Drawing from diverse legal disciplines, Bryan Cave’s Retail Banking Team focuses on consumer compliance and contractual matters for banks and non-bank financial institutions. Whatever day-to-day legal assistance you need for consumer finance or banking services, we can provide prompt and accurate guidance.
We have many years of experience in all of the federal consumer banking regulation, and every day we work to stay current with the constantly changing regulatory environment. We will help you avoid the regulatory minefields. Our Retail Banking Team can assist your institution in all of the following areas:
- Mortgage, credit card, retail consumer credit and other consumer lender licensing, disclosure, interest rate and fee, and consumer agreement reviews;
- Consumer loan advertising reviews, including federal and state requirements and UDAP and UDAAP reviews;
- Deposit account agreement reviews;
- Deposit advertisement reviews;
- Overdraft policies and disclosures;
- Remote deposit capture agreements and policies;
- Automated clearing house agreements;
- Power of attorney interpretations;
- Trust documents and trustee power reviews;
- Individual Retirement Account transactions;
- Prepaid card programs;
- Check fraud assistance;
- Online business banking and cash management; and, of course,
- any issues arising under the Truth in Savings Act, Truth in Lending Act, Electronic Fund Transfers Act, Real Estate Settlement Procedures Act, or consumer privacy and data security laws and regulations.
9th Circuit Holds TILA Bars Rescission Suits Filed More Than 3 Years After Consummation
In McOmie-Gray v. Bank of America (9th Cir. Feb. 8, 2012), the Ninth Circuit Court of Appeals held that under the Truth in Lending Act (“TILA”), “rescission suits must be brought within three years from consummation of the loan, regardless whether notice of rescission is delivered within that three-year period.” It ruled that the three year period in the Act is an absolute limitation on rescission actions and that the one year period for bringing claims applies only to damages actions and does not extend the time to file a claim for rescission even where the borrower has sent the Bank a written notice of rescission within three years of loan signing or “consummation.” To learn more about the facts in this case and the Court’s decision, please click here to read the Alert published by the Commercial Litigation Client Service Group and the Financial Institutions Client Service Group on March 6, 2012.
How Long Should You Retain Data? Recent Developments May Add Confusion Not Clarity
Businesses have always collected information about their customers, but with the explosion of on-line commerce the quantity of information collected has ballooned. One question that necessarily arises for almost any business is deciding how long it will keep the data it collects. Businesses are aware that future developments in technology will improve the usefulness (and value) of the data that is currently in their possession. Retaining consumer data, however, raises a number of legal risks which are often difficult to quantify in light of the changing regulatory and litigation landscape. For a discussion of how recent developments add to the legal complexity, please click here to read the Bulletin published by the Data Privacy & Security Team on March 16, 2012.
Supreme Court Weakens EPA’s Enforcement Regine
The United States Supreme Court handed landowners a major victory against the United States Environmental Protection Agency (EPA) in its unanimous decision in Sackett v. EPA, No. 10-1062. The decision announced March 21, 2012, held that Clean Water Act compliance orders can be challenged in court under the Administrative Procedures, undercutting EPA’s historic practice of using compliance orders to, in the words of the Court, “strong-arm” parties into voluntary compliance. To learn about the case and the Court’s decision, please click here to read the Alert published by the Environmental Client Service Group on March 22, 2012.
FINRA Issues Guidance on Protection of Customer Accounts
A recent alert from the Financial Industry Regulatory Authority (“FINRA”) is encouraging broker-dealers to reexamine their policies and procedures relating to protection of customer assets and accounts. FINRA Regulatory Notice 12-05 advises broker-dealers that FINRA has received an increasing number of reports of customer funds being stolen as a result of instructions e-mailed to firms from customer e-mail accounts that have been compromised. With that notice, FINRA also issued an Investor Alert advising the public about the reported incidents. To learn more about the Notice and Alert, please click here to read the Alert published by the White Collar Defense & Investigations and Securities Litigation & Enforcement Client Service Groups and Data Privacy & Security Team on February 6, 2012.
Reporting Cybersecurity Risks — New Obligations for Publicly Traded Companies
Most companies are aware that they may be required to report data security breaches to consumers and, in some instances, state attorneys general, the FTC, or HHS. Publicly traded companies should bear in mind that they have to notify another group — their investors. The SEC last year offered first-of-its kind guidance on when companies should report cybersecurity incidents in their disclosure statements. To learn more about the new requirements, please click here to read the Alert published by the Data Privacy & Security Team on February 14, 2012.
DOL Issues Final Fee Disclosure Rule
Earlier this year, the Department of Labor issued a final rule on the disclosure requirements for a contract or arrangement for services to a covered plan to be deemed “reasonable” under Section 408(b)(2) of the Employee Retirement Income Security Act of 1973 (“ERISA”). These disclosure requirements become effective July 1, 2012 and apply to service contracts and arrangements entered into both before and after that date. To learn more about the disclosures required and what plans or contracts may be excluded from the rule, please Click here to read the Alert published by the Employee Benefits and Executive Compensation Client Service Group on February 7, 2012.
FED Releases Second Set of FAQs on Durbin Rules
The Federal Reserve Board recently posted a second set of questions and answers to the “Frequently Asked Questions About Regulation II (Debit Card Interchange Fees and Routing)” on the Fed’s website. This current release of FAQs has been merged with the previously published FAQs, with the newer questions annotated with the date added. For a summary of the new issues addressed in the FAQs, please click here to read the Alert published by the Financial Institutions Client Service Group on November 28, 2011.
FinCen Issues FAQs and Holds Webinar on Prepaid Access Rule
The Financial Crimes Enforcement Network ( “FinCEN”) recently released a set of FAQs related to the final rule on prepaid access that was issued on July 29, 2011 (the “Rule”). The FAQs are intended to provide interpretive guidance for the Rule, not supersede or replace any part of it. FinCen also recently gave a webinar presentation on the Rule. The most significant clarifications to the Rule made by FinCen are discussed in an Alert published by the Financial Institutions Client Service Group on November 28, 2011. To read this discussion, please click here.
Supreme Court to Determine Whether Corporations Are Liable in U.S. Courts for Human Rights Violations Committed Abroad
The U.S. Supreme Court may soon decide the extent to which corporations may be sued for alleged human rights violations which arise in connection with their business activities outside the U.S. The Court has granted certiorari petitions in two cases brought against corporations for alleged human rights violations committed abroad. In each case, the claims were discussed by a Court of Appeals on the ground that corporations are immune from such suits. The cases will be argued in tandem, even though different statutes apply. To read more the cases and the statutes being applied, please click here for the Alert published by the Commercial Litigation Client Service Group on November 11, 2011.
The Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) announced on September 9, 2011, that it is extending the compliance date for most aspects of its final rule on prepaid access (the Final Rule). The Final Rule, which was published on July 29, 2011, was set to go into effect on September 27.
Compliance Date for Sellers of Prepaid Access Extended Until March 31, 2012
The provisions of the Final Rule applicable to “sellers of prepaid access” (Sellers) will become effective March 31, 2012. FinCEN states it received compelling information from the industry on the compliance challenges faced by Sellers, given that the Final Rule’s original effective date coincides with the back-to-school season and the beginning of the holiday shopping season. Many retailers impose a “lockdown” on their IT systems at this time of year, to accommodate peak retail sales and consumer traffic, which prevents any systems changes until the close of the holiday season in late January.
Compliance Date for Providers of Prepaid Access Remains Sept. 27, 2011 In Part; Extended Until March 31, 2012 In Part
Some provisions of the Final Rule applicable to “providers of prepaid access” (Providers) still become effective Sept. 27, 2011; other provisions are extended until March 31, 2012. By Sept. 27, Providers must:
- Develop an anti-money laundering (AML) compliance program that is risk-based and commensurate with the location, size, and types of financial services offered. (As required by 31 CFR 1022.210(a) and (b).)
- Report suspicious transactions. (31 CFR 1022.320.)
- Maintain transactional records related to prepaid access. (31 CFR 1022.420.)
Compliance with all other aspects of the Final Rule for Providers is extended until March 31, 2012.
FinCEN notes that in addition to preparing their own systems for compliance with the Final Rule, Providers may also need to negotiate new contracts with their distributors and retailers in order to clarify the status of their products under the Final Rule. However, FinCEN states it has learned that Providers are differently situated than Sellers, and some are currently capable of complying with the three basic requirements listed above. In fact, FinCEN believes many aspects of the Final Rule are already common business practices for Providers, and thus they will be able to comply with those aspects of the Final Rule by the original effective date of Sept. 27.
No Enforcement Prior to March 31, 2012
FinCEN states that for both Providers and Sellers, it will not initiate any compliance matter or enforcement action prior to March 31, 2012 for violations of the Final Rule, nor will it assess any civil money penalties for violations that occur prior to March 31, 2012.
FinCEN’s announcement of this administrative relief is available at http://fincen.gov/whatsnew/html/20110909.html.
Our previous client alert on the Final Rule may be viewed at http://www.bankbryancave.com/2011/09/fincen-issues-final-rule-on-prepaid-access/
If you have any questions or would like more information about FinCEN’s prepaid access Final Rule, please contact Kris Andreassen or Judie Rinearson.
|Kristine M. Andreassen
Bryan Cave LLP
1155 F Street NW
Washington, DC 20004
(202) 220-7417 fax
Bryan Cave LLP
1290 Avenue of the Americas
New York, NY 10404
(212) 541-1135 phone
(212) 541-1385 fax
Retailers Issuing Gift Cards and/or Selling Other
Companies’ Gift Card or Prepaid Cards Impacted
New anti-money laundering regulations that directly impact retail businesses that issue or sell gift cards or other prepaid cards have recently been released. These new regulations, known as the prepaid access “Final Rule,” currently effective on September 27, 2011, were issued by the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) and require the collection and verification of customer information when certain prepaid cards are sold or reloaded. Retailers issuing their own closed loop gift cards, or selling and reloading other companies’ open and/or closed loop gift cards may be significantly impacted by the new Final Rule. (Print-Friendly Version)
I. RETAILERS THAT ISSUE THEIR OWN “CLOSED LOOP” GIFT CARDS
Many retailers now issue (either directly or through a gift card company) their own gift cards useable solely to buy goods or services at their own locations. Such programs have in the past been deemed low risk. However, the new Final Rule may impact such programs depending on how such gift cards are sold and structured.
What is Closed Loop Prepaid Access?
Under the new Final Rule, “closed loop prepaid access,” is defined as “[p]repaid access to funds or the value of funds that can be used only for goods or services in transactions involving a defined merchant or location (or set of locations).” The definition includes gift cards that provide access to a specific retailer, affiliated retailers, or retail chain, or alternatively, a designated locale, such as a college campus, or a subway system.
The Implications for FCPA Enforcement of the SEC’s New Whistleblower Rules
The SEC’s recent adoption of rules to implement the whistleblower program mandated by the Dodd-Frank Act has particular significance for enforcement of the Foreign Corrupt Practices Act. For a discussion of the overall SEC enforcement context for the new whistleblower rules, a summary of the rules, and a discussion of the key issues for FCPA enforcement, including recommendations that companies should take now, please click here to read the Alert published by the Global Anti-Corruption Team of the Securities Litigation and Enforcement and International Trade Groups on June 22, 2011.
Supreme Court De-Certifies Largest Employment Discrimination Class Action In History
In Wal-Mart Stores, Inc. v. Dukes, the Supreme Court reversed a lower court’s decision to certify a nationwide class pursuing employment discrimination claims against the nation’s largest employer. A 5-4 majority of the Court concluded that the class of 1.5 million current and former female employees could not satisfy the commonality requirement. For a discussion of the decision, please click here to read the Alert published by the Class and Derivative Actions section of the Labor & Employment Client Service Group on June 21, 2011.
Supreme Court Draws Bright Line Barring Securities Fraud Claims Against Advisers to Companies Who Do Not “Make” Statements At Issue
In June the U.S. Supreme Court issued a significant decision restricting the ability of plaintiffs to bring securities fraud actions against adviser defendants who play a role in preparing statements actually made by companies they are advising. In Janus Group, et al. v. First Derivative Traders, the court held that an investment adviser to a mutual fund could not be sued in a private securities fraud action for false statements made in mutual fund prospectuses. To read more, please click here for the Alert published by the Securities Litigation and Enforcement practice group on June 16, 2011.
Federal Judge in Missouri Dismisses Legal Challenge to Health Care Reform
The Judge in the U.S. District Court for the Eastern District of Missouri, Southeastern Division, entered an order dismissing a lawsuit filed by Lt. Gov. Peter Kinder that challenged the Patient Protection and Affordable Care Act. Kinder et al v. Geithner et al. was filed in July 2010 by Kinder, joined in by six other Missouri residents, as a private citizen after the state’s attorney general declined to join other states in challenging the health care law. To read more about the order in this case, please click here to see the Alert published by the Life Sciences and Health Care Client Service Group on May 3, 2011.
FTC Cracking Down on Affiliate Advertisers
In April the FTC filed 10 lawsuits against companies and individuals that run affiliate advertising websites. These lawsuits come within two months of an earlier round of lawsuits targeting affiliate advertising programs. The most recent targets are fake news websites that promote weight loss products. To learn more, please click here to read the Alert published by the Retail Team on May 5, 2011.
Arbitration Clauses May Waive Class Proceedings
The U.S. Supreme Court recently ruled that the Federal Arbitration Act does not allow state law to invalidate class action waivers in arbitration agreements on the basis of unconscionability. While AT&T Mobility v. Concepcion involved consumer claims, the language of the ruling will bolster enforceability of class action waivers in employment related arbitration agreements. To read more about the ruling, click here for the Alert published by the Labor & Employment Client Service Group on May 18, 2011.
CPSC Opens Business Registration for New Consumer Product Safety Information Database
The new Consumer Product Safety Information Database is now available online on a trial basis, and will launch officially in March at www.SaferProducts.gov. The Database allows a broad range of people to file so-called “reports of harm” informing the CPSC about an incident or concern that the submitter believes is an indication a product is unsafe or potentially hazardous. To read more the database, please click here to see the Alert published by the Retail Team on February 3, 2011.
IRS Reverses Course — Breast Pumps and Other Lactation Supplies are Now Deductible Medical Expenses Subject to Reimbursement under FSAs, HRAs and HSAs
In Announcement 2011-14, the Internal Revenue Service concluded that breast pumps and supplies that assist lactation are medical care under Section 213(d) of the Internal Revenue Code and can therefore be reimbursed under a health flexible spending arrangement. To learn more about this announcement, please click here to read the Feburary 22, 2011 Alert published by the Employee Benefits & Executive Compensation Client Service Group.
Patent Reform Act of 2011
On January 25, 2011, The Patent Reform Act of 2011 was introduced by Senator Leahy (D-VT) with bipartisan support. The Bill is the latest installment of Congress’ attempts to pass patent legislation reform, following the Patent Reform Act of 2009 and other bills in recent years, all of which died in Congress. To learn more, please click here to read the February 22, 2011 Bulletin published by the Intellectual Property Client Service Group.
Wide-Open House Budget Debate Moves Toward Finish Line
The House continues to work towards completing a major budget bill to fund the federal government for the remainder of the 2011 fiscal year. Of the hundreds of amendments which have been offered and voted upon, major energy and environment-related amendments would reverse a law that requires the federal government to pay the legal costs of some environmental plaintiffs, de-fund the White House climate czar’s office, prevent an EPA appeals board from revoking air permits for oil exploration in the Arctic, and de-fund the EPA’s greenhouse gas emissions registry. To read more about the proposed amendments and other energy updates, please click here to see the February 18, 2011 Energy Update.
IRS Issues Guidance Expanding and Modifying 409A Correction Program and New Reporting Requirements for Stock Transfers under ISOs and ESPPs
The IRS issued Notice 2010-80 (the “Notice”), which made favorable changes to the procedures for voluntary correction of failures to comply with Internal Revenue Code Section 409A (“Section 409A”) originally issued in Notice 2010-6. These changes should make the correction procedures more accessible and less burdensome. For a summary of the changes, please click here to read the Executive Compensation Update published by the Employee Benefits and Executive Compensation Client Service Group on December 7, 2010.
Virginia Federal Court Rules Health Reform “Individual Mandate” Unconstitutional
On December 13, the U.S. District Court for the Eastern District of Virginia ruled that the individual mandate of the Patient Protection Affordable Care Act, as amended (“PPACA”), which requires individuals to purchase health insurance or pay a penalty, was unconstitutional. Virginia v. Sebelius, E.D. Va., No. 3:10-CV-188, memorandum opinion 12/13/10. The 42-page ruling declared that the penalty was beyond Congress’s Commerce Clause powers and could not be rationally construed as a tax. To learn more about this ruling, please click here to read the Client Alert published by the Employee Benefits and Executive Compensation Client Service Group on December 16, 2010.