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CFPB Weekly Update: The CFPB Issues a Whitepaper on Overdraft Fees and Elder Abuse Issues

June 14, 2013
  1. The CFPB issued a whitepaper concerning the overdraft fees that banks charge to consumers.  Many in the industry see this as a move that is designed to eliminate some of the circumstances under which banks charge overdraft fees.  The concerns addressed in the white paper should not be surprising that the CFPB has always made it clear during its supervisory examinations that it will track and analyze the percentage of revenue that a financial institution earns from late fees and penalties.  The review and analysis of overdraft fees is within the same ballpark.  While I do not what the CFPB will do to eliminate some of the circumstances under which a financial institution can charge overdraft fees, any new rule should take into consideration the fact that it would be patently unfair to the financial institutions to not allow them to penalize customers for withdrawing money when there are insufficient funds.  A customer will not be deterred from writing bad checks if the customer knows that the bank cannot penalize them for doing so.  I see a lot of potential problems if the CFPB is not careful with the overdraft fees issue.  In any event, the whitepaper is here.
     
  2. Yesterday, the CFPB and FDIC issued a report on the manner in which friends, family members and financial institutions can spot elder financial abuse issues.  While the report offers guidance to friends and family members with respect to spotting elder financial abuse issues, the report can also be used by financial institutions with respect to spotting elder financial abuse issues when friends or family members are the persons committing the financial abuse.  For example, banks and brokerage firms are often placed in the middle of family feuds when an elderly relative changes the beneficiary of bank assets in a trust from one friend or relative to another.  The person who is no longer the beneficiary often claims that the new beneficiary engaged in some form of elder abuse and wants the bank or brokerage firm to freeze the account.  The new beneficiary, on the other hand, wants the bank or brokerage firm to adhere to the customer’s wishes.  The bank or brokerage firm wants to follow the customer’s wishes, but does not want to be accused of missing an elder abuse issue.  Do not be surprised if the CFPB’s supervisory examinations place an emphasis on the manner in which financial institutions respond to indications of elder abuse.  The CFPB and FDIC’s report is here.

Next week, we will be teaming up with our friends at KPMG for a webinar entitled: "Join KPMG and Sutherland To Discuss the CFPB: Insights on The Bureau, Third-Party Service Providers, and Lessons Learned so Far.  If you want to sign up for this FREE webinar, go here: REGISTER NOW

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