March 20, 2020

NAFCU seeks e-sign relief for CUs, members

Carrie HuntNAFCU's Carrie Hunt yesterday urged the CFPB to modernize electronic disclosure and signature-related provisions of all its regulations and outlined proposed legislative amendments to the Electronic Signatures in Global and National Commerce Act (E-Sign Act) to provide relief to credit unions and their members amid the coronavirus pandemic.

"Credit unions are currently transforming business operations to adjust to the new realities imposed by the COVID-19 pandemic," wrote Hunt, NAFCU's executive vice president of government affairs and general counsel. "These changes have introduced numerous administrative stresses that have the potential to delay or impair member service at a time when it is urgently needed, and when credit union members are looking for quick responses. Alleviating outdated administrative burdens, such as the E-Sign Act’s electronic consent provisions, would be just one small step in reducing roadblocks to consumer relief at a time when it is desperately needed."

Hunt noted that several bureau regulations "specify that a valid method for providing electronic disclosures is to follow the consumer consent provisions in the E-Sign Act." However, following the E-Sign Act’s outdated requirements add delays and creates confusion at a time when many members expect more streamlined experiences and the vast majority of U.S. adults have some form of internet access.

To address these concerns, Hunt reiterated NAFCU's proposal to amend the E-Sign Act to "create a presumption of consent if a consumer uses an online service to initiate a transaction that involves or requires the exchange of electronic records."

Specifically, for the bureau to facilitate relief in the near term, Hunt recommended:

  • amending all its rules to allow financial institutions to deliver electronic disclosures under a presumptive consent framework, so long as the consumer is initiating the transaction using an online service;
  • clarifying that a financial institution that obtains this presumptive consent once may rely on it in the future for all subsequent related transactions; and
  • construing the scope of subsequent related transactions to include disclosures that are delivered by third parties acting on a credit union's behalf.

NAFCU will continue working with the Trump administration, Congress, and regulators to obtain guidance and relief for credit unions working to support members through the coronavirus pandemic.