Consumer Financial Services Alert - May 18, 2010

The American College of Consumer Financial Services Lawyers recently honored our Financial Services Group partner, Lynne Barr, with its Senator William Proxmire Lifetime Achievement Award at the College’s annual dinner. The College is an invitation-only group of prominent consumer financial services lawyers, of which Lynne is a fellow and past president.

The Proxmire Award is granted periodically by the College to a person who has made significant contributions in the field of consumer financial services over that person’s career. William Proxmire was a U.S. Senator who served as Chairman of the Committee on Banking, Housing and Urban Affairs. Among his many accomplishments, he was the chief sponsor and was largely responsible for the Consumer Credit Protection Act, major legislation that created a national framework for bringing fairness to consumers entering into credit transactions.

Departing from the Ninth Circuit’s decision in Rose v. Chase Bank, N.A., 513 F.3d 1032 (9^th Cir. 2008), a California appeals court  ruled that a California statutory challenge to a national bank’s “convenience checks” is not preempted by the National Bank Act. In Parks v. MBNA America, N.A., plaintiffs alleged that defendant’s convenience checks violated a California statute – Cal. Civ. Code § 1748.9 – because they did not contain the statutorily-required disclosures. After Rose, defendants moved for judgment on the pleadings on the ground that plaintiffs’ claim was preempted by the National Bank Act. The trial court granted that motion, but the appeals court reversed creating a split of authority with Rose. The appeals court held that the statute was not preempted because, on its face, it did not preclude defendant from exercising its authority to lend. The court left open the possibility that the statute may still be preempted because it significantly impairs the defendant’s authorized activities under the National Bank Act, but concluded that such a determination was premature at the pleadings stage because it depended upon a developed factual record.  Click here for Parks v. MBNA America, N.A., No. G040798 (Cal. App. 4th) (May 12, 2010).

The FDIC published for comment templates it developed that describe potential features for basic savings account products designed for low- to moderate-income consumers. This initiative encourages insured depository institutions to make low-cost products available to the communities they serve. According to the FDIC, the guiding principles in the development of the templates are that the products have low and transparent fees; are FDIC-insured and subject to consumer protection laws, regulations, and guidelines; are simple to use; include easily understandable terms and conditions; and represent sustainable product offerings for banks. Comments on the templates are due by June 6, 2010. Click here for the FDIC’s notice which includes links to the templates.

The OTS published a new examination handbook section which provides examination guidance for evaluating whether a federal savings bank has engaged in unfair or deceptive acts or practices in violation of Section 5 of the Federal Trade Commission Act. The handbook discusses the standards used by the OTS to determine what constitutes an unfair or deceptive act or practice, and provides examples of FTC Act enforcement actions. Click here for the OTS regulatory bulletin which includes this new section.