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 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 ›
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 ›
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 ›
Witness Only Closings in West Virginia and Notary Fees: Is Your Bank at Risk for a Class Action Lawsuit?
In a class action lawsuit filed in West Virginia, the United States District Court for the Northern District of West Virginia recently held in Dijkstra v. Carenbauer et al (Civil Action No. 5:11-CV-152, Document Nos. 210 and 242) that the closing of real estate loans by non-lawyers constitutes the unauthorized practice of law. The Court held: Read More ›
The news reports of bank losses serve as both cautionary tales and teaching moments: no bank wants to find its name included in headline-grabbing stories of bank employee misconduct. Monitoring employee accounts for fraud and malfeasance is a regulatory expectation and a best practice for fraud prevention. While regulators may not have specified particular types of monitoring requirements regarding employee accounts, it is evident that account monitoring parameters targeting high-risk employee transactions can have a greater chance of catching employee fraud than general non-risk based monitoring. Read More ›
Financial institutions rejoiced last year at the victory won by BancorpSouth Bank in the case brought by its customer, Choice Land Title, LLC, alleging that the Bank must compensate it for $440,000 in fraud losses it suffered arising out of fraudulent wire transfer orders executed by the Bank. (Choice Land Title, LLC v. BancorpSouth Bank, 2013 WL1121339, W.D. Missouri, 2013). The trial court recognized the validity of the financial institution’s defense that it had acted in accordance with commercially reasonable standards, and enforced the indemnification agreement between the customer and the Bank. After being confronted with numerous cases finding in favor of the customers who had been the victims of payment fraud, financial institutions finally had a legal precedent for holding firm on refusing to reimburse customers who suffered payment fraud losses as a result of not following the security procedures offered by their financial institutions. Read More ›
The Supreme Court of Kentucky, on June 19, 2014, finalized its “to be published” decision in the case of Patricia W. Ballard v. 1400 Willow Council of Co-Owners, Inc. Although this case arises from facts involving a condominium owner’s dispute with her building’s council of owners, the case is of interest to all financial institutions engaged in mortgage lending and real estate collections. Read More ›
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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.