January 24, 2024

The Consumer Financial Protection Bureau (CFPB) is proposing to block banks and other financial institutions from one potential source of new fee revenue – fees on transactions declined right at the swipe, tap, or click. The proposed rule would prohibit non-sufficient funds (NSF) fees on transactions that financial institutions decline in real time. These types of transactions include declined debit card purchases and ATM withdrawals, as well as some declined peer-to-peer payments. The CFPB’s proposal would cover banks, credit unions, and certain peer-to-peer payment companies.

Comments must be received on or before March 25, 2024.

The Federal Trade Commission (FTC) charged online cash advance provider FloatMe and its co-founders with using empty promises of quick and free cash advances to entice consumers to join its service, only to fail to deliver the promised advance amounts, make it difficult to cancel, and discriminate against consumers who receive public assistance. FloatMe is also being charged with making baseless claims that cash advance limits would be increased by an algorithm or another automated system. Under the terms of a settlement order, FloatMe, as well as its co-founders Joshua Sanchez and Ryan Cleary, are required to provide $3 million to be used to refund customers, stop the company’s deceptive marketing, make it easier for consumers to cancel their subscriptions, and institute a fair lending program.

Director of the National Economic Council Lael Brainard delivered remarks on place-based growth at the Brookings Institution. She discussed trickle-down economics; bottom-up middle out economics; and the importance of place-based growth in supporting communities.

The U.S. Department of the Treasury’s (Treasury) Office of Foreign Assets Control (OFAC) imposed a fifth round of sanctions on Hamas since the October 7 attack on Israel. The action targets networks of Hamas-affiliated financial exchanges in Gaza, their owners, and associates, and particularly financial facilitators that have played key roles in funds transfers, including cryptocurrency transfers, from the Islamic Revolutionary Guard Corps-Qods Force to Hamas and Palestinian Islamic Jihad in Gaza. Concurrent with OFAC’s designations, the United Kingdom and Australia are also placing sanctions on key Hamas officials and facilitators.

The Internal Revenue Service (IRS) is launching the Simple Notice Initiative to review, redesign, and deploy hundreds of notices, with an immediate focus on the most common notices that individual taxpayers receive, as part of ongoing modernization efforts through the Inflation Reduction Act.

The Federal Reserve Board (FRB) announced five new members of its Community Advisory Council, or CAC. CAC members provide information, advice, and recommendations to the Board on relevant policy matters and emerging issues of interest. The new members of the CAC are: Roberto Gallardo, Vice President for Engagement & Associate Professor, Agricultural Economics, Purdue University; Renata B. Kowalczyk, CEO, Wilmington Alliance; Jose Quinonez, CEO, Mission Asset Fund; Bruce Schultz, Vice President, Community Development Banking Strategy, Gateway First Bank; and Justin Slattery, Executive Director, Belknap Economic Development Council.

The FRB announced that it will extend until May 12, 2024, the comment period on its interchange fee proposal. The Board extended the comment period to allow the public more time to analyze the proposal and prepare their comments. Comments on the proposal were originally due by February 12, 2024. Separately, the Board published additional data related to the interchange fee cap. The Board published the data to give the public additional information as they consider the proposal. 

The FTC issued an Opinion and Final Order that Intuit Inc., the maker of the popular TurboTax tax filing software, engaged in deceptive advertising in violation of the FTC Act and deceived consumers when it ran ads for “free” tax products and services for which many consumers were ineligible. In its Opinion, the Commission upheld the Chief Administrative Law Judge (ALJ), D. Michael Chappell’s opinion that Intuit has engaged in deceptive advertising in violation of Section 5 of the FTC Act and said that the defenses that Intuit raised lack merit. The Commission ordered Intuit to cease making the deceptive claims as outlined by complaint counsel, who are FTC staff in the Bureau of Consumer Protection.

Securities and Exchange Commission (SEC) Commissioner Mark Uyeda delivered remarks at the 51st Annual Securities Regulation Institute. Commissioner Uyeda discussed the current regulatory regime for raising capital without registration; the definition of an accredited investor; the sliding scale approach to investing in private companies; and general considerations for the private markets.

The SEC adopted new rules and amendments to enhance disclosures and provide additional investor protection in initial public offerings (IPOs) by special purpose acquisition companies (SPACs) and in subsequent business combination transactions between SPACs and target companies (de-SPAC transactions). The SEC seeks to enhance investor protection in SPAC IPOs and de-SPAC transactions with respect to the adequacy of disclosure and the responsible use of projections. The rules also address investor protection concerns more broadly with respect to shell companies and blank check companies, including SPACs.

Read SEC Chair Gary Gensler’s statement here.
Read SEC Commissioner Caroline Crenshaw’s statement here.
Read SEC Commissioner Jaime Lizárraga’s statement here.
Read SEC Commissioner Mark Uyeda’s dissenting statement here.

Figure Technologies Inc., a blockchain and lending startup, is seeking approval to issue an interest-bearing stablecoin. The move is a novel attempt at creating a new class of stablecoins with federal legitimacy, and if successful, Figure will be offering the first stablecoin regulated as a security in the US. Figure filed a draft registration statement with the SEC in October under the name of Figure Certificate Co., a subsidiary. The filing shows that Figure is seeking to register the stablecoin as so-called “face-amount certificates,” a type of fixed income securities, and will issue it using blockchain technology. If approved, it will be available to both US retail and institutional investors.

The Commodity Futures Trading Commission (CFTC) announced it filed a civil enforcement action in the U.S. District Court for the District of Arizona against Debiex, a purported digital asset company. The complaint alleges Debiex used popular romance scam tactics to target Asian Americans and fraudulently misappropriated $2.3 million in customer funds intended for digital asset commodity trading.

U.K. Financial Conduct Authority (FCA) CEO Nikhil Rathi delivered a speech on how consumer-facing technology can help keep consumer markets honest at the Imperial College London Business School. Rathi discussed the rise of technology in financial services and the need to use and adapt regulatory tools while embracing innovation; consumer facing technology in financial services and its need to boost financial inclusion and security of data and services so that the industry does not risk triggering a Techlash; that a wider debate between policymakers, industry and consumers is needed about what we are willing to risk in search of innovation and better products and services; and the need to be alert to competition impacts.

The Financial Industry Regulatory Authority (FINRA) published a crypto asset communications sweep update. FINRA identified potential violations of FINRA Rule 2210 (Communications with the Public) in 70 percent of crypto asset communications it reviewed from its member firms.

House Financial Services Committee Ranking Member Maxine Waters (D-CA) sent a letter to Mark Zuckerberg, Founder, Chairman and Chief Executive Officer of Meta Platforms, Inc. (formerly Facebook, Inc.); and Javier Olivan, Chief Operating Officer of Meta Platforms, Inc. In the letter, Congresswoman Waters expresses concern with Meta’s filing of five trademark applications related to digital assets services and blockchain technology and what those applications could portend for Meta’s entry into cryptocurrency. Rep. Waters requests that Meta respond to a series of questions to address concerns related to this latest action.

Representative Zach Nunn (R-IA) and Senator Jerry Moran (R-KS) wrote a letter  to FRB Vice Chairman for Supervision Michael Barr, Federal Deposit Insurance Corporation (FDIC) Chairman Martin Gruenberg, and Office of the Comptroller of the Currency (OCC) Acting Comptroller of the Currency Michael Hsu cautioning that the proposed Basel III Endgame regulations will have a harmful impact on agriculture and energy industries.

The Senate Banking Committee held a hearing discussing national security challenges, particularly those related to China and emerging technology. Read our summary here.

The House Financial Services Committee Subcommittee on Oversight and Investigations held a hearing discussing the SEC’s proposed climate disclosure rule. Read our summary here.

New York Department of Financial Services (NYDFS) Superintendent Adrienne Harris released final guidance to New York State banking organizations and non-depository financial institutions licensed or chartered under the New York Banking Law or Financial Services Law to notify them of the Department’s expectations regarding their review and assessment of the character and fitness of their directors and senior officers, both upon onboarding and on an ongoing basis.  

Senate Finance Committee Chairman Ron Wyden (D-OR) and House Ways and Means Committee Chairman Jason Smith (R-MO) announced their agreement on a bipartisan tax framework. The plan will be introduced as The Tax Relief for American Families and Workers Act of 2024.

Need to catch up on what happened last week? Check out our January 19th End of Week Wrap Up here