Author: Michelle Jun

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Reflecting on Payments at Year’s End

This is not original content, but I wanted to commemorate the end of an active year in payments.  The Atlanta Fed’s Blog Portals and Rails has a great list, so why reinvent the wheel?:

As the year draws to a close, the Portals and Rails team would like to share its own Top 10 list of major payment-related events that took place in the United States this year.

  1. The Consumer Financial Protection Bureau finalized Dodd-Frank 1073 money transfer rules.
  2. The payments industry experienced increased regulatory scrutiny of third-party processors and high-risk business customers.
  3. Major global ATM cash-out fraud attacks—including many U.S. ATMs—totaled $45 million.
  4. FTC issued a proposal to ban telemarketers from using remotely created checks and payment orders.
  5. Debit networks sought a compromise on an EMV interface—while there is little movement on the issuance of EMV cards.
  6. The newly designed $100 bill with additional security features was released.
  7. Several major data breaches occurred, and identity theft occurrences skyrocketed. (Perhaps you are experiencing repercussions from the recent Target breach?)
  8. Cyber Monday online sales were up 17 percent, with phones and tablets representing almost a third of the total.
  9. Virtual currencies received increased public, legislative, and regulatory awareness after the U.S. Department of Justice took action to close down virtual currency operators Liberty Reserve and Silk Road.
  10. U.S. District Court Judge Richard Leon threw out Regulation II debit card interchange fees and routing rules.

Happy Holidays everyone!

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CFPB’s Latest Rulemaking Agenda

The CFPB recently released its upcoming rule making agenda, “Fall 2013 Rulemaking Agenda” that maps out what the agency will focus on in 2014.  Here’s a look at their summary:

On Mortgages: “follow-up mortgage issues, such as how to apply certain exemptions under the Dodd-Frank Act that are designed to preserve credit in “rural or underserved” areas…a proposed rule to implement Dodd-Frank Act changes to the Home Mortgage Disclosure Act, which will improve the mortgage data that is available to monitor the market and assess fair lending practices.”

On Prepaid Cards: a proposed rule with respect to prepaid card products.

On other Consumer Financial Products and Services: “actively assessing the need for regulations…on debt collection, payday loans and deposit advance products, and bank overdraft programs.”

Testing consumer disclosures in connection with prepaid products and debt collection.

Ways to streamline regulations, including issuing a proposal regarding consumer notices from financial institutions explaining information sharing practices.

For more information–the CFPB’s Agency Rule List Fall 2013.

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Payments and Privacy Roundup

A quick wrap-up of a few notable happenings on Payments and Privacy, this month so far (okay, one of them happened before November):

David Lott at the Atlanta Fed asks the larger question “Is Consumer Privacy Possible?”

Coinbase’s Bitcoin Wallet gets pulled by Apple

Raj Date is brought on-board to Circle’s Board of Directors

A California federal court determines email addresses are PII

$3 million settlement awarded in class action data breach case, even to those who were not victims of identity theft.

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Tis the Gift Card Giving Season

gift-cardIn the past, every holiday season I would be bombarded with question after question about gift cards from consumers and reporters.  It seems most fitting that I continue to provide a quick run-down on gift cards and the rules that pertain to them, as gift cards continue to be a much desired and often given gift, with an estimated 85% of Americans exchanging them and over $110B spent on them according to the CEB TowerGroup’s 2012 assessment.

Whether you are on the giving, receiving, issuing, vending, or marketing side of gift cards (including plastic gift cards, e-cards, codes), it’s helpful to know that generally cards may all look like “gift cards” but laws certainly do not categorize treat them all as such.

Here’s the quick rundown:

Bank issued/Open Loop (Require compliance under Section 401 of the Credit CARD Act)

Store-issued/Closed Loop (Require compliance under Section 401 of the Credit CARD Act, relevant state gift card and escheat laws)

These laws restrict fees and expiration dates.  The Credit CARD Act gift card provisions also contain disclosure requirements.  Additionally, a number of states have gift card laws with more stringent fee and expiration date limits as well as have other laws on the books that require unused gift card funds escheat to the state.

Exceptions to Gift Card Laws:

  • Loyalty, reward, promotional cards (e.g. cards provided by retailers for spending certain amounts of money like the current offer at Barnes and Nobles or cards redeemed with credit or debit card reward points)

  • Prepaid calling cards

  • Cards NOT labeled or marketed as a gift card or gift certificate (e.g. General Purpose Reloadable Cards like Green Dot)-both issuers and retailers must be careful with how these cards are marketed and displayed

  • Cards not available to the public (card with funds from returned items)

  • Cards only in paper form (think old school paper gift certificates)

  • Cards only redeemable for admission to events/venues

This blog is for general information and educational purposes, not to provide legal advice. If you need legal advice, please consult with a qualified attorney.   

 

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The TCPA and Payments?

text_messagingThe new rules to the TCPA (Telephone Consumer Protection Act) go into effect today.  Generally speaking, consumers should be overjoyed that their dinners will likely go uninterrupted by an automated call from a telemarketer, creditor or debt collector (provided that they did not provide express consent to have them make the call in the first place).  But in the world full of mobile phones and text messaging, entities who have been auto generating offers and rewards need to take extra caution.

These new rules have been a hot topic in the legal world since the FCC issued them last year.  Legal news and blogs have been all over the issue for months.  Two key changes include the requirement of express consent and the end of the established relationship business exception.

Since I focus largely on payments and privacy, it seems appropriate to take a look at these significant changes to the TCPA, as they relate to merchants, creditors and debt collectors.

In the money and payments chain, merchants, creditors and debt collectors will also need to take extra caution and provide “clear and conspicuous disclosures” when obtaining “express consent” from their applicants and customers.  They should make sure they have documented proof of this consent in the event that they are met with future allegations of TCPA violations, as there will likely be plenty.  The cost for violation can be very high, starting from $500 up to $1500 per call.  Just ask Papa John’s who recently had to fork over $16.5M when its affiliates had a marketer send out unwanted text messages for their pizzas.

 

This blog is for general information and educational purposes, not to provide legal advice. If you need legal advice, please consult with a qualified attorney.