CFPB Consent Order Highlights Pre-authorized ACH Payment Errors
January 23, 2017
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. Such agreements, which allow the creditor to withdraw monthly payments from consumers’ deposit and credit accounts, are required to be clear and readily understandable to consumers, and comply with specific notice and timing requirements related to changes in debit amounts. The creditor was subject to a civil money penalty of $200,000. See CBA’s Regulatory Compliance Bulletin prepared by Ted Kitada, Senior Counsel of Wells Fargo Bank and Chairman of CBA’s Legal Affairs Committee.