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New on the Compliance Blog: Reg CC collectibility exceptions; NSF fees UDAAP risk
As credit unions work to meet the needs of more than 137 million Americans, NAFCU's award-winning regulatory compliance team continues to keep credit unions informed with new posts on the Compliance Blog every Monday and Wednesday.
Here's a roundup of what's new this week:
An Overview of the Reasonable Cause to Doubt Collectibility Exception under Regulation CC: NAFCU Regulatory Compliance Counsel Tara Simpson reviews the reasonable cause to doubt collectibility exception under Regulation CC. She lists the six exceptions to the general availability schedules detailed in the regulation, and explains the exception if a credit union has reasonable cause to believe a check is uncollectible. Simpson notes the reasonable cause exception must be based on a set of facts, hold time considerations, and an institution’s ability to craft flexible policies to address the issue.
Compliance Risk: Multiple NSF Fees: Following the CFPB’s enforcement action against the Bank of America for “systematically double-dipping on fees imposed on customers with insufficient funds in their account,” among other issues, NAFCU Director of Regulatory Compliance Nick St. John explains the bureau’s allegations that the bank violated unfair, deceptive, or abusive acts or practices (UDAAP).
“Importantly, the consent order does not allege that these NSF practices were improperly disclosed or that more thorough disclosures could have prevented this enforcement action,” St. John writes. “Instead, the CFPB’s analysis states that these practices are a UDAAP violation because consumers could not reasonably prevent these fees because they had no knowledge of when a transaction would be re-presented or how many times a merchant may try to present the transaction. Additionally, the CFPB asserts that such fees provide little or no benefit to the consumer.”
St. John flags that there is no clear guidance from the NCUA nor CFPB prohibiting this practice, but notes the CFPB has indicated a supervisory move to target this issue. He notes that credit unions may want to consider ways to mitigate this new UDAAP risk.
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