$250,000 CMP and I believe the first time I have seen the Electronic Signatures in Global and National Commerce Act, 15
U.S.C.§§ 7001 et seq. (“E-Sign”) referenced in a consent order.

https://www5.fdic.gov/EDOBlob/Mediator.aspx?UniqueID=29eec4c5-8435-4780-b832-7f74ce49f5ab

I saw that this morning!

Do you think it had something to do with the vendor providing the E-SIGN software?

I can't seem to find what "PPN" is short for (paragraph 42b).

Promotion Plan.

That is what I assumed. But did I miss where it was defined?

Because they spell it out fully (multiple times, actually) in the same section with no indication that it means PPN.

The PPN abreviation is used only twice in the document, and nowhere is it adequately defined. "Promotional Plan" is the only explanation that fits both usages.

I wish more details were provided as this is an area banks need guidance on.

e-billing appears suspect here as perhaps E-SIGN hoops were not completed or documented when "written" disclosures and bills were made in e-form. Corrective actions differ based on paper and e-bills (pg. 18). I haven't seen this in the press or heard enough to understand where the fault was. Anyone else have more?

It is interesting that they are owned by Fry's Electronics. I assume the bank mainly handles Fry's credit cards. They also have a B- rating by the BBB with 41 or 51 complaints related to collection activity.

It couldn't relate to electronic signatures because ESIGN doesn't regulate or restrict them. That leaves us with the preconsent disclosures and the demonstrable consent. Since the disclosures are a no-brainer and we've watched 13 years of never-ending confusion about demonstrable consent, my money is on "failure to obtain proper electronic demonstration."

I hope that is it because it is impossible to convince bank management they do no have proper e-sign processes when their banking regulator says it looks fine and there is no demonstrable consent.

I leave them with the thought that their biggest risk is if their contracts don't hold up.

Now that one of the bank regulators has actually done something relating to it, ESIGN is fair game for a conference panel discussion. One of the national trades should set it up with a title of "Lessons We Should Learn from the First Electronic Bank Enforcement Action." All the regulators should be invited and when the infractions are discussed, members of the audience should be prepared to stand up and say "that's not what we heard from your examiners...."

I'm with Kathleen B. Looks like multiple, fundamental screw-ups in basic processing and risk management, and not, as far as E-Sign is concerned, a fundamental push by the regulators for electronic transactions, or "green", paperless banking. The bank calls itself "First Electronic Bank", so use of all available electronic techniques would be expected.

I'm in the camp of leaning toward this being a demonstrable consent issue. I can see it happening with a click online or at a register and not following the full process. But I think that was the first half, then disclosures that were to be in writing may have been with the statements and that is an E-SIGN issue.

Under executing a contract, they might have had UETA as a defense. But required federal disclosures remove that argument.

I am in the camp of hoping it is a demonstrable consent issue, so we can get clarity what the banking regulators want!

What the regulators want is one thing. But the proof of the pudding, as they say, is in court when someone tries to claim non-disclosure using a flawed e-sign process as the linchpin of his argument.

And that is what I tell clients, but meanwhile their regulators give them a pass while I am cautioning them. That is all I can do. The regulators are not considering contractual issues so banks are not looking at this as a safety and soundness issue.

This penalty has garnered almost zero press that I saw, but could be a catalyst toward litigation.

All the more reason to push the regulators toward public discussion of the underlying problems. Once the trade press picks it up, bank executives will sit up and take notice.

Think back to the days when very few bankers had a clue about OFAC. Then, ABA included a session in the annual compliance conference. Once we understood how it worked it didn't take long for the industry to get religion.