Newsroom

NAFCU President and CEO Dan Berger Wednesday wrote to NCUA Chairman Todd Harper setting the record straight regarding a misleading letter sent to federal financial regulators incorrectly claiming that depository institutions were evading their legal responsibilities under the Electronic Fund Transfer Act (EFTA). Berger explicitly explained that credit unions are compliant with the EFTA and Regulation E and called on the NCUA to continue to adhere to legally sound interpretations of the EFTA.

Earlier this month a group of Democrat senators sent a letter to federal banking regulators – including the NCUA – calling on the agencies to review customer reimbursement and anti-money laundering practices of financial institutions that participate in the Zelle network.

The senators argued there are compliance concerns – related to potential UDAAP, consumer protection, and AML violations – regulators should review at financial institutions and asked the Federal Reserve and OCC to regularly examine Early Warning Services, which operates Zelle and is owned by the nation’s largest banks. They also recommended the banking agencies coordinate oversight with the CFPB. In his response, Berger explained that Zelle is already subject to the examination authority of the Office of the Comptroller of the Currency (OCC) and the CFPB under the Bank Service Company Act.

“Further, all financial institutions that participate on the Zelle Network are subject to prudential oversight by one or more of the NCUA, OCC, [Federal Deposit Insurance Corporation], or [Federal Reserve Board],” added Berger.

In addition, he explained that no reasonable interpretation of the EFTA can conclude that a financial institution must reimburse a consumer for a transaction the consumer authorized.

“To effectively combat fraud while providing members with convenient and affordable payment options, credit unions must have confidence that longstanding law will not suddenly change on a whim in response to political pressure,” wrote Berger.

Of note, NAFCU’s advocacy team has shared concerns with lawmakers and regulators regarding reports that the CFPB was reviewing Regulation E liability requirements last summer, including potential guidance that would seek to ensure financial depository institutions cover losses from consumer authorized transactions that are the result of scams.

Read the full letter. NAFCU will continue to monitor the CFPB’s efforts related to Regulation E and keep credit unions informed of compliance considerations.