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Top Story Compliance Related


False info on hearing aids and stimulus payment claims

The Federal Trade Commission has announced that the Commission and the State of Wisconsin have sent warning letters to a company that placed newspaper advertisements and social media posts suggesting it could provide government stimulus money to customers to purchase their hearing aids.

The letters highlight claims included in the ads and posts that implied consumers were eligible for such a benefit, including language such as “COVID-19 HEALTHCARE STIMULUS PROGRAM” and “Receive up to $3000 through our HEALTHCARE STIMULUS PROGRAM. Must register by July 31.” The ads and posts also included an image of the Great Seal of the United States next to a headline reading “FREE HEARING AIDS.”

The letters warn the recipients to cease making all deceptive claims and instruct them to notify the FTC and State of Wisconsin within 48 hours about the specific actions they have taken to address the concerns raised in the letters.


CFPB settles with company over false loan ads

The Bureau has issued a consent order against Go Direct Lenders, Inc., a California corporation licensed as a mortgage broker or lender in about 11 states. The Bureau found that Go Direct sent consumers numerous mailers for VA-guaranteed mortgages that contained false, misleading, and inaccurate statements or that lacked required disclosures, in violation of the Consumer Financial Protection Act’s prohibition against deceptive acts and practices, the Mortgage Acts and Practices – Advertising Rule (MAP Rule), and Regulation Z.

Specifically, the Bureau found that Go Direct advertisements:

  • misrepresented the credit terms of the advertised mortgage loan by stating credit terms that the company was not actually prepared to offer to the consumer, including advertising a lower annual percentage rate than it was prepared to offer
  • made misrepresentations about the applicable fees in connection with the advertised mortgage
  • misleadingly described variable-rate loans as “fixed” rate loans, when in fact the rate was adjustable and could increase over time
  • falsely stated or implied that an appraisal, assets, and income documentation were not required to qualify for certain loans and that consumers with FICO scores as low as 500 would qualify for the advertised rates
  • falsely represented that it had records showing that the value of the consumer’s property had increased over the past year by a specific percentage
  • created the false impression that Go Direct was affiliated with the government by using words, phrases, images, or design characteristics that are associated with the VA or the Internal Revenue Service
  • failed to properly disclose, when required by Regulation Z, credit terms for the advertised mortgage, such as the consumer’s repayment obligations over the full term of the loan.

The consent order requires Go Direct to pay a civil money penalty of $150,000 and imposes requirements to prevent future violations.


FDIC proposes change to appeals process

The FDIC has announced it is seeking comments on proposed amendments to its Guidelines for Appeals of Material Supervisory Determinations (Guidelines). The proposed amendments are intended to enhance the independence of appeals decisions and to clarify the procedures and timeframes that apply to appeals when the FDIC is taking a formal enforcement action.

The proposal would replace the Supervision Appeals Review Committee (SARC) with an independent, standalone office within the FDIC, known as the Office of Supervisory Appeals. The Office would be independent of the Divisions that have authority to issue material supervisory determinations, while still operating within the FDIC. To promote the independence of the Office, the FDIC anticipates recruiting externally and employing reviewing officials on a part-time or intermittent, time-limited basis. Reviewing officials may serve on term appointments. The proposal also would modify the procedures and timeframes for when determinations underlying formal enforcement-related actions may be appealed.

Changes to the supervisory appeals process are being proposed, in part, based on outreach sessions the FDIC's Ombudsman held with bankers and other interested parties in the fall of 2019. The FDIC believes that the creation of the proposed Office would promote independence and help alleviate perceived conflicts of interest, among other important goals.

Currently, the SARC is comprised of three voting members—an inside FDIC Board member who serves as the Committee's chairman and a deputy or special assistant to each of the other two inside FDIC Board members who are not designated as the SARC Chairman.

Comments on the proposed amendments to the Guidelines will be accepted until October 20, 2020.

PUBLICATION UPDATE: Published at 85 FR 54377 on 9/1/2020.


Statement on due diligence and PEPs

FinCEN and the prudential financial institution regulators (Fed, FDIC, NCUA and OCC) have issued a "Joint Statement on Bank Secrecy Act Due Diligence Requirements for Customers Who May Be Considered Politically Exposed Persons" to clarify that Bank Secrecy Act (BSA) due diligence requirements for customers who may be considered "politically exposed persons" (PEPs) should be commensurate with the risks posed by the PEP relationship.

The term PEP is commonly used to refer to foreign individuals who are or have been entrusted with a prominent public function, as well as their immediate family members and close associates. By virtue of this public position or relationship, these individuals may present a higher risk that their funds may be the proceeds of corruption or other illicit activity. The Agencies do not interpret the term “politically exposed persons” to include U.S. public officials.


Housing discrimination agreement approved

The Department of Housing and Urban Development has announced its approval of a Conciliation Agreement with the owners and property management company of Springdale Ridge Apartments in Springdale, Arkansas, resolving allegations that they discriminated against several residents because of their national origin and retaliated against an employee living on site who sought to inform the residents of their fair housing rights.


CFPB posts 2021 HMDA FIG and Supplemental Guide

The CFPB has published its HMDA Filing Instructions Guide (FIG) for data collected in 2021 and its Supplemental Guide for Quarterly Filers for 2021. Both of these resources, along with other filer resources, are available on the FFIEC Home Mortgage Disclosure Act webpage.

The Bureau also reminded filers in an August 21 email that, as of March 26, 2020, and until further notice, the Bureau does not intend to cite in an examination or initiate an enforcement action against any institution for failure to report its HMDA data quarterly, as noted in its Statement on Supervisory and Enforcement Practices Regarding Quarterly Reporting Under the Home Mortgage Disclosure Act.


Communities suspended from NFIP

FEMA has published [85 FR 52052, August 24, 2020] a rule identifying communities in Louisiana and Washington that were scheduled for suspension from the National Flood Insurance Program on August 19, 2020, for failure to comply with the floodplain management requirements of the program. If any of the listed communities was able to document that it had adopted the required floodplain management measures by the August 19 date, it was not suspended.

  • Louisiana: Calvin, Jonesboro, and Winnfield
  • Washington: Bellevue, Black Diamond, Burien, Carnation, Covington, Duvall, Enumclaw, Federal Way, Issaquah, Kent, Kirkland, Lake Forest Park, Normandy Park, North Bend, Pacific, Redmond, Renton, Seatac, Seattle, Shoreline. Sykomish, Snoqualmie, Tukwila, and unincorporated areas of King County.


Syrian officials and military leaders sanctioned

OFAC has taken action against the Syrian presidential office and the Syrian Ba’ath Party through its designations of two senior members of the Syrian government—Assad’s top press officer and a prominent member of the Syrian Ba’ath Party. These designations, under the authority of Executive Order 13573, target both individuals for their roles as senior Government of Syria officials.

In addition, the State Department has designated four individuals leading Syrian military units for their efforts to prevent a ceasefire in Syria.

For identification details on the six sanctioned individuals, see BankersOnline's OFAC Update.


TD Bank in $122M settlement for OD fee and FCRA violations

The CFPB announced yesterday a settlement with TD Bank, N.A., regarding its marketing and sale of its optional overdraft service, Debit Card Advance (DCA). TD Bank operates about 1,250 locations throughout much of the eastern part of the country. The Bureau found that TD Bank’s overdraft enrollment practices violated the Electronic Fund Transfer Act and Regulation E by charging consumers overdraft fees for ATM and one-time debit card transactions without obtaining their affirmative consent, and that TD Bank engaged in deceptive and abusive acts or practices in violation of the Consumer Financial Protection Act of 2010.

The Bureau also found that TD Bank engaged in practices prohibited by the Fair Credit Reporting Act and its implementing Regulation V.

The consent order requires TD Bank to provide an estimated $97 million in restitution to about 1.42 million consumers and to pay a civil money penalty of $25 million. For addition information and to access the Bureau's Consent Order, see BankersOnline's penalty pages entry.


CFPB extends comment period

The CFPB has announced that it will extend the comment period on its Request for Information on how best to create a regulatory environment that expands access to credit and ensures that all consumers and communities are protected from discrimination in all aspects of a credit transaction. Comments will be accepted for an additional 60 days, through December 1, 2020.


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