Compliance Bulletin

CBA Files Brief with U.S. Supreme Court on Credit Sales Case
December 14, 2015

CBA files brief with U.S. Supreme Court on credit sales case. CBA filed a joint amicus brief in the federal second circuit court decision of Madden v. Midland Funding with the U.S. Supreme Court, a case where an assignee of a portfolio of loans was unable to collect some of the loans because the terms violated a state usury law if collected by the assignee. The credits were enforceable as made by the originator/seller of the loan, which was a national bank not subject to state usury limits. The decision is inconsistent with other federal circuit court decisions that recognize the rule that loans that are enforceable when made continue to be enforceable by any assignee. The decision thus significantly interferes with the lending activities of national banks that sell loans in the secondary market.

FTC prohibits use of “novel” payments in telemarketing; effect on banks. The Federal Trade Commission issued a final rule prohibiting the use of four types of payment methods by telemarketers and sellers: remotely created checks, remotely created payment orders, cash-to-cash money transfers, and cash reload mechanisms. The rule also expands the prohibition against advanced fees for recovery services, now limited to recovery of losses sustained in prior telemarketing transactions. CBA’s Regulatory Compliance Bulletin explores the risks that the final rule poses to banks under BSA and AML rules, as well as heightening banks’ litigation risks. The bulletin was prepared by Ted Kitada, senior counsel with Wells Fargo Bank and chairman of CBA’s Legal Affairs Committee.