All Categories

    Last Week... Today! Fed Amends Reg CC, TransUnion Confuses Customers with Crooks, Veterans Frustrated with VA Debt Collections


    The Fed Amends Reg CC Part II: The Expeditious Return, NAFCU Compliance Blog

    On May 31, 2017, the Federal Reserve Board issued a final rule amending Regulation CC. Previously, we discussed how this new Regulation CC addresses electronic checks and RDC warranties and indemnifications. Now, we're going to have a look at another big change in the final rule: the expeditious return of checks.

    But before we dive in, let's a take a moment to acknowledge that Regulation CC can be technical and boring. Your NAFCU Regulatory Compliance Team does the best we can to make it interesting... but there's only so much you can do.

    Expeditious Returns Under Current Regulation CC

    Currently, under sections 229.30(a) and 229.31(a), a credit union returning a check is required to do so in "an expeditious manner." An expeditious manner is a manner that meets one of two tests: the two-day test or the forward collection test.

    The two-day test (a/k/a the two-day/four-day test) requires that the check must be received by the depositary bank no later than 4:00pm its local time on the second business day from when the check was presented for payment.

    The forward collection test compares a credit union's swiftness in its handling of a check for return to its handling of a check for collection. It requires the return to be made in the same manner that a similarly situation bank (or credit union) would normally process a check of the same amount if it had theoretically been deposited by noon on the day after it was actually presented for payment, and was being sent for collection, rather than return.

    Under section 229.33, if a check is in the amount of $2,500 or more, a credit union returning the check must also provide a notice of nonpayment. That notice must be provided in a manner that meets the two-day test. The return of the check itself may serve as the required notice of nonpayment, assuming the returned check includes all the content requirements for the notice.

    Expeditious Returns Under the Final Rule

    Part of the Fed's goals in issuing a new rule is to encourage electronic processing of checks. The Fed stated that an electronic clearing process "offers lower costs, faster returns, and fewer errors, which substantially reduces risk to the check system compared to the previous largely paper-based environment." In an effort to incentivize the implementation of electronic check returns, the Fed is implementing stricter requirements for what constitutes an expeditious return.

    Read More

    TransUnion Confused Customers With Crooks, Jury Hears, Law360

    A corporate representative for TransUnion conceded Tuesday in California federal court that one of the company’s databases conflated consumers with similarly named terrorists and criminals from a government watch list, bolstering plaintiffs’ claims in an $8 million class action over alleged Fair Credit Reporting Act violations. 
    Colleen Gill, a former project manager at TransUnion LLC, testified Tuesday that in the wake of the 9/11 attacks, many companies wanted to check consumers against the U.S. Department of Treasury’s Office of Foreign Assets Control database, which lists terrorists, drug traffickers and other criminals.

    “When the Patriot Act was announced in October 2001, a lot of companies wanted to check names against the OFAC list,” she said. “There was widespread interest. A lot of customers were requesting it.”

    But Gill, who helped launch TransUnion’s version of the database, conceded that reports about law-abiding consumers were sometimes linked to similarly named criminals on the OFAC watch list.

    The suit, filed in February 2012, alleges lead plaintiff Sergio L. Ramirez was prevented from buying a car in 2011 because TransUnion told lenders he potentially matched two entries on the OFAC list. When he tried to get off of TransUnion’s list, Ramirez said the company’s customer service agents gave him “the runaround" and didn’t explain how the error could be corrected.

    The suit is seeking an award of $1,000 for each of the 8,185 class members.

    In July 2014, U.S. Magistrate Judge Jacqueline Scott Corley partially granted Ramirez’s motion for class certification, forming a national class seeking punitive statutory damages under the FCRA, as well as a California subclass based on a similar state law seeking injunctive relief.

    At trial on Tuesday, class counsel John Soumilas of Francis & Mailman PC showed Gill a sample credit report with a potential OFAC match. The date of birth listed for the OFAC name was different from the date of birth entered by the consumer, yet Gill admitted that no one at TransUnion cross-checked such data, and that the company requesting the credit check would have indeed been alerted to a potential OFAC match.

    She said the company eventually developed a procedure by which she would use her discretion to determine whether a match was legitimate, but only after a customer disputed the results.

    Gill told TransUnion attorney Bruce Luckman of Sherman Silverstein Kohl Rose & Podolsky that there was “widespread interest” from companies for the search service, since U.S. companies doing business with people on the OFAC list face criminal penalties.

    She said TransUnion ultimately took steps to remind companies in an email notification that a potential OFAC match in a credit report wasn’t a guarantee the individual customer was on the government’s list, and was only “a first step in a process.” She also said TransUnion eventually changed the wording of its OFAC results from “match” to “potential match.” Read More


    The U.S. House of Representatives on Tuesday passed a bill aimed at increasing accountability at the U.S. Department of Veterans Affairs, three years after the agency was plunged into a major scandal over falsified records. A slew of other reform efforts are underway, but veterans and advocates say the VA remains confusing and frustrating to deal with. 

    One key reform not yet on the table is an overhaul of how the VA collects debts from veterans and their family members.

    Julie Larsen of the American Legion, the largest advocacy organization for veterans in the United States, testified before Congress last month that some of these debts are the VA’s fault — the result of the same types of haphazard systems and standards that caused the 2014 records scandal.

    Many debts result from benefits overpayments — because of an error in accounting or reporting, the agency pays a veteran too much. A VICE News investigation earlier this year found that the VA sent nearly 187,000 overpayment notices to veterans and their families in 2016. Some were for debts in the tens of thousands of dollars, with the potential to upend veterans’ lives.

    Under current rules, the VA can withhold benefits from veterans it says owes the agency money, even if the debt is the result of some error on the VA’s part. Veterans who received overpayment letters told us they had to jump through hoops to get more information and they often ran into dead ends in the appeals process. Some had their benefits withheld without ever understanding how much they really owed the VA or why.

    After we published our story in March, more than 70 veterans and their families reached out to say they’d faced similar challenges trying to settle their debts to the VA. HERE are a few of their stories.

    Starting July 1, Some Black Marks Wil Vanish from Credit Reports, San Francisco Chronicle 

    Many people with tax liens, civil judgments and certain medical debts on their credit reports could soon see a rise in their credit scores. 

    On July 1, about half of tax liens and almost all civil judgments — both big negatives — will be expunged from consumer credit files, thanks to an agreement the big three credit bureaus made under pressure from regulators and state attorneys general to improve the accuracy of credit reporting.

    In September, the three bureaus — Experian, Equifax and TransUnion — will also make consumer-friendly changes in the way medical debts are reported.

    Scoring companies plug information from a consumer’s credit report into a formula and come up with a score that estimates that person’s likelihood of defaulting on a debt. Scores factor heavily in loan approvals, rates and terms. Some insurance companies and employers also consider them, although a few states including California outlaw or strictly limit their use in insurance and employment.

    In a 2012 report, the Federal Trade Commission found that 26 percent of people surveyed identified an error in their credit reports, although only 5 percent had mistakes big enough to affect loan approval or terms. Most errors were the result of identity theft, lenders or collection agencies providing incorrect information to the bureaus, or the bureaus putting data into the wrong person’s file.

    Studies suggest that people with liens and judgments could see their credit scores rise after these items are expunged, generally by less than 20 points but in some cases by 40 points or more. In some cases, scores could decrease. How it actually plays out depends on how lenders and credit scoring companies respond to the changes.

    Lenders who want the missing data could simply ask borrowers on a loan application if they have outstanding liens or judgments. Or they could obtain the information from the public record.

    LexisNexis Risk Solutions, which sells public records data to credit bureaus and others, is marketing a new product called RiskView Liens & Judgments Report that, it says, “fills the gap left behind” by the July 1 changes.

    Starting on that date, the bureaus will no longer display tax liens and civil judgments on a credit report unless they include the person’s name, address and either Social Security number or date of birth. About half of tax liens and virtually all judgments do not have a Social Security number or birth date, which can cause mix-ups, especially for people with common names or large families. Read More

    If you liked the Great Recession, you’ll love Donald Trump’s Wall Street reforms, The Mercury News

    President Donald Trump’s administration and House Republicans want to roll back financial reforms and return us to the free-for-all system that led to the panic of 2008 and the Great Recession.

    We shouldn’t be surprised, given Trump’s aversion to government regulation. But it is a marvel just the same.


    The House voted on straight party lines June 8 to repeal the Dodd-Frank Wall Street reforms signed into law by President Obama in 2010. A Treasury report also recommended gutting them.

    Fortunately, Majority Leader Mitch McConnell doesn’t have the votes to finish the job in the Senate. This presents a golden opportunity for a bipartisan bill that pulls back the regulatory overreach without abandoning consumers.

    Dodd-Frank definitely needs improvement. But like the Affordable Care Act, it set out to solve a very real problem. It needs fixing, not repeal.

    The U.S. banking system collapse in 2008 was epic. Housing prices fell by more than 30 percent as unemployment soared. Many of the world’s biggest banks would have imploded without a massive federal bailout. Consumers, not Wall Street executives, took the brunt of this, losing more than $1 trillion in assets. Many never recovered financially.

    Dodd-Frank was supposed to prevent that from happening again. In some ways, it’s working. The economy has stabilized, the unemployment rate has plunged and the banking industry has prospered. The Federal Reserve reports that the top 30 U.S. banks have added about $700 billion in capital since the collapse, and commercial and industrial loans are at an all-time high.

    This is why most large banks actually favor  retaining Dodd-Frank, which force them to maintain a higher level of capital on hand to guard against downturns. They know it helps prevent a repeat of 2008.

    It’s smaller, community banks that need help — the ones that finance the small businesses that power the economy. Dodd-Frank has been excessively hard on small banks. Nearly 15 percent have closed since 2011. Remedies include giving greater flexibility in the types of loans they can offer and easing some reporting burdens that now overwhelm banks with small staffs. Read More

    Trump selects former House GOP staffer for top bank regulator, Washington Examiner

    President Trump is poaching from House Republicans for his top bank regulator.

    The White House announced Friday evening that Trump intends to nominate James Clinger, counsel of the House Financial Services Committee, to chair the Federal Deposit Insurance Corporation, the agency tasked with insuring banks' deposits and protecting them in the case of a bank failure. 

    Clinger would first be nominated to be a member of the FDIC, and then to replace current chairman, Martin Gruenberg, when his five-year term runs out in November.

    As chair of the FDIC, Clinger would be responsible for regulating banks to prevent failures that could result in taxpayers having to ensure that depositors did not lose insured money. The agency also takes over banks that do fail, speedily reorganizing them to make sure that depositors have access to their cash. In the case of a megabank failure, the FDIC, under the 2010 Dodd-Frank financial reform law, would take the lead if the government chose to step in and take over the firm to prevent a panic. 

    Clinger has served as the general counsel to the Financial Services Committee since 2007, and before that was the acting assistant attorney general for legislative affairs at the Department of Justice. Previously, he had worked as a staffer on what was then called the House Banking Committee, starting in 1995. Read More

    Police: Serial bank robber slipped up, let a witness see his face, The Times-Tribune

    A man who police say robbed at least 12 banks in four counties made a mistake with his latest heist and let a witness see his face before he could put his mask on, state police at Dunmore said.

    The description that witness gave allowed police to draw a composite sketch of the thief who has plagued area banks since the end of 2015.

    “We’re hopeful that somebody out there in the public can recognize him,” said Trooper Mark Keyes, a public information officer for the Dunmore barracks.

    The robber’s sketch shows the side profile of a square-jawed man with a shadow of stubble and eyes covered by a baseball cap and aviator-style sunglasses.

    Since December 2015, he has robbed 12 banks in Lackawanna, Luzerne, Wayne and Monroe counties, state police said. His method has remained generally consistent. Read More