Financial Services Blog

When Contract Boilerplate Matters: A Case Lesson From the Credit Card Processing World

Those practicing in the payments space know that recorded judicial decisions are few and far between concerning disputes over credit card processing contracts.  Terms and conditions in these contracts are often created with heavy reliance on general contract principles, even though the operative acts of the parties are highly unique and subject to extensive third-party rules.  The January 15, 2015 decision in Schnuck Markets v. First Data Merchant Data Services Corp. and Citicorp Payment Services, U.S.D.C. E.D. Missouri, No. 4:13-CV-2226-JAR, is one of those rare cases, and is a decision highlighting the importance of careful contract drafting in the context of the merchant processing relationship. Read More ›

Supreme Court Clarifies Borrower’s Rescission Rights Under the Truth in Lending Act

On January 13, 2015, the U.S. Supreme Court unanimously decided that a borrower may simply provide written notice to a lender to exercise its right to rescind under the Truth in Lending Act (“TILA”). It need not have actually filed suit within the statutory three year period.  The Court’s decision in Jesinoski v. Countrywide Home Loans, Inc. clarified borrowers’ rescission right under TILA and resolved a split between Circuits.  Read More ›

Financial Institutions are Foreseeable Victims in Target Data Breach Cases

In an important decision regarding financial institution claims for recovery of losses resulting from data breaches, the United States District Court in Minnesota recently issued an Order denying Target’s attempt to dismiss all claims brought against it by financial institutions. Read More ›

New Savings Options Authorized for Retail Customers

Towards the end of 2014, two new national savings laws were signed by President Barack Obama.  The first is American Savings Act, H.R. 3374.  To encourage consumer savings, this Act permits financial institutions to offer prize-linked savings products.  Citing the need to improve the country’s saving rate by American households, and following the success the State of Michigan saw with its own similar program, the Act permits a saving promotion raffle to be offered by insured financial institutions, including federal savings and loan institutions.  A permitted savings promotion raffle is a contest in which the consideration for entry is obtained by the deposit of a specified amount of money into a savings account or other savings program offered by a financial institution. Read More ›

Remote Deposit Capture Technology- Changing Liability for Double Presentment?

The Board of Governors of the Federal Reserve System (“Board”) is proposing important changes to Regulation CC, 12 C.F.R. § 229, which implements the Expedited Funds Availability Act of 1987 (“EFA Act”) and the Check Clearing for the 21st Century Act of 2003 (“Check 21 Act”).  See Availability of Funds and Collection of Checks, 79 Fed. Reg. 6674-01 (proposed Feb. 14, 2014) (to be codified 12 C.F.R. § 229).  The Board’s proposal includes a revised regulatory framework for subpart C of Regulation CC, dealing with the forward collection and return of checks.  In particular, the Board’s proposal would amend 12 C.F.R. § 229.34 to provide new indemnity provisions relating to remote deposit capture services. Read More ›

TD Bank’s Settlement Agreement Provides Insight on State Privacy Concerns

TD Bank recently agreed to pay $850,000 as part of a multi-state settlement agreement with state attorneys from Connecticut, Florida, Maine, Maryland, North Carolina, New Jersey, New York, Pennsylvania, and Vermont. While the assurances in the settlement agreement only bind TD Bank, other companies with electronic records containing consumers’ personal information can benefit from this agreement by interpreting its requirements as minimum standards for their internal security policies and procedures. Read More ›

What Banks Large and Small Need to Know About “Prior Express Consent” Under the Telephone Consumer Protection Act

The Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227, has become the darling of the plaintiff class action industry.  Too often the press has reported on very large dollar settlements arising out of TCPA claims.  Recent examples include a September 2, 2014, approval of a $32 million settlement of six pending TCPA class action suits against Bank of America, involving 7 million class members.  Similarly, Capital One recently agreed to pay $75 million after plaintiffs’ alleged the financial institution used an auto-dialer to call customer cell phones without the required consent.  While the large dollar settlements involving large institutions may catch the headlines, all financial institutions should understand that the TCPA applies to them, and even indirectly to them, if certain vendors violate the Act.  There is also concern that an opportunistic plaintiffs’ bar will soon seek to replicate their litigation business model by bringing copy-cat lawsuits on a more local level against smaller institutions. Read More ›

ECOA AND SPOUSE-GUARANTOR RIGHTS: ANOTHER COURT, ANOTHER VIEW

On the heels of the Sixth Circuit Court of Appeals’ decision in the RL BB Acquisition case that we wrote about a couple of weeks ago comes a contrary decision from the Eighth Circuit on exactly the same issue.  Is a credit guarantor an “applicant” for credit, so that the protections of the Equal Credit Opportunity Act (ECOA) extend directly to a credit guarantor? The Eight Circuit says no. Read More ›

SIXTH CIRCUIT STRENGTHENS SPOUSAL GUARANTY RULE

The Equal Credit Opportunity Act’s ban against credit discrimination on the basis of race, gender, national origin, and the other prohibited bases listed in the law – including marital status - is not terribly complex.  Since its enactment 40 years ago, the ECOA has generated only a small fraction of the lawsuits that the Truth in Lending Act has spawned.  Nevertheless, one ECOA rule in particular has continuously been an Achilles’ heel for creditors – the Spouse Guarantor Rule.  The Rule is particularly difficult to apply because it attempts to address what would seem to be a logical credit request in the structuring of a loan; that is, the personal guaranty of husband and wife business owners, who often hold jointly-owned assets.  A decision last month by the Sixth Circuit Court of Appeals in RL BB Acquisition, LLC v. Bridgemill Commons Development Group, LLC, has now strengthened the Rule by giving it both sword and shield status in the arsenal of a spouse-guarantor defending the enforcement of a guaranty Read More ›

Supreme Court of Kentucky Rules on Check Fraud Case Involving Articles 3 and 4 of the Uniform Commercial Code.

On June 19, 2014, the Supreme Court of Kentucky issued its decision regarding check fraud in the case of Mark D. Dean, P.S.C. v. Commonwealth Bank & Trust Company.  This is an important decision for Kentucky banks and employers who authorize employee signatories on company bank accounts. Read More ›

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Attorney Spotlight

Jared M. Tully Jared Tully has extensive experience defending financial institutions in litigation involving claims of predatory lending and violation of the West Virginia Consumer Credit Protection Act and the Federal Fair Debt Collection Practices Act. Jared is also experienced in defending financial institutions in class action suits as well as defending insurance companies against claims of bad faith.

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