Clarks' Bank Deposits and Payments Monthly

  • December 23, 2021

    Reporting Suspicious Elder Financial Exploitation: An Overview Of The Law And Best Practices

    A majority of the nation’s states now mandate financial institutions and or persons tied to the financial institution to report suspected financial exploitation against seniors and other vulnerable customers to law enforcement and social service agencies.

  • November 05, 2021

    Is Fifth Circuit’s Hold On CFPB Implementation Of Payday Loan Regs Only A Reprieve?

    By way of a one paragraph Order, the Fifth Circuit recently stayed the CFPB’s ability to implement the payment provisions of its 2020 Final Rule on payday regulations, until 286 days after resolution of the appeal now pending before it.

  • November 05, 2021

    Fraudsters Create “Fictional Persons”: Federal Reserve Adopts A Definition Of “Synthetic Identity Payments Fraud”

    To help combat a particularly pernicious and sophisticated type of cyber payments fraud, the Federal Reserve recently adopted a definition of “Synthetic Identity Fraud” (SIF). SIF is used by fraudsters to purchase a house or use credit cards over long periods of time. SIF also is known to finance money laundering operations, drug cartels, human trafficking, and illegal arms sales.

  • November 05, 2021

    Best Practices: A Banker’s Dozen For Reviewing Wire Transfer Agreements

    Article 4A of the Uniform Commercial Code (UCC) sets out a comprehensive set of rules governing funds transfers. Even without a special agreement, parties to a funds transfer may look to Article 4A to understand their rights and obligations. Moreover, unlike the general freedom of contract principle that prevails under Article 4 dealing with checks, Article 4A contains numerous provisions that may not be varied by agreement.

  • October 22, 2021

    More Than Repackaging: Primary Bank Regulators Coordinate Third-Party Risk Management

    Banks engaging third parties to perform services and activities are held responsible for the third-party’s performance just as if the bank were to perform the service or activity itself. Moreover, engaging a third party does not diminish the bank’s own responsibility to operate in a safe and sound manner including compliance with applicable law. At least on paper, these principles are integral to modern day federal bank regulation and compliance.

  • October 22, 2021

    Heightened Focus On Climate Change Risk Expected From Federal And State Financial Regulators

    Compared to their global peers, prudential federal financial regulators in the United States have been slow to focus on managing the risk of climate change to financial institutions and financial market stability. The laissez-fare attitude is changing. Regulated depository and non-depository banking organizations need to prepare for heightened scrutiny.

  • October 22, 2021

    Can Check Or Wire Fraud Trigger Bank Liability Under State Deceptive Trade Practices Laws?

    Banks can be liable for fraud under state unfair and deceptive trade practices (UDAP) acts depending upon the nature of the fraud. State attorneys general are very aggressive in using UDAP statutes against financial institutions, as are consumers—often in class actions. One of the big attractions of proceeding under a state UDAP statute is the potential award of treble damages.

  • September 17, 2021

    Tackling Headaches: An Overview Of Deposit Account Garnishment

    Garnishment of deposit accounts is a timely topic for banks, deposit account holders, and third-party creditors, especially now while successive waves of the Coronavirus pandemic are proving relentless.

  • September 17, 2021

    Garnishment Of Directly Deposited Federal Benefit Payments

    Federal benefit payments are protected under federal law from creditors, other than the United States government and certain state agencies, seeking to access the funds by way of a garnishment order issued by a court. These benefits are directly deposited into consumer accounts. Even with the protections afforded by federal law, financial institutions subject to a garnishment order are quick to freeze accounts containing federal benefit payments.

  • September 17, 2021

    The Supreme Court’s Transunion Decision Raises “Standing” Threshold For Federal Court

    On June 25, 2021, the United States Supreme Court released its opinion in TransUnion LLC v. Ramirez, 2021 U.S. LEXIS 3401 (TransUnion). At issue was whether several thousand putative class members who had information added to their credit report indicating that they might be terrorists, drug traffickers, or other serious criminals, even though they were none of these things, had standing to assert claims for statutory damages under the Fair Credit Reporting Act (FCRA). Building upon and extending the logic of Spokeo, Inc. v. Robins, 578 U.S. 330 (2016) (Spokeo), the Supreme Court held that Article III standing requires a federal court plaintiff to demonstrate that they have suffered a concrete harm: “No concrete harm, no standing.”

  • August 20, 2021

    CFPB Expands Safe Harbor Exemption In The Remittance Rule

    Regulation E implements protections for persons who send remittances to individuals and businesses in foreign countries (Remittance Rule). The most recent amendments to the Remittance Rule promulgated by the Consumer Financial Protection Bureau (CFPB or Bureau) raised the safe harbor compliance exemption threshold (2020 Safe Harbor Exemption).The consequences are most important for smaller players in the marketplace.

  • August 20, 2021

    Who Is The Bank’s “Customer” For Standing Purposes?

    Legal decisions are legion where the strict application of the standing requirement knocks out a potential litigant’s day in court on what appears to be a technicality. This is the usual outcome in cases where the legal issue is who is the bank’s “customer” for standing purposes.

  • August 20, 2021

    Federal Reserve Board Views Digitizing The U.S. Dollar As High Priority

    The Federal Reserve Board is seriously considering creating a new payments system based on a Central Bank Digital Currency (CBDC). CBDC is issued by a nation’s central bank in digital form as a substitute for cash in physical form. Digitizing the U.S. dollar would largely bypass existing electronic payment systems.

  • July 30, 2021

    Congressional Review Act Kills True Lender Rule: What Now?

    On June 30th, President Biden signed into law three joint resolutions under the Congressional Review Act (“CRA”). One of those resolutions, S.J.Res. 15, disapproved of and nullified the Office of the Comptroller of the Currency’s rule titled “National Banks and Federal Savings Associations as Lenders,” more commonly known as the true-lender rule. The resolution passed Congress with essentially unanimous Democratic approval but with only one Republican House member and 3 Republican Senators signing on.

  • July 30, 2021

    Overdraft Fees And The Statute Of Limitations: Two Federal Courts Dismiss Reg E Claims In Class Action Lawsuits

    In two recent federal district court decisions, credit unions relied on the statute of limitations to successfully block consumer class action lawsuits challenging allegedly improper overdraft fees under the EFTA and Reg E.

  • June 07, 2021

    Brookings Study: Do Banks Relying On Overdraft Fees Become “Payday Lenders With A Charter”?

    The practice of temporarily covering a payment against insufficient funds in a deposit account used to be a practice banks offered as a courtesy to existing customers in good standing. Today, it is common for banks and credit unions to charge “overdraft fees.” Overdraft fees generate over $34 billion in revenue annually.

  • June 07, 2021

    Maryland Federal Court Decision On UCC Wrongful Dishonor Adds To The Split Case Law

    A recent Maryland federal court decision interpreting the UCC’s provisions on wrongful dishonor recounts a whopper of a story. The facts read like a bad saga of alleged flip-flopped decisions by the drawee bank compounded by clerical mistakes. At times, the drawee bank even reverses its own reversals, at least as pled in the complaint. The opinion decides a motion to dismiss.

  • June 07, 2021

    Some Basics: Stale Checks And Legends

    The prior story discusses Titan Custom Cabinets, Inc. v. Truist Bank, 220 U.S. Dist. LEXIS 229713, 103 UCC Rep.2d 653 (D. Md. 2020) (Titan). The facts bring into play the UCC’s provisions on stale check and legends. Near the end of the long saga of dealings between the plaintiffs and the defendant drawee bank in Titan, the complaint charges the drawee bank with wrongfully honoring a check even though it was stale and contained a legend with a condition. The opinion describes the facts in this way: SunTrust honored the check “negotiated more than 180 days after issuance, even though it bore the legend that it would only be good for 90 days.”

  • June 07, 2021

    The Clearing House Asks The Fed To Close The Interchange Fee “Loophole” For Fintechs

    The Clearing House (TCH) is on a mission to convince the Board of Governors of the Federal Reserve System (Fed or Board) to even out the regulatory landscape for big banks in regard to the exemption small banks enjoy from limitations on interchange fees.

  • May 25, 2021

    Trends: Banks Block Loss-Shifting In Wire Fraud Cases

    A basic principle of UCC Article 4A governing funds transfer is known as the “displacement principle.” As a matter of public policy, Article 4A favors the beneficiary bank and disfavors the victim of the wire transfer fraud.