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The FDIC has released a list of enforcement orders and notices it issued in June 2024. Among those orders are four prohibition orders; one combined prohibition order and order to pay a civil money penalty (CMP); and one CMP order. The first Notice seeks a prohibition order; the second Notice seeks a prohibition order and assessment of a CMP.

• A Notice of Charges and Hearing seeking a civil money penalty and prohibition order against Elias Israel Robiero Rangel, now or formerly affiliated with Truist Bank, Charlotte, NC
• A Notice of Charges and Hearing for a prohibition order against Martin Fernandez Jr., now or formerly affiliated with International Bank of Commerce, Laredo, TX
• An order for assessment of a $15,000 CMP and prohibition against Toni Miller, formerly affiliated with South State Bank, Columbia, SC
• An order assessing a CMP of $7,000 against Mohammed A. Kasem, now or formerly affiliated with Truist Bank, Charlotte, NC
• An order of prohibition against Joshua E. Breedwell, formerly affiliates with Discover Bank, Greenwood, DE
• An order of prohibition against Brady D. Torgerson, formerly affiliated with The Union Bank, Beulah, ND, and First Security Bank, West Beulah, ND
• An order of prohibition against Mitchell A. Fowler, formerly affiliated with Sunmark Community Bank, Perry, GA

The CFPB on Friday announced it has sued Acima Holdings, LLC, Acima Digital, LLC (subsidiaries of Rent-a-Center (now known as Upbound Group, Inc.), and collectively, "Acima"), and Acima's founder and former CEO, Aaron Allred for illegal lending activities in connection with as many as five million consumer financing agreements.

The CFPB alleges Acima used deceptive dark patterns and other tricks to trap consumers in high-cost credit agreements to finance the purchase of household goods. Acima sought to disguise many of these credit agreements as leases to evade consumer financial protection laws. Due to Acima’s deception and obstruction, many consumers did not understand they were agreeing to expensive markups, exorbitant finance charges, and having few ways to escape their contracts. The CFPB is asking that the court order the defendants to forfeit the illegally obtained profits, give refunds to consumers, and halt their misconduct.

The CFPB’s lawsuit alleges Acima violated the Consumer Financial Protection Act, Truth in Lending Act, Fair Credit Reporting Act, and Electronic Fund Transfer Act. Specifically, the CFPB alleges Acima has misled and harmed consumers through:

• False marketing
• Deceptive digital dark patterns
• Trapping borrowers
• Widespread credit reporting failures

The FDIC, Federal Reserve Board, and the OCC yesterday announced their second 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 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 in three categories: Consumer Protection; Directors, Officers, and Employees; and Money Laundering. The public has 90 days from publication in the Federal Register to comment on the relevant regulations. PUBLICATION AND COMMENT PERIOD UPDATE: Published at 89 FR 62679 in the August 1, 2024, Federal Register, with comments due by 10/30/2024.

In a related news release, the agencies announced they will hold a virtual public outreach meeting on September 25, 2024, as part of their review of regulations. The outreach meeting is an opportunity for interested stakeholders to present their views on the six categories of regulations listed in the first two Federal Register notices: Applications and Reporting; Powers and Activities; International Operations; Consumer Protection; Directors, Officers and Employees; and Money Laundering.

Individuals interested in providing oral comments must register by August 9, 2024, and indicate the regulatory category they would like to discuss. The agencies will notify those individuals selected to provide comments within one month of registration closing.

Advance registration is not required to attend this virtual public meeting as an observer.

The FDIC, OCC, and Federal Reserve yesterday jointly issued a statement reminding banks of potential risks associated with third-party arrangements to deliver bank deposit products and services. The agencies support responsible innovation and banks engaging in these arrangements in a safe and sound manner and in compliance with applicable law. While these arrangements can provide benefits, supervisory experience has identified a range of safety and soundness, compliance, and consumer-related concerns with the management of these arrangements.

The statement details the potential risks and provides examples of effective risk management practices for these arrangements. In addition, the statement reminds banks of relevant existing legal requirements, guidance, and related resources, and provides insights that the agencies have gained through their supervision. The statement does not establish new supervisory expectations.

Separately, the agencies have requested additional information on a broad range of bank-fintech arrangements, including with respect to deposit, payments, and lending products and services. The agencies are seeking input on the nature and implications of bank-fintech arrangements and effective risk management practices. Responses and comments will be accepted for 60 days following publication of the request for information in the Federal Register. [Update: Published 7/31/2024 at 89 FR 61577, with a 61-day comment period ending 9/30/2024.]

The agencies are considering whether additional steps could help ensure banks effectively manage risks associated with these various types of arrangements.

• OCC Bulletin 2024-20
• OCC Bulletin 2024-21
• FDIC FIL-45-2024

The Federal Reserve Board has reported it has executed a consent order for the assessment of a $4,800 civil money penalty against North Shore Bank of Commerce, Duluth, Minnesota, for a pattern or practice of violations of Regulation H, 12 C.F.R. § 208.25, which implements the provisions of the National Flood Insurance Act.

The NMLS yesterday launched a video and podcast highlighting NMLS enhancements completed July 20 to improve the NMLS regulator and user experience. The enhancements mark the beginning of a multi-year effort to continually improve NMLS.

The FFIEC has released the 2024 Census flat file, which incorporates the boundary changes from OMB Bulletin 23-01.

Five federal agencies — the CFPB, FDIC, Federal Reserve, NCUA, and OCC — yesterday jointly announced final guidance addressing reconsiderations of value (ROVs) for residential real estate transactions. The guidance advises on policies and procedures that financial institutions may implement to allow consumers to provide financial institutions with information that may not have been considered during an appraisal or if deficiencies are identified in the original appraisal.

ROVs are requests from a financial institution to an appraiser or other preparer of a valuation report to reassess the value of residential real estate. Deficiencies identified in valuations, either through an institution's valuation review processes or through consumer-provided information, may be a basis for financial institutions to question the credibility of the appraisal or valuation report.

The guidance offers examples of ROV policies and procedures that a financial institution may implement to help institutions identify, address, and mitigate discrimination risk; describes the risks of deficient residential real estate valuations; and explains how financial institutions may incorporate ROV processes into risk management functions. The agencies finalized the guidance largely as proposed, with the addition of clarifying edits based on public comments received on the proposed guidance published in July 2023.

The guidance is final as of the date it is published in the Federal Register.

• Federal Register notice: Interagency Guidance on Reconsiderations of Value of Residential Real Estate Valuations.
• Publication update: Published in the Federal Register on 7/26/2024 at 89 FR 60549

The OCC has released a list of 11 enforcement actions taken against national banks and federal savings associations and individuals currently and formerly affiliated with OCC-supervised financial institutions.

• The amended cease and desist order previously announced against Citibank, N.A., Sioux Falls, South Dakota.
• A cease and desist order against CNB Bank & Trust, N.A., Carlinville, Illinois, for violations of 12 CFR 21.21 (BSA/AML compliance program), 31 CFR 1020.210 (Customer Due Diligence), and 1020.220 (Customer Identification Program) as well as unsafe or unsound practices relating to the bank’s BSA/AML compliance, and failure to correct previously reported BSA/AML compliance problems.
• A formal agreement with Lincoln FSB of Nebraska, Lincoln, Nebraska, for unsafe or unsound practices, including those relating to strategic planning, liquidity risk management, contingency funding planning, interest rate risk management, and board oversight and corporate governance.
• A cease and desist order against Summit National Bank, Hulett, Wyoming, for unsafe or unsound practices including those related to capital and strategic planning, liquidity risk management, transactions with affiliates, and the bank’s BSA/AML compliance program, and violations including of 12 CFR 21.21 (BSA/AML compliance program).
• Orders of prohibition against the following individuals:
  • Cindy M. Flores, former branch operations associate manager at a Fargo, North Dakota, branch of Wells Fargo Bank, N.A., Sioux Falls, South Dakota, for misappropriating at least $47,600 by diverting funds from customer deposit accounts
  • Randall David Ditzer, former banking center team lead relationship banker at a Prairie Village, Kansas, branch of BOKF, N.A., Tulsa, Oklahoma, for making unauthorized withdrawals from the accounts of an elderly bank customer and depositing the funds into his own accounts.
  • Aaliyah Shaheed, former digital banking representative for Varo Bank N.A., Draper, Utah, who worked remotely from Charlotte, North Carolina, for improperly accessing and modifying customer account information, which resulted in approximately $21,700 of fraudulent transfers.
  • Kathryn Thomure (now known as Kathryn Makler), former business banking specialist at a Farmington, Missouri, branch of U.S. Bank, N.A., Cincinnati, Ohio, for making false representations on two Paycheck Protection Program loan applications to the U.S. Small Business Administration and receiving a loan for approximately $29,300.
  • Valeria Martinez Vazquez, former branch relationship banker at Zions Bancorporation, N.A., Salt Lake City, Utah, for misappropriating approximately $11,100 from a customer’s account.
  • Andre Jackson, former relationship banker at a Kenmore, New York, branch of Bank of America N.A., Charlotte, North Carolina, for misappropriating at least $8,000 in cash from the bank.
  • Cordia Shedde McDonald, former associate banker at a New Rochelle, New York, branch of JPMorgan Chase Bank, N.A., Columbus, Ohio, for misappropriating at least $10,000 in cash from the bank.

The CFPB yesterday announced a proposed interpretive rule explaining that many paycheck advance products, sometimes marketed as “earned wage” products, are consumer loans subject to the Truth in Lending Act. The guidance, according to the Bureau, will ensure that lenders understand their legal obligations to disclose the costs and fees of these credit products to workers. The CFPB also published a report examining employer-sponsored paycheck advance loans. The report finds that workers using these employer-sponsored products take out an average of 27 such loans per year and that the typical employer-sponsored loan carries an annual percentage rate (APR) over 100%.

The proposed interpretive rule [Note: Published 7/31/2024 at 89 FR 61358] explains how existing law applies to this emerging product market, and replaces a 2020 advisory opinion that addressed a very specific paycheck advance product that is not common in the real market. The proposed interpretive rule makes clear that many paycheck advance products – whether provided through employer partnerships or marketed directly to borrowers – trigger obligations under the federal Truth in Lending Act. In addition, the CFPB’s proposed interpretive rule makes clear that:

• Many loan costs are finance charges: Fees for certain “tips” and expedited delivery meet the Truth in Lending Act’s standard for being finance charges. When the paycheck advance product is no-fee and truly free to the employee, many requirements would not apply.
• Borrowers must receive key disclosures: Among other requirements, earned wage lenders must provide workers with appropriate disclosures about the finance charges. Clear disclosures help borrowers understand and compare loan options, sharpens price competition, and ultimately benefits companies that offer competitive products.

The CFPB encourages the public to submit comments on this interpretive rule to inform whether additional clarifications are needed. Comments will be accepted until August 30, 2024.