The Roundup: Banks Must Prove Overdraft Fee Opt-in, a Crackdown on Deceptive AI Claims, and Student Loan Challenges for Servicemembers
Welcome to the PerformLine Regulatory Compliance Roundup, home of the latest news, articles, and reports from our industry, curated for you. Let’s get into it.
In this edition: The CFPB says banks must prove consumers’ opt-in to overdraft fees, the FTC announces a crackdown on deceptive AI claims and schemes, the Justice Department pushes companies to consider AI risks, the FDIC, OCC, and Justice Department update bank merger guidelines, a report on challenges facing servicemembers and veterans with student loans, and how to adapt quickly to recent rate changes.
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CFPB Says Banks Must Prove Consumers’ Opt-in to Overdraft Fees
The CFPB has issued new guidance emphasizing that banks must provide concrete proof of customer consent before charging overdraft fees for ATM or debit card transactions. The guidance aims to eliminate so-called “phantom opt-ins,” where banks claim customer consent but lack evidence to support it. According to the CFPB, banks are required to maintain records such as signed forms, call recordings, or electronic signatures to verify consent. This initiative is part of the Bureau’s broader effort to combat unfair and deceptive practices, particularly in relation to overdraft fees.
FTC Announces Crackdown on Deceptive AI Claims and Schemes
The FTC has launched “Operation AI Comply,” targeting deceptive claims involving AI technologies. The agency is taking action against five companies, including those promoting AI tools for generating fake reviews, “AI lawyer” services, and AI-powered online business schemes. These companies allegedly used misleading AI promises to defraud consumers. The FTC’s enforcement highlights that there are no exemptions for AI from consumer protection laws, ensuring that deceptive practices in AI are addressed to protect both consumers and honest businesses.
Significant Stat: $48 Million: The proposed settlement by the FTC against a home rental company for deceptive costs, undisclosed junk fees, and other unlawful actions against consumers. Read more
Justice Department Pushes Companies to Consider AI Risks
The U.S. Department of Justice has updated its guidelines on corporate compliance programs, urging companies to address the risks associated with artificial intelligence. The revised guidance highlights the need for compliance officers to evaluate AI’s potential benefits and risks, ensuring that its use aligns with criminal laws and compliance standards. Additionally, the changes emphasize the importance of using data analytics to strengthen compliance efforts, promoting a speak-up culture for whistleblowers, and learning from past misconduct.
FDIC, OCC, and Justice Department Update Bank Merger Guidelines
The FDIC, OCC, and the Department of Justice have updated guidelines for evaluating bank mergers, focusing on competition, financial stability, and community benefits. The new policy considers the impact of mergers beyond just deposits, including loans and services, and places greater scrutiny on mergers, resulting in institutions with assets exceeding $100 billion. It also outlines a process for holding public hearings for larger transactions. These updates reflect a more comprehensive approach to assessing the risks and benefits of bank mergers.
Report: Challenges Facing Servicemembers and Veterans with Student Loans
The CFPB’s latest report highlights the financial challenges servicemembers and veterans face with student loans, including difficulties in reaching loan servicers, errors in income-driven repayment plans, and issues with transcript withholding by colleges, which can hinder career opportunities. The report also notes an increase in scams targeting older veterans.
How to Adapt Quickly to Recent Rate Changes
With the recent interest rate adjustment by the Fed, many organizations were left scrambling to update their marketing materials and disclosures to stay in compliance. In most cases, the complexity and scope of accomplishing this task requires a solution that goes beyond manual processes.
PerformLine offers a more comprehensive and efficient way for banks and consumer finance companies to manage updates. This is done by automating and streamlining the process of discovering and monitoring content across the web. Learn more about our revolutionary platform here.
