Complete Story
05/24/2016
Government Regulatory Update
Kurt Helwig, president and CEO of the Electronic Funds Transfer Association (EFTA) and Kimberly Ford VP of Global Government and Public Affairs for First Data provided a regulatory update and discussed how government oversight can also disrupt business at the AFT Spring Summit at Orlando, Fla.
A major focus of their discussion centered on the Consumer Financial Protection Bureau, a U.S. government agency that makes sure banks, lenders, and other financial companies treat you fairly.
Legal experts said they believe the CFPB’s action against online payment provider Dwolla – its first action related to data security – could lead to considerable ramifications going forward. The CFPB targeted Dwolla recently for deceiving consumers about its data security practices and the safety of its online payment system.
The bureau ordered the Des Moines, Iowa-based Dwolla, an agent of the $2.7 billion, Waterloo, Iowa-based Veridian Credit Union and the Houston-based Compass Bank, to pay a $100,000 penalty and fix its security practices.
“CFPB will be interested in regulating anyone that impacts consumers,” Ford said. She explained the reach of the bureau, funded by the treasury, is extremely broad.
The scope of the CFPB covers “everything you can possibly think of in the financial service area.” This includes credit, servicing loans, and real estate settlement services.
Anticipated forthcoming enforcement actions involve payday lending, debt collecting, prepaid accounts, overdraft fees, deceptive marketing, debt collection, credit reporting inaccuracies and undisclosed fees. New in 2016 is deceiving customers about security practices. On their radar is the use of databases for account opening and ATM surcharges.
“The CFPB is here to stay,” Helwig warned. It is also on record saying it consider small business to be a consumer.
Ford and Helwig talked about Strategies for Improving the U.S. Payment System from a Federal Reserve study, to improve the payment system in the United States. They include:
- Actively engaging with stakeholders on initiatives designed to improve the U.S. payment system
- Identifying effective approaches for implementing a safe, ubiquitous, faster payments capability in the United States
- Working to reduce fraud risk and advance the safety, security and resiliency of the payment system
- Achieving greater end-to-end efficiency for domestic and cross-border payments
- Enhancing Federal Reserve Bank payments, settlement and risk-management services
State regulations also received attention during the presentation. “The states have become quite a battleground for financial services,” Ford pointed out. Among the areas gaining the attention of states are data-breach notification laws, prepaid cards, virtual credit cards, mobile apps and geolocation capabilities.
