Faster Payments Primer
NACHA’s Payments Innovation Alliance released its Faster Payments 101 primer for small- to mid-sized financial institutions. The primer is an update to the Introduction to Faster Payments that NACHA released in 2017, and was finalized during NACHA’s Faster Payments Playbook Project Team meeting in February 2019. The primer provides a timeline of payment milestones, a comparison of faster payment solutions (e.g., NACHA Same Day ACH, Visa Direct, and Early Warning Zelle), and an overview of faster payments governance, such as the NACHA Operating Rules, Regulation E, and Zelle Operating Rules.
Warning! Technology Failure!
The FDIC issued a letter to supervised entities highlighting gaps in technology service contracts — gaps that the FDIC noted “contribute to ambiguity” in the rights and responsibilities of service providers, and gaps that could increase the risks that disruptions of service providers or security breaches could impact a supervised entity’s operations or compromise customer information. In recent FDIC examination reports, examiners noted that some technology service contracts “may not adequately” define rights and responsibilities regarding business continuity and incident response, or provide sufficient detail to manage business continuity and incident response processes or risks. The FDIC pointed to several areas of concern, including long-term contracts and auto-renewals, noting higher risk for coverage gaps with respect to due diligence ongoing monitoring of technology service providers.
Marketplace Lender UDAP Settlement
In April 2019, the FTC settled with a marketplace lender to resolve allegations that the lender engaged in unfair and deceptive practices when it deceived consumers about (1) the acceptance of credit cards and debit cards for repayment of loans and (2) loan payoff amounts. The FTC also alleged that the lender violated the Telemarketing Sales Rule and the EFTA by requiring borrowers, as part of the loan application, to allow the lender to initiate recurring EFTs or remotely created checks as a condition of obtaining the loan. Despite informing consumers in the loan agreement and via FAQs that payments may be made by check, money order, and credit or debit card, according to the FTC, the lender rejected such payments. The FTC also alleged that the lender failed to timely apply paper payments and made unauthorized charges to consumers. The settlement requires the lender to pay $3.85 million in consumer restitution and prohibits the lender from taking payment using remotely created checks.