December 23, 2020

NAFCU seeks clarity for CUs ahead of next round of EIPs

moneyAs the new coronavirus relief package is set to send another round of economic impact payments (EIPs) to consumers, NAFCU and industry trade groups continue to ask for additional clarity for processing electronic and paper check transactions to ensure credit unions and other financial institutions have the resources and guidance needed to efficiently get funds to consumers.

While President Donald Trump has not yet signed the relief legislation and indicated Tuesday some issues with the package, which also included fiscal year 2021 federal government funding, NAFCU expects the IRS to send payments out before Dec. 31. It is expected that the vast majority of consumers will receive EIPs via ACH and the remainder will receive the payment through check.

The legislation also protects the EIPs from financial institution garnishment or levy by private creditors or debt collectors.

NAFCU and the trades have shared concerns with lawmakers, the Treasury Department, IRS, and CFPB about concerns related to EIPs and how to best facilitate safe and fast access to these critical funds. NAFCU is also concerned about another round of EIPs potentially overloading the ACH payments systems and financial institutions experiencing cash shortages.

The CFPB worked in coordination with the IRS to ensure consumers who were eligible to receive EIPs could access them. NAFCU met with the CFPB in April to share credit union concerns regarding the operational challenges posed by handling EIPs and discussed potential regulatory relief the bureau could provide under Regulation CC. 

NAFCU also called for improvements to existing delivery mechanisms as the Federal Reserve and Treasury considered creating a new system for consumers to receive EIPs, and instead encouraged the Fed to dedicate resources to its FedNow Service development.

A NAFCU Compliance Blog from earlier this year outlined some considerations for credit unions processing EIP checks to help address potential issues.

NAFCU will continue to share how credit unions' operations are affected by processing EIPs and seek additional guidance and improvements.