforcement of the Beneficial Ownership Reporting Rule. The order says the covered companies nationwide do not need to comply with the January 1, 2025, reporting deadline unless the judge or a higher court reverses the order before then.

The lawsuit in question was brought by the National Federation of Independent Business and several of its members. It challenges the constitutionality of the Corporate Transparency Act.

FinCEN has published [89 FR 96708] an invitation to the public to nominate financial institutions, trade groups, and non-Federal regulators or law enforcement agencies for membership in the Bank Secrecy Act Advisory Group (BSAAG). New members will be selected for three-year membership terms.

BSAAG membership is open to financial institutions subject to the BSA, trade groups that represent financial institutions subject to the BSA, and federal and non-federal regulators and law enforcement agencies that are located within the United States. The BSAAG is the means by which the Treasury receives advice on the reporting requirements of the Bank Secrecy Act (BSA) and informs private sector representatives on how the information they provide is used.

Nominations must be emailed to BSAAG@fincen.gov, and received by January 6, 2025.

The CFPB yesterday announced it has taken action to permanently ban Student Loan Pro and Judith Noh, its owner, from offering or providing consumer financial products. The CFPB alleges that Student Loan Pro and Noh violated federal law by charging borrowers upfront fees to file paperwork on their behalf to access free debt-relief programs available to consumers with federal student loans. The CFPB’s stipulated judgment, if entered by the court, would also require Noh to take steps to dissolve Student Loan Pro and a related business, FNZA Marketing, LLC, and pay a civil money penalty.

According to the CFPB's press release, Student Loan Pro is a California sole proprietorship formed in 2015 by Noh that telemarketed debt-relief services for consumers with federal student loan debt. The CFPB filed a lawsuit in 2021 alleging that Student Loan Pro, Noh, and Syed Gilani—Student Loan Pro’s manager and owner-in-fact—violated the Telemarketing Sales Rule by requesting and receiving advance fees, initially running as high as $795, for its debt-relief services. The company’s services included filing paperwork on consumers’ behalf to apply for programs that were already available to borrowers for free from the United States Department of Education.

The Federal Trade Commission's Telemarketing Sales Rule (16 C.F.R. part 310) prohibits sellers and telemarketers from requesting or receiving advance fees for any debt-relief service before renegotiating, settling, reducing, or otherwise altering the terms of at least one of a consumer’s debts, and before a consumer has made at least one payment on such altered debt. Student Loan Pro’s advance-fee violations cost approximately 3,300 consumers nearly $3.5 million in advance fees.

• CFPB Complaint
• Proposed stipulated judgment and order

The Treasury Department has reported that OFAC has sanctioned five individuals and four entities — including Pullman Global Solutions LLC, a Wyoming-based entity that is owned 50 percent or more by a sanctioned individual — that are associated with or leverage the TGR Group, a sprawling international network of businesses and employees that have facilitated significant sanctions circumvention on behalf of Russian elites.

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

Yesterday, the Federal Reserve Board, CFPB, FDIC, OCC, FinCEN, NCUA and state financial regulators issued a joint press release to announce a joint Statement on Elder Financial Exploitation.

The eleven-page Statement provides supervised institutions with examples of risk management and other practices that may be effective in combating such exploitation.

• FDIC FIL-83-2024
• OCC Bulletin 2024-34

The Federal Reserve Board has announced it has issued a consent Cease and Desist Order to First of Murphysboro Corp., Murphysboro, Illinois (FMC), a registered bank holding company that owns The First Bank and Trust Company of Murphysboro, after a recent inspection of FMC by the Federal Reserve Bank of St. Louis identified deficiencies with respect to the operations of FMC, including FMC's ability to serve as a source of strength to the bank, and with respect to compliance with rules related to affiliate transactions.

The FBI has posted a Public Service Announcement warning the public that criminals exploit generative artificial intelligence (AI) to commit fraud on a larger scale which increases the credibility of their schemes. The PSA calls attention to criminals' use of AI-generated text, images, audio, and video in furtherance of their schemes. The FBI's message also includes tips for self-protection.

The FDIC has released its December 2024 list of banks examined for CRA compliance. This month's list includes 65 institutions whose most recent CRA evaluations have been made public. CRA evaluations are assigned one of four ratings: Outstanding, Satisfactory, Needs to Improve, or Substantial Non-compliance.

The December 2024 list includes 60 banks whose evaluations were rated Satisfactory. Two banks — one in Brentwood, Tennessee, and one in New York, New York — were rated "Needs to Improve.

We congratulate three institutions whose evaluations were rated Outstanding:

• Bank of Wiggins, Wiggins, Mississippi
• Liberty Bank, Middletown, Connecticut
• Waukesha State Bank, Waukesha, Wisconsin

The OCC has issued Bulletin 2024-33 announcing it has issued version 1.1 of its “Unfair or Deceptive Acts or Practices and Unfair, Deceptive, or Abusive Acts or Practices” booklet of the Comptroller’s Handbook. The booklet contains information for examiners regarding supervision of a bank’s practices related to section 5 of the Federal Trade Commission Act, which prohibits banks from engaging in unfair or deceptive acts or practices (UDAP), and sections 1031 and 1036 of the Dodd-Frank Act, which prohibit unfair, deceptive, or abusive acts or practices (UDAAP).

The updated booklet—

• provides further clarity regarding sound risk management practices and guidance to examiners regarding overdraft services.
• incorporates updates from the Consumer Financial Protection Bureau regarding data protection and information security.
• includes an updated version of the “Appendix B: UDAP and UDAAP Risk Indicators.”
• reflects OCC and interagency issuances that have been published or rescinded since June 2020.
• includes other minor updates for general clarity.

The Treasury Department yesterday announced that the U.S. is imposing sanctions on 35 entities and vessels that play a critical role in transporting illicit Iranian petroleum to foreign markets. This action imposes additional costs on Iran’s petroleum sector following Iran’s attack against Israel on October 1, 2024, as well as Iran’s announced nuclear escalations. Petroleum revenues provide the Iranian regime with the resources to fund its nuclear program, develop advanced drones and missiles, and provide ongoing financial and material support for the terrorist activities of its regional proxies.

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

The FDIC, OCC, and Federal Reserve Board have issued a joint press release to announce their third notice requesting comment to reduce regulatory burden. The Economic Growth and Regulatory Paperwork Reduction Act of 1996 requires the Federal Financial Institutions Examination Council and federal bank regulatory agencies to review their regulations at least once every 10 years to identify outdated or otherwise unnecessary regulatory requirements for their supervised institutions.

To facilitate this review, the agencies divided their regulations into 12 categories and are now soliciting comments on their regulations for three categories: Rules of Procedure, Safety and Soundness, and Securities. The public has 90 days from publication of the notice in the Federal Register to comment on the relevant regulations.

The agencies will request comment on regulations in the remaining categories in 2025, asking the public to identify the regulations they believe are outdated, unnecessary, or unduly burdensome.

The OCC has released a list of 19 OCC-supervised financial institutions whose Community Reinvestment Act performance evaluations became public during November. The list includes 16 institutions that received evaluation ratings of "Satisfactory," and the following three whom we congratulate for receiving "Outstanding" ratings:

• Evergreen Federal Bank, Grants Pass, Oregon
• FNC Bank, National Association, Brookville, Indiana
• Santander Bank, National Association, Wilmington, Delaware

Yesterday, the Treasury Department reported that OFAC had sanctioned three former Government of Uzbekistan officials who were involved in human trafficking and gender-based violence. All three individuals were designated under the authority of Executive Order 13818, which builds upon and implements the Global Magnitsky Human Rights Accountability Act and targets perpetrators of serious human rights abuse around the world.

For the names and identification information of those individuals, see yesterday's BankersOnline OFAC Update.

The Consumer Financial Protection Bureau this morning proposed a new rule to rein in data brokers that sell Americans' sensitive personal and financial information. The proposed rule would limit the sale of personal identifiers like Social Security Numbers and phone numbers collected by certain companies and make sure that people’s financial data such as income is only shared for legitimate purposes, like facilitating a mortgage approval, and not sold to scammers targeting those in financial distress. The proposal would make clear that when data brokers sell certain sensitive consumer information they are "consumer reporting agencies" under the Fair Credit Reporting Act (FCRA), requiring them to comply with accuracy requirements, provide consumers access to their information, and maintain safeguards against misuse.

The proposed rule would:

• Treat data brokers just like credit bureaus and background check companies: Companies that sell data about income or financial tier, credit history, credit score, or debt payments would be considered consumer reporting agencies required to comply with the FCRA, regardless of how the information is used.
• Protect consumers' personal identifiers from abuse and misuse: When consumer reporting agencies collect information like names, addresses, or ages for credit reports, any subsequent sale of that information would be covered by the FCRA's protections.
• Require clear consumer consent for data sharing: Under the proposed rule, companies relying on consumers’ consent to obtain or share a consumer’s credit report would need separate, explicit authorization to do so, rather than burying permissions in fine print.

Comments on the proposal will be accepted through March 3, 2025.

• Fact Sheet on the proposed rule
• Director Chopra's remarks on the proposal
• Proposed rule
• Press release
• Publication update: Published at 89 FR 101402 on 12/13/2024

The OCC, Federal Reserve Board, and FDIC have jointly published [89 FR 95786] in today's Federal Register their collective annual report to congressional committees describing differences among the accounting and capital standards used by the agencies for insured depository institutions.

As of September 30, 2024, the agencies have not identified any material differences among the agencies' accounting standards applicable to institutions.

With regard to differences in capital requirements, in 2013 the agencies revised the risk-based and leverage capital rule for institutions (capital rule) which harmonized the agencies' capital rule in a comprehensive manner. Since 2013, the agencies have revised the capital rule on several occasions, further reducing the number of differences in the agencies' capital rule. Today, only a few differences remain, which are statutorily mandated for certain categories of institutions, or which reflect certain technical, generally nonmaterial differences among the agencies' capital rule. No new material differences were identified in the capital standards applicable to institutions in this report compared to the previous report submitted by the agencies.

The FDIC has updated its webpage Questions and Answers Related to the FDIC's Part 328 Final Rule to add several answers to a growing collection of frequently asked questions relating to the updated regulation from stakeholders, including banks, trade associations, tech companies, vendors, and others.

The Office of the Comptroller of the Currency has announced increased assessment rates for national banks and federal savings associations for the 2025 calendar year. The increases are primarily targeted at large banks and other institutions that require increased supervisory resources, according to the OCC.

The OCC increased the rates in the general assessment fee schedule for assets above $40 billion by 16 percent to reflect the increased cost of supervising the largest institutions. The OCC increased all other rates in the general assessment fee schedule by 2.65 percent to account for inflation.

The calendar year 2025 assessment rates will be in effect as of January 1, 2025, and will be reflected in assessments paid on March 31, 2025, and September 30, 2025.

• OCC Bulletin 2024-32, with further details and complete assessment schedule

The NCUA has announced it issued a consent order of prohibition in November against Daniel Garza, a former teller with Alhambra Credit Union, Phoenix, Arizona, after a finding that he performed numerous unauthorized cash withdrawals from Alhambra Credit Union member accounts, resulting in a lost of $14,900, and stole $7,597 from his teller cash drawer.

The FDIC has posted its CRA Examinations Schedules for the first quarter and second quarter of 2025. The schedules can be sorted by location, bank name, and other criteria.

There are 238 evaluations scheduled for the first quarter, and 210 for the second quarter.

The FDIC has released a list of enforcement orders issued in October 2024.

• The Stockgrowers State Bank, Maple Hill, Kansas, was assessed a $5,250 civil money penalty (CMP) for violations of the Flood Disaster Protection Act and National Flood Insurance Act.
• First & Peoples Bank and Trust Company, Russell, Kentucky, paid a $1,500 CMP for engaging in a pattern or practice of committing violations of the National Flood Insurance Act and 12 C.F.R. § 339.7(a), by failing to follow force placement flood insurance procedures for three loans.
• Bank of Frankewing, Frankewing, Tennessee, received a consent order regarding lending-related concerns, management succession, budgeting, capital, and violations noted in a November 2023 Visitation Report.
• John C. Ponte, formerly a loan referral agent for Independence Bank, East Greenwich, Rhode Island, was issued an Order of Prohibition and Order for Restitution of $1 million, for violations of regulations and unsafe and unsound practices in connection with the bank, causing the bank to suffer financial loss and Ponte to receive financial gain.

The Treasury Department has reported that OFAC has sanctioned 21 security and cabinet-level officials aligned with Nicolas Maduro. These individuals are sanctioned under the authority of Executive Order 13692 for being current or former officials of the Government of Venezuela. They have supported and carried out Maduro’s orders to repress civil society in his efforts to fraudulently declare himself the winner of Venezuela’s July 28 presidential election, thus ignoring the will of the overwhelming majority of Venezuelan voters who elected Edmundo Gonzalez Urrutia as their next president.

For the names and identification information of the designated individuals and an unrelated administrative update, see this November 27, 2024, BankersOnline OFAC Update.