Consumer Financial Services Alert - February 23, 2010 February 23, 2010
In This Issue

Federal Court Rules Injunctive Relief Unavailable to Private Parties Under FDCPA

A federal court in Virginia has ruled that a private litigant may not seek injunctive relief that would cancel an underlying debt under the Fair Debt Collection Practices Act. The court reasoned that Congress vested extensive authority to enforce the FDCPA by way of injunctive relief with the FTC, and that private litigants may only sue for actual and statutory damages. The court dismissed that part of the complaint through which the plaintiff sought to void the underlying debt on which the alleged FDCPA violation had occurred during collection. Click here for  Vitullo v. Mancini, No. 1:09cv614 (U.S.D.C., E.D. Va., February 3, 2010).

OCC Issues Guidance on Refund Anticipation Loans

The OCC issued a policy statement and a consumer advisory on tax refund-related products, including refund anticipation loans. The policy statement addresses risk management practices and consumer protections for tax refund-related products and covers the following topics:  board and management responsibility, consumer protection standards, third-party risk management, fraud and anti-money laundering compliance, training, management information systems, loss recognition, and capital and liquidity. Among other things, the policy statement includes disclosure and contract terms requirements. In its press release, the OCC states that it expects national banks to implement the policy statement’s requirements in 2010, to the extent practicable, and for the enhanced consumer disclosures that may necessitate revisions to forms currently in use, implementation is expected for products offered in 2011. Click here for a copy of the press release, here for the policy statement and here for the consumer advisory.

FRB Issues Proposed Clarifications to New Overdraft Rules

The FRB proposed clarifications to aspects of its November 2009 final rule under Regulation E and its December 2008 final rule under Regulation DD pertaining to overdraft services. The proposals are intended to address questions that have arisen and to provide further guidance regarding compliance with certain aspects of the final overdraft rules.  In particular, the proposals would clarify that the prohibition in Regulation E on assessing overdraft fees without the consumer's affirmative consent applies to all institutions, including those with a policy and practice of declining ATM and one-time debit card transactions when an account has insufficient funds. Click here for the Regulation E Federal Register notice and here for the Regulation DD Federal Register notice.  Comments on the proposals must be submitted within 30 days after publication in the Federal Register, which is expected shortly.

HUD Extends Comment Period on SAFE Act Proposal

HUD announced it is extending the comment period for its proposal on minimum standards for state laws that effect the requirements of the Secure and Fair Enforcement for Mortgage Licensing Act. The new deadline for comments is March 5, 2010. Among other things, the proposal interprets certain terms contained in the SAFE Act, such as "engage in the business of a loan originator," "take an application," and "offering or negotiating." Click here for a copy of the extension notice.