A recent consent order by the Consumer Financial Protection Bureau against Military Credit Services, LLC for violations under the Electronic Funds Transfer Act (EFTA) and National Automated Clearing House Association (NACHA) Operating Rules over its consumer agreements to use pre-authorized ACH payments to facilitate collection of debt.
The California Supreme Court held that “on-call” rest periods are impermissible under Labor Code Section 226.7 and Industrial Welfare Commission wage order no. 4-2001. In Augustus v. ABM Security Services, Inc. the Court held that the applicable standard for rest periods is the same for meal periods: employers must relieve the employee of all duty and relinquish any employer control over the employee and how he or she spends the time. Thus an employer may not compel employees to remain on call during rest periods.
In a type of case that happens all too often, a lawyer was duped into accepting a large check, deposited it, and wired good funds to the perpetrator against the check, which was later determined to be fraudulent. In this case the bank that took the loss was the paying bank, which had reimbursed the owner of the account from which the bogus check had been drawn. The bank then sued the bank of deposit (the lawyer’s bank), the lawyer, and the Federal Reserve Bank through which the check was routed.
A new bill, AB 2337, enhances the employer anti-retaliation law by requiring employers to inform, in writing, new employees when they are hired of their California Labor Code Section 230.1 rights and inform other employees upon request. Under Section 230.1, employers with 25 or more employees are barred from discriminating or retaliating against any employee who is a victim of domestic violence, sexual assault, or stalking for taking time off to address those issues.The Labor Commissioner is required to develop form notices for employers’ use.
A big question brought on by the digital revolution is the disposition of online accounts and records of the deceased. Businesses such as email service providers and social media companies need to protect privacy, while fiduciaries and other representatives need to marshal the assets of the deceased, including digital assets. Assembly Bill 691 adopts a version of UFADAA effective in January 2017. Banks would be affected primarily in the provision of trust services. The bill establishes a three-tier priority system for determining the deceased user’s intent with regard to disclosure.
A new California law, SB 1001, seeks to bar employment practices that are already prohibited under federal law. 8 U.S.C. 1324a and 1324b require employers to verify an individual’s right to work in the United States, and prohibit specific activities that amount to discrimination based on immigration status except with respect to those who are not authorized to work. SB 1001 makes it illegal under California law for an employer to do those same activities. The bill’s author believed that seeking federal remedies is cumbersome.
A new bill, AB 2562, amends sections 800 and 803 of the Military and Veterans Code that make now obsolete distinctions between reservists who were called to active duty before and after January 1, 2014. In response to the events of September 11, 2001, the state Legislature had enacted a series of bills designed to benefit service members who are called to duty in Afghanistan, Iraq, and other locations. The benefits include the right to defer payments on a mortgage, credit card, retail installment contract or revolving account, vehicle loan, and property tax and assessments.
In Ho v. ReconTrust the federal Ninth Circuit Court of Appeals held that a trustee that was carrying out its duties in connection with the non-judicial foreclosure process in California following the borrower’s default was not a debt collector under the federal Fair Debt Collection Practices Act. Ms. Ho, the plaintiff borrower, claimed that ReconTrust, the trustee on a residential mortgage, had misstated the amount owed on the debt and thus was in violation of the FDCPA.
Below is a second informational bulletin that CBA is providing to its members on compliance with the Americans With Disabilities Act. This bulletin, prepared at CBA’s request by affiliate member law firm Bryan Cave LLP, offers more technical guidance on ATM and website accessibility. We will soon make other resources available, including a free webinar to CBA members, featuring ADA legal and technical experts to help banks comply with, and respond effectively to, demand letters and claims.
A new bill, AB 1974, sponsored by the County Recorders Association of California, establishes a standard procedure for re-recording documents such as deeds of trust and loan documents to correct an error or make amendments. Each re-recorded document now has to include a cover sheet stating the reason for re-recording. If the document modifies, releases, or cancels the provisions of a previously recorded document, the cover sheet must state the recorder identification number or RIN or the book and page of the document affected.
On the heels of the CFPB’s new mortgage servicing rule, much of which addresses servicers’ duties towards borrowers’ successors in interest, the state of California adopted a new law, SB 1150, covering the same subject matter. The new law prohibits mortgage servicers, upon receipt of notification of the death of the mortgagor or trustor, from recording a notice of default until it takes steps to verify the borrower’s death.
A new law, AB 2844, requires businesses that contract with a state agency to certify that they comply with the Unruh Civil Rights Act and the California Fair Employment and Housing Act (FEHA), and that they do not have policies against the nation and people of Israel that violate those statutes. The bill is partly intended to counteract a movement that seeks to pressure the state of Israel, known as the Boycott, Divestment and Sanctions (BDS) movement.
Mortgage lenders are among the beneficiaries of a new bill, AB 2693, which makes property assessed clean energy or “PACE” financing subject to some of the same guidelines that apply to other consumer credit. Some local agencies offer financing to property owners to make improvements related to clean energy, which the owner repays through an assessment on the property similar to paying property taxes. Agencies are under little legal obligation to exercise discipline in ensuring that consumers are informed of their obligations or whether they have the ability to repay.
A new bill, SB 1063, prohibits an employer from paying a person less than another employee of a different race or ethnicity for substantially similar work. The new law is patterned after a bill passed just last year, SB 358, that called for equal pay based on an employee’s sex. A willful violation is subject to a fine of up to $10,000 and imprisonment for up to six months, or both. See CBA’s Regulatory Compliance Bulletin for more information.
A new California law, AB 1993, establishes certain standards for technology companies to respond to requests for electronic communications information by law enforcement. Because the definitions used in this bill and in last year’s SB 178 (the California Electronic Communications Privacy Act) to which it refers are so broad, the bills likely cover other kinds of companies, including banks.
A new California law, AB 2258, amends the state’s escheat laws that apply to bank accounts. Currently, bank accounts must be escheated to the State Controller’s Office if the account holder has not increased or decreased the amount of the deposit for three years. AB 2258, which amends Code of Civil Procedure Section 1513, would treat certain recurring and electronic transactions as permissible indicators of account activity.
Lawyers from a law firm based in Pennsylvania have been sending demand letters to businesses claiming that their retail websites discriminate against persons who are visually disabled under the Americans with Disabilities Act. A new round of demand letters has recently been sent to regional and community banks demanding website compliance. Website standards have not yet been adopted and the speculation is that the DOJ will implement comprehensive website regulations in the first quarter of 2018.
The California Legislature enacted AB 2828 to further strengthen consumer protections in the event of a data breach. The existing laws include a safe harbor that generally exempted compromise of encrypted personal information from the law’s notification provisions. The inclusion of the safe harbor was intended to incentivize companies to encrypt personal information under their control.
The California legislature adopted a CBA-sponsored bill, AB 2907, that restores a bright line test for banks to satisfy their account disclosure obligation under Commercial Code Section 4406. As of January 1, 2017, Section 4406(a) will again include the language that a bank’s periodic disclosure statement regarding items (such as checks) drawn on a customer’s account is sufficient if the item is identified by item number, amount, and date of payment. As long as the bank complies with the standard, then it can avail itself of protections from liability for customer check fraud claims.