IBA Comment on FTC Proposed “Junk Fees” Rule

February 7, 2024

Federal Trade Commission
Office of the Secretary
600 Pennsylvania Avenue NW
Washington, DC 20580
Unfair or Deceptive Fees, NPRM, R207011

Attn: Janice Kopec, Division of Advertising Practices, Bureau of Consumer Protection

Re: Proposed Regulations on Unfair or Deceptive Fees, NPRM, R207011

To Whom It May Concern:

Thank you for the opportunity to present comments on behalf of our 120 commercial, cooperative, and savings banks, as well as federal savings banks and savings and loan associations, which employ more than 72,000 employees throughout Idaho. We believe that the proposed regulations on Unfair or Deceptive Fees, NPRM, R207011, as proposed by the Federal Trade Commission, will impose unnecessary requirements on the Idaho banking industry. We respectfully request that if any regulations are promulgated, they be done in coordination and consultation with the prudential banking regulatory agencies.

The banking industry is among the most regulated in the United States, adhering to strict protocols mandated by both state and federal laws and regulations. Our FDIC-insured banks, subject to oversight by various state and federal regulators, including the state bank regulators, the FDIC, the Federal Reserve, the Office of the Comptroller of Currency, and the Consumer Financial Protection Bureau, rigorously follow rules and directives concerning the protection of customers’ personal and confidential information, financial health, and the full disclosure of fees for various services.

Our industry rejects the notion of “junk, hidden, and bogus fees” as every fee charged by a bank is regulated by numerous statutes and regulations, including but not limited to the Truth in Lending Act, Truth in Savings Act, Consumer Financial Protection Act of 2010, among others.

According to a 2023 Morning Consult survey conducted for the American Bankers Association, 84% of consumers reported being “very satisfied” or “satisfied” with their bank, with 94% rating their bank’s customer service as “excellent,” “very good,” or “good.” Additionally, 78% believe their bank is transparent in disclosing fees. The survey also indicated that 61% of respondents felt that now is not the time for additional regulations on the banking industry due to current economic challenges facing the country.

Furthermore, the survey highlighted strong consumer appreciation for bank overdraft programs, with 88% finding them valuable and 77% who paid an overdraft fee in the past year preferring their bank to cover their overdraft payment. Sixty-three percent of consumers consider it reasonable for banks to charge a fee for an overdraft.

There are several other federal agencies, including the Federal Reserve, the FDIC, the OCC, the CFPB, and the SEC, with various proposed regulations targeting the financial services industry. Many of these proposals seem to overlook the existing laws and regulations that mandate clear and conspicuous disclosure of fees to consumers. The current draft of this proposed regulation misrepresents fee applications and disclosure practices.

The banking industry, bound by state and federal laws, ensures that fees are clearly and conspicuously disclosed, allowing customers to understand the services they pay for. This level of consumer protection should serve as a model for other industries. We support efforts to raise standards for non-banks while avoiding unintended consequences that could overburden an already highly-regulated industry.

We strongly recommend that any proposals to change existing regulation related to the banking industry be undertaken carefully and in coordination with the aforementioned agencies to avoid conflicts and ensure maximum protection for consumers.

We appreciate the opportunity to provide our comments regarding the proposed regulations on Unfair or Deceptive Fees, NPRM, R207011, as proposed by the Federal Trade Commission.

Sincerely,

Trent Wright

Idaho Bankers Association

Idaho Bankers’ Advocacy in Washington D.C., A Comprehensive Agenda

Last week, Idaho’s bankers converged on Washington D.C., representing the state’s diverse financial interests. This delegation included bankers Jeff Huhn, Cheryl Sorensen, and Carlan McDaniel as well as IBA’s Trent Wright, and Jeni Hall, and Idaho Department of Finance Director Patti Perkins. In addition, the Idaho group comprised delegates from Umpqua Bank, U.S. Bank, Washington Trust Bank, Heritage Bank, Bank of America, and Bank of Eastern Oregon. The purpose was clear: to engage in meaningful dialogues with our Congressional Delegation and Federal Regulators, casting light on pressing legislative  and regulatory issues.

A key focal point was the “Promoting Fair Lending to Small Businesses Act” that seeks uniform oversight across all lenders, guaranteeing equitable lending terms for small enterprises. Further, there were deliberations to streamline data collection methodologies championed by the CFPB under rule 1071. Credit unions, with their distinct tax advantages, were also under the lens. Lawmakers are keenly assessing their contributions, especially in juxtaposition to community banks, to low-to-moderate-income communities. Global discussions on Central Bank Digital Currencies (CBDCs) haven’t gone unnoticed, and Idaho bankers expressed apprehensions about the potential federal competition they might pose against traditional banking mechanisms. Another pivotal discussion was on interchange fees. Idaho bankers staunchly opposed price controls on these fees, emphasizing that such measures, instead of benefiting consumers, end up disproportionately favoring a handful of large merchants while sidelining small businesses. Additionally, underscoring the heartbeat of rural America, the delegation pushed for initiatives to reduce credit costs for rural stakeholders, including farmers, ranchers, and homeowners.

This recent expedition to the nation’s capital underscores the dedication and forward-thinking approach of Idaho’s bankers. By advocating for these issues at the national level, Idaho bankers are ensuring that the unique challenges and opportunities of Idaho’s financial landscape are recognized and addressed. Idaho bankers’ endeavors in Washington D.C. are a testament to their commitment to shaping a more inclusive and progressive financial environment for all stakeholders, both in Idaho and across the nation.

HELOC Scams

Home Equity Line of Credit (HELOC) scams continue to be a costly and challenging issue for financial institutions. Wire transfer fraud can easily reach millions of dollars, and with advancements in technology, such as online databases for county clerk records, online banking and online title searching, data commonly used by financial institutions to verify customer identity for wire transactions is routinely and easily compromised.

Several financial institutions have fallen victim to losses arising out of wire transfer and check forgery schemes targeting HELOC accounts and have taken action to mitigate the risk of future loss experience. Institutions that place a high value on their customer service and customer confidence in the institution’s security against wire transfer fraud have implemented risk mitigation upgrades to their operations to help solidify customer confidence. According to Travelers, the following steps are initiatives that can help to avoid, or at least significantly reduce, losses arising out of HELOC fraud scams:

  • Place greater emphasis on getting full account numbers from callers;
  • Phrase verification questions so that the caller is providing the information, rather than simply confirming what the financial institution has on file;
  • Remove items from the list of authentication options (such as mother’s maiden name and date of birth) that have become “public information” through social media websites and venues;
  • Train employees who field calls to verify authentication items in a specific order and not skip to other items if the caller cannot verify the requested information;
  • Train personnel with an updated full fraud-awareness module to help employees identify warning signs of fraud;
  • Encourage customers to set up PIN numbers if the automated phone system allows it;
  • Update customer account files with driver’s license numbers, if not copies of the entire driver’s license (or other government-issued ID if there is no driver’s license);
  • Utilize a mandatory callback procedure for all customer-not-present wire transfer requests;
  • Use a password to authenticate customers rather than commonly compromised information and only allow in-person modification of passwords and key account information;
  • Consider requiring full balance transfers (or transfers up to a certain percentage of the available funds) to be made in person while placing a reasonable monetary limit (or percentage limit) on customer-not-present wire transfer requests;
  • Establish a reporting procedure which refers all suspicious wire transfer requests to a higher level of authority for confirmation/processing;
  • Require a dual telephone confirmation procedure where the financial institution calls the home phone of the customer as well as an alternate number, such as a mobile phone or work phone;
  • Establish an automatic two-day holding pattern anytime a request is made to initiate a wire transfer from a HELOC account to a foreign bank account within which time the financial institution ensures accurate verification and deters fraudsters seeking immediate processing;
  • Verify change of address or phone number requests with a call to the customer’s phone number on file;
  • Customize specific and unique verification questions and procedures with an account holder/customer that can only be modified in-person.
  • Consider performing a verification call back when a purported customer calls the bank to set up on-line banking for the first time.

Technology has made it easier than ever for bad actors to obtain data that is commonly used by financial institutions to verify the identity of their customers. That’s why financial institutions must utilize robust authentication procedures to protect their customers – and themselves – from wire transfer fraud. This includes greater awareness, updated and vigilant policies, procedures and training, and implementing imaginative and unique verification procedures to help reduce the risk of loss arising out of wire transfer fraud targeting HELOC accounts.

Travelers is committed to managing and mitigating risks and exposures, and does so backed by financial stability and a dedicated team – from underwriters to claim professionals – whose mission is to insure and protect a company’s assets. For more information, visit travelers.com.

Improving Operational Efficiency Via the ITM-ATM Channel

It has been said again and again that our job economy remains strong. Companies are reportedly hiring new employees, whether it is to fill a vacancy or expand on operations. However, this is not what I am experiencing as I go about my professional and personal life.

I repeatedly run into “longer than normal” call wait times when dealing with a customer service issue over the phone. One such situation with a cable company that promised to “wow” me, caused me to spend over 45 minutes on hold on three separate occasions just to speak to a representative. Online help chats are even taking far too long to switch from the AI bot over to a human interaction. And I still see many lobbies and restaurants that have closed their in-store service indefinitely.

It is clear to me that numbers are askew when it comes to “official” claims regarding employment figures but what are we as banks to do? Where is the slew of quality, dependable people wanting to earn a decent living. How do we adjust our operating procedures to accommodate a smaller staff at our branches and administrative offices?

Human Resources will continue to search for reliable new employees to hire but this takes time. Even the right hire from HR doesn’t always translate into a solid, long-term employee. So, how do we operate short-staffed?

What if we turn our attention to the operational tasks we burden our staff with that can be better placed in the hands of a trusted partner? Have you considered outsourcing your ATMs (or ITMs)? 99% of the industry has outsourced the operation of its core operating system and credit and debit card services. ATMs should be next on your list to outsource for several reasons.

Your staff time is critical. Enabling your staff to focus on your customers is of the utmost importance. Anything operational that pulls your staff away from this focus should be put on the list for outsourcing consideration.

ATMs are a very cost-effective means for customers to access their cash & make deposits. However, they can be a drain on your staff’s schedule. Some banks have indicated they spend 40+ hours of staff time on just 10-20 ATMs. What would the impact be for your sales and retention efforts if you could redirect 40 hours of existing, quality staff time back to a customer focus?

Another reason to consider ATM outsourcing is the cost associated with hiring employees to manage your ATMs. We like to call it a soft cost, but a mid-level FTE salary and benefits package has a direct impact on the bottom line. Even a reasonable compensation package of $55,000 adds over $4,500 to your monthly ATM bill.

You can eliminate the time spent as well as the costs associated when you outsource your ATM & ITM fleet. Put experts in charge of your program now so you can sell your existing ATM assets to your outsourcing partner and eliminate the hassle right away.

Joe Woods
SVP, Marketing & Partnerships
Dolphin Debit Access

FDIC Community Bankers Workshop New Date | Monday, January 23- Boise

Due to staffing issues the FDIC has rescheduled the Community Bankers Workshop originally planned for September 13th. The new date is Monday, January 23rd, 2023. The date change has allowed us to combine the Workshop with the Legislative dinner and ICBA Winter Conference. Attendees will have the option to register for the Workshop or Conference separately or both at a discounted fee. Registration will open later this fall. Please see the draft schedule below as it’s much different than years past. A block of discounted rooms has been reserved at the Grove Hotel. The FDIC training, Legislative Dinner, and ICBA Conference will be held at Boise Centre on the Grove, located next to the Grove Hotel. The ICBA Board meeting will remain at the Grove Hotel.

Monday, January 23rd, 2023

7:30am- 3pm, FDIC Community Bankers Workshop

3:30- 5pm, ICBA Board of Directors Meeting

5:30- 7:30pm, Legislative Dinner

Tuesday, January 24th, 2024

7am- 3pm, ICBA Leadership Conference

Rooms reservations can be made now by calling the hotel directly at (208) 489-2222 or (888) 961-5000 and asking for the Idaho Community Bankers group block (rate of $154 a night). A reservation link will be provided at a later date.

IBA will be sending schedule and registration information as we get closer.

Best Practices to Prevent Elder Abuse

According to the Federal Bureau of Investigation (FBI), millions of elderly citizens are targeted annually with some form of financial fraud, and many of these attempts are successful. It has been estimated that seniors lose approximately $3 billion per year as a result of these scams, which are becoming more widespread and sophisticated.

Surprisingly, much of the criminal activity is initiated by a friend or family member. A recent study by the University of Southern California revealed that 55% of respondents reporting any type of elder abuse categorized those acts as financial, and that family members were the most alleged perpetrators of elder financial abuse.

With these facts in mind, banks should maintain heightened sensitivity around transactions that involve elderly clients, particularly if these clients have historically managed their own finances and may be exhibiting signs of cognitive decline. Increased vigilance, in general, can assist in uncovering fraud.

Knowing the customer, coupled with a comprehensive employee training program, can act as a strong front-line tactic to help banks prevent and expose elder financial abuse.

Here are some best practices for recognizing “at-risk” clients:

  • Be on the lookout for non-family members being added to banking or investment accounts.
  • Monitor large money transfers and changes in spending patterns, as these could be signs that some form of abuse is occurring. A senior’s spending habits are often predictable in frequency, volume and payees.
  • Be alert for large amounts of funds exiting accounts to payees who had not been previously paid in any manner.
  • Keep detailed notes in the form of dated, journal-type entries, recording any spending or personal behavior that seems unusual. These notes would be in addition to those kept on risk tolerance, goals, objectives, etc.
  • Follow up with clients via phone or email to discuss any sudden financial decisions that seem out of character.
  • In addition to making personal contact, encourage the client to engage an independent attorney to assist in their financial matters.
  • Understand the laws that apply to the financial abuse of an elder client. Follow prescribed protocols if any illegal activity is suspected.
  • Implement internal procedures to elevate circumstances which may present the need for further inquiry and analysis to the appropriate decision-makers.

“It’s important not just to have a system in place to detect elder financial abuse, but to also act on situations where potential fraud or malicious intent has been identified,” said Kristin Roger, Vice President and Head of Financial Institutions at Travelers. “We know banks want to serve as trusted advisors to their customers, and by taking simple steps, they can better protect their customers from potential financial harm.”

Elder financial fraud is on the rise and counts as one of the more heinous abuses of trust that senior citizens might endure. Along with the financial damage inflicted on customers, incidents of elder financial fraud can cause serious reputational harm. Therefore, implementing a sound method of prevention, detection, identification and reporting of this criminal behavior is paramount.

Travelers is committed to managing and mitigating risks and exposures, and does so backed by financial stability and a dedicated team – from underwriters to claim professionals – whose mission is to insure and protect a company’s assets. For more information, visit www.travelers.com.

 

House to Consider Credit Union Charter Expansion Bill

June 9, 2022

The Honorable Jim McGovern
Chairman
House Rules Committee
Washington, D.C. 20515

The Honorable Tom Cole
Ranking Member
House Rules Committee
Washington, D.C. 20515

Dear Chairman McGovern and Ranking Member Cole:

On behalf of the American Bankers Association and state bankers associations from every state in the country, we ask that you reject the inclusion of the credit union charter enhancement bill H.R. 7003 (the Expanding Financial Access for Underserved Communities Act of H.R. 7003) in H.R. 2543 (the Financial Services Racial Equity, Inclusion, and Economic Justice Act).

H.R. 7003 is a self-serving piece of credit union legislation masquerading as a financial inclusion initiative. The bill expands field of membership and commercial lending authority for taxexempt credit unions, two of the industry’s long-standing political priorities, by claiming those charter enhancements would improve access to financial services in underserved areas.

However, this legislation does not deliver on the purported objective of improving banking access nor does it address the needs of underserved communities. It instead should be seen for what it is: a pretext for charter enhancement at ongoing cost to taxpayers.

The absence of Community Reinvestment Act requirements on credit unions in this legislation is extremely troubling. Any sincere effort to improve financial inclusion through credit unions must include comparable mechanisms to ensure accountability. This is especially urgent since credit unions are receiving a tax subsidy to serve the underserved. Credit unions regularly tout their commitment to low- and moderate-income communities, so they should welcome the opportunity to demonstrate that taxpayer dollars are being spent as intended.

There is simply no justification or need for this legislation. Community credit unions can already serve underserved areas if they identify a local need and choose to do so. Although by statute, only “well-defined local communities” can be the basis of a community credit union’s membership, remarkably, there are multiple regulatory paths for a credit union to add multi-state areas to their membership and count that as a “local” community. Without this legislation, a community credit union can already choose to focus on any area, underserved or not, inside those expansive spaces.

The legislation also creates a major and highly controversial new loophole in the credit union business lending cap, which Congress rightly put in place to keep this tax-exempt industry focused on its specified mission of “meeting the credit and savings needs of consumers… through an emphasis on consumer rather than business loans.” (Senate Banking Committee Report 105- 193) (emphasis added). Bankers remain staunchly opposed to any effort to weaken that important limitation.

Expanding financial access to underserved communities is an important and shared goal. Loosening credit union membership criteria under the guise of financial inclusion and without appropriate consumer protections, however, is not. We strongly urge you to strip H.R. 7003 from H.R. 2543.

Sincerely,

American Bankers Association
Alabama Bankers Association
Alaska Bankers Association
Arizona Bankers Association
Arkansas Bankers Association
California Bankers Association
Colorado Bankers Association
Connecticut Bankers Association
Delaware Bankers Association
Florida Bankers Association
Georgia Bankers Association
Hawaii Bankers Association
Idaho Bankers Association
Illinois Bankers Association
Indiana Bankers Association
Iowa Bankers Association
Kansas Bankers Association
Kentucky Bankers Association
Louisiana Bankers Association
Maine Bankers Association
Maryland Bankers Association
Massachusetts Bankers Association
Michigan Bankers Association
Minnesota Bankers Association
Mississippi Bankers Association
Missouri Bankers Association
Montana Bankers Association
Nebraska Bankers Association
Nevada Bankers Association
New Hampshire Bankers Association
New Jersey Bankers Association
New Mexico Bankers Association
New York Bankers Association
North Carolina Bankers Association
North Dakota Bankers Association
Ohio Bankers League
Oklahoma Bankers Association
Oregon Bankers Association
Pennsylvania Bankers Association
Puerto Rico Bankers Association
Rhode Island Bankers Association
South Carolina Bankers Association
South Dakota Bankers Association
Tennessee Bankers Association
Texas Bankers Association
Utah Bankers Association
Vermont Bankers Association
Virginia Bankers Association
Washington Bankers Association
West Virginia Bankers Association
Wisconsin Bankers Association
Wyoming Bankers Association

cc: Members of the House Rules Committee
Members of the U.S. House of Representatives

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