Page 6 - February 20, 2025 Bulletin

aRTiCLeS

In an X post, Sen. Elizabeth Warren (D-Mass.) – who is the chief “Aligning regulatory requirements to modern onboarding
architect of the bureau – said that Vought “is giving big banks processes is long overdue,” Hill said. “Federal authorities have
and giant corporations the green light to scam families.” long allowed banks to onboard credit card customers in this way;
I support extending this approach more broadly.”
Courts Grant Stays in Lawsuits Over Read more: https://www.fdic.gov/letter-acting-chairman-hill-
Section 1071, Medical Bill Reporting fincen-2-7-25

Two federal courts have granted stays in a pair of lawsuits against the Court Expands Injunction Against
CFPB over the Section 1071 data collection rule and the medical
debt reporting rule, with the bureau noting it is reviewing its previous Illinois Law Restricting Interchange
positions on both rules. Fees
Treasury Secretary Scott Bessent, in his role as acting director of A federal judge has expanded a preliminary injunction against
the CFPB, has directed bureau staff to pause all rulemakings and enforcement of an Illinois state law restricting interchange fees
enforcement as the Trump administration reviews whether those policies to include out-of-state banks – a decision coming after the court
align with its priorities. The bureau noted the pause in its filings in two previously limited the injunction to national banks and federal
cases. savings associations. The injunction does not cover federal credit
In the first case, in which the ABA and Texas Bankers Association sought unions, which will still be required to comply with the law.
to overturn the CFPB rule implementing Section 1071 of the Dodd- The Illinois Interchange Fee Prohibition Act, or IFPA, bans
Frank Act, the Fifth Circuit Court of Appeals granted a stay pending banks, payment networks and other entities from charging or
appeal after the bureau said it would not contest the motion. As a result, receiving interchange fees in Illinois on the portion of a debit or
the CFPB cannot enforce the rule during the plaintiffs’ appeal. The credit card transaction attributable to tax or gratuity. The ABA,
court also extended the compliance deadlines to reflect the stay, but only Illinois Bankers Association and other groups last year challenged
for members of the co-plaintiff associations and intervenors in the case. the law in U.S. District Court for the Northern District of
In the second case, brought by groups representing credit unions and Illinois, arguing it violates multiple federal statutes, including the
data collection firms, a Texas judge ordered a 90-day stay of a CFPB rule National Bank Act and the Federal Credit Union Act. The OCC
that would prohibit the use of medical bills in consumer credit reports. filed a rare amicus brief in support of the association’s position.
The bureau didn’t contest the request for the stay because Bennett has Judge Virginia Kendall issued a preliminary injunction in
not yet reviewed the rule. December after agreeing that federal law likely preempted
state law when it came to national banks and federal savings
FDIC’s Hill Supports Revision of associations. The injunction was partial, however, because
Customer Identification Program Kendall requested additional briefing on the court’s jurisdiction
Data Collection Requirements to enter a preliminary injunction for out-of-state state-chartered
banks and federal credit unions.

FDIC Acting Chairman Travis Hill has expressed support In her decision, Kendall agreed that the federal Riegle-Neal Act
for revisions to the Financial Crimes Enforcement Network’s likely preempts the IFPA and therefore expended the injunction
Customer Identification Program, or CIP, rule to allow banks to cover out-of-state state-chartered banks while the courts weigh
to collect only part of a Social Security number when customers the merits of the case. However, she was not convinced that the
open new accounts. Federal Credit Union Act did the same for credit unions, so did
Under the CIP rule, banks must collect a taxpayer identification not expand the injunction to cover those institutions.
number from U.S. customers who open accounts, which The Riegle-Neal Act “is meant to ensure that out-of-state state
is usually their SSN. FinCEN has sought public input to banks can compete with nationally chartered banks,” Kendall
understand the potential risks and benefits if banks were wrote in her decision. “This means that because the court granted
permitted to collect partial SSN information and subsequently the preliminary injunction with respect to nationally chartered
use reputable third-party sources to obtain the full SSN prior to banks, forcing out-of-state state banks to comply with the IFPA
account opening. The American Bankers Association previously would run afoul of” the federal law.
provided feedback to FinCEN on such a proposal.
The co-plaintiffs informed the judge that they plan to pursue a
In a letter to FinCEN, Hill said many nonbank financial motion for summary judgment in the case. Kendall scheduled a
technology firms already use partial SSNs validated by third-party hearing for March 6.
sources.

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