FTC "Red Flags Rule" Enforcement Begins in May 2009
The Federal Trade Commission announced that it would suspend its enforcement of its new "Identify Theft Red Flags Rule," 16 CFR 681.2, until May 1, 2009, allowing subject institutions additional time to prepare for compliance with the new identity theft rules and regulations. FTC enforcement was previously expected to begin November 1, 2008, and the FTC announcement does not affect other federal agencies' enforcement of the original deadline.
The FTC has issued some guidance on complying with the rule, promulgated pursuant to the 2003 Fair and Accurate Credit Transactions Act ("FACTA"). Generally, the rule requires financial institutions and creditors to develop and implement written identify theft prevention programs for "covered accounts." Specifically, institutions "must provide for the identification, detection, and response to patterns, practices, or specific activities–known as 'red flags'–that could indicate identity theft." The FTC has also issued details related to its enforcement policy.
Resources for Tracking the Evolution of Banking
The recent myriad decisions and revisions related to the Troubled Asset Relief Program ("TARP") mean that banking regulations, and banks themselves, are changing daily. Here's how to keep up with the evolving government regulations.
The Federal Reserve publishes a current list of orders on bank applications, including financial institutions applying to become bank holding companies. The Fed also publishes regular updates on the status of TARP. The Treasury Department's website includes resources on the Emergency Economic Stabilization Act as well as a link to Secretary Paulson's November 18, 2008, testimony before Congress and New York Times Op-Ed on "Fighting the Financial Crisis, One Challenge at a Time."
Comment Period Closes on Credit Card and Overdraft Rules
The comment period has closed for the Federal Reserve's sweeping proposed rule changes for credit cards and overdrafts. The proposed revisions to Regulation AA, revisions to Regulation DD, and revisions to Regulation Z seek to redefine "unfair or deceptive acts or practices" in connection with credit card accounts and overdraft protection services.
The Federal Reserve reports receiving an unprecedented number of comments on these proposed regulations. The Fed received nearly 50,000 comments on the proposed revisions to Regulation AA alone. On a parallel track, the "Credit Cardholders Bill of Rights Act of 2008" (H.R. 5244), which would amend Truth in Lending Act to include new restrictions on billing and practices related to credit cards, is moving to the floor of the House.
Fed Issues Revised Consumer Compliance Handbook
Your Scorecard For New Laws and Regulations
California law
• Mortgages: new foreclosure procedures are now law in Civil Code §§2923.5, 2923.6 and 2929.3 and Code of Civil Procedure §1161b.
Federal law
• Credit Cards: the 2008 Credit and Debit Card Receipt Clarification Act, now law, clairifies the Fair and Accurate Credit Transactions Act of 2003;
• Credit Cards and Deposit Accounts: "unfair or deceptive acts or practices" are refined and redefined in revisions to Regulation AA, revisions to Regulation DD, and revisions to Regulation Z;
• Mortgages: Regulation X would get a makeover in HUD's proposed rule amending the Real Estate Settlement Procedures Act;
• Arbitration: the proposed "Arbitration Fairness Act of 2007" would slice and dice the Federal Arbitration Act; the "Automobile Arbitration Fairness Act of 2008," would eviscerate pre-dispute arbitration provisions in auto sales or lease contracts.
Fed's Credit Card and Overdraft Rules in Comment Period
The proposed changes would significantly alter the current regulations governing card issuers' payment billing cycles, allocation of payments, interest rate increases, security deposits and fees, credit card holds, and firm offers of credit. The revised rules would also make significant changes to overdraft protection linked to deposit accounts, including imposing an opt-out provision, eliminating overdraft charges resulting from debit holds, and changing required overdraft fee disclosures.
The American Bankers Association issued a public comment on the proposed rule changes on May 2, 2008, citing its concerns about a resulting "reduction in credit availability at the very time the Fed is working to increase access to credit in the marketplace."
