NAFCU Compliance Blog

What Else is New With Marijuana Banking?; Another Credit Union ADA Victory; Help Us Help You!

Written by Pamela Yu, Special Counsel for Compliance and Research

A couple of weeks ago, I blogged about what's new with marijuana banking.  Among other things, I provided an update on one credit union's ongoing efforts to become the first credit union chartered to support the marijuana industry and with a field of membership focused on cannabis groups.

In response to my post, several credit union industry players reached out to ask how many cannabis-friendly credit unions are currently handling marijuana-related accounts. 

Who's Holding All That Cannabis Money? 

Recent reports indicate that legal marijuana sales reached $9.7 billion across the seven states where recreational marijuana was legal and Canada in 2017. That number does not include California, which is projected to hit $3.7 billion in legal cannabis sales by the end of 2018, and $5.1 billion in 2019. Overall, despite continued federal prohibition here in the U.S., North American legal cannabis sales are expected to hit $24.5 billion by 2021.

Because the substance continues to be illegal under the federal Controlled Substances Act, marijuana businesses have remained challenged in obtaining traditional financial services but information from the Treasury Department indicates that more institutions are taking on these accounts.

According to FinCEN's Marijuana Banking Update, based on Suspicious Activity Report (SAR) filings, around 400 depository institutions were actively banking marijuana businesses in the U.S. as of September 30, 2017.  Less than 100 of those were credit unions, while the rest were banks.  FinCEN's data shows that the agency received a total of 39,025 SARs using key phrases associated with marijuana-related businesses by the end September 2017. 

Source: FinCEN Marijuana Banking Update (September 2017)

While the number of institutions serving marijuana businesses has more than tripled since 2014, federal data shows that only a small percentage of the 5,573 federally-insured credit unions across the country are reporting service to marijuana businesses.  The growing industry will likely continue to be underbanked as long as cannabis continues to be federally illegal.

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Third ADA Win for Credit Unions

On March 5, in another win for the credit union industry, a federal district court in Virginia granted a credit union's motion to dismiss an Americans with Disabilities Act (ADA) website accessibility suit.  See, Carroll v. ABNB Federal Credit Union, No. 2:17-cv-521 slip. op. (E.D. Va. Mar. 5, 2018).  NAFCU filed an amicus brief in this case; we have filed five briefs so far in support of our member credit unions.

As discussed in the latest issue of NAFCU's Compliance Monitor, for the past year credit unions have faced a growing litigation threat due to unclear website accessibility standards under the ADA.  To date, NAFCU is aware that credit unions in at least 24 states have been impacted by ADA website accessibility claims. 

In the latest case to be thrown out, the court found that "because [the plaintiff] has not shown that he (1) is a member of [the credit union], (2) that he is within [the credit union's] membership field, or (3) that he could become a member of [the credit union]," the plaintiff had not alleged a "sufficiently concrete injury in fact" necessary to show legal standing. See, Carroll v. ABNB Federal Credit Union, No. 2:17-cv-521 slip. op. at 8 (E.D. Va. Mar. 5, 2018). 

The court's reasoning regarding the plaintiff's standing was consistent with two other recent decisions in virtually identical suits alleging website violations of the ADA by other credit unions. See, Griffin v. Department of Labor Federal Credit Union, 1:17-CV-1419, slip op. (E.D. Va. Feb. 21, 2018); Carroll v. Northwest Federal Credit Union, l:17-cv- 01205, slip op. (E.D. Va. Jan 26, 2018).

In addition, cases against two Texas credit unions (involving the same plaintiff) were dismissed on March 2. NAFCU also filed an amicus brief in support of one of those credit unions.

Please visit NAFCU's ADA webpage to learn more about this issue, and to keep apprised about what NAFCU is doing to fight for credit unions.

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Monthly Research Survey: Help Us Help You!

NAFCU's Economic and Research Team conducts monthly surveys of NAFCU member credit unions in order to compile meaningful data reports that you can use to benchmark against your geographic and asset level peers. These survey results are also critical to NAFCU's advocacy efforts on your behalf to federal agencies, such as NCUA, CFPB and the Federal Reserve. Your participation helps us help you!

Today is the last day to share your voice on the topic of Financial Literacy & Community Outreach. We rely on your survey responses for our industry analysis and legislative advocacy efforts on behalf of all credit unions.

NAFCU members can participate in this month's Economic and CU Monitor survey with one of the options below:

• Online survey
• PDF file (please return by email to [email protected])

Deadline for Economic & CU Monitor survey: March 9, 2018

 

ADA Litigation Update: One Down, More to Go

Written by Pamela Yu, Special Counsel for Compliance and Research

Last Friday, a federal judge in Virginia granted a credit union's motion to dismiss in a lawsuit alleging the credit union's website was not compliant with the Americans with Disabilities Act (ADA).  The ruling represents a big initial victory for credit unions facing growing litigation threats over unclear website accessibility requirements under the ADA.

The Shakedown

Credit unions nationwide have faced a tide of lawsuits and demand letters over the past year relative to the ADA.  Currently, the ADA and the Department of Justice's (DOJ) implementing regulations are silent on website accessibility standards, and the DOJ recently removed an earlier initiative from its rulemaking agenda and withdrew two advanced notices of proposed rulemaking on the subject.  See, 82 Fed. Reg. 60932 (Dec. 26, 2017).  Ambiguities in the law have spawned a new cottage industry for opportunistic plaintiffs' attorneys looking to make a quick dollar off the backs of credit unions and other well-intentioned entities.  Generally the shakedown goes something like this:  lawyers send multiple, identical demand letters alleging ADA website violations to credit unions, banks, and other entities throughout a targeted state on behalf of one unnamed, repeat complainant, then settle for several thousand dollars per case. If the case doesn't settle, the lawyers file suit. 

Some credit unions are making the business decision to settle, but others have decided to fight the charges in federal court. 

Carroll v. Northwest Federal Credit Union

In the first of these cases involving a credit union to be decided by the court, the plaintiff generally alleged that he is a visually-impaired individual who visited the credit union's website but was unable to navigate the website due to accessibility barriers and, as a result, was denied the full use and enjoyment of the facilities and services of the credit union.  However, the plaintiff did not allege he was a member of the credit union or even clearly within the credit union's limited field of membership (multiple-common bond).  See, Carroll v. Northwest Federal Credit Union, No. 1:17-cv-01205, slip. op. at 5 (E.D. Va. Jan. 26, 2018).

NAFCU filed a brief as amicus curiae (i.e., "friend of the court") in support of the defendant credit union's motion to dismiss on the grounds that, among other things, a website is not a place of public accommodation under Title III of the ADA and the plaintiff lacked standing to sue because he was not a member of the credit union.  

A Credit Union Win

The court's January 26th decision granted the credit union's motion to dismiss, ruling that the plaintiff did not have standing to sue the credit union because he was not a member or eligible for membership and would not likely use the credit union's services.  The court therefore determined the plaintiff did not sufficiently establish an injury-in-fact:

"Here, the defendant, Northwest Federal Credit Union ("Northwest FCU"), is a credit union chartered by the Federal government which only includes a specific membership field. . . . Plaintiff is not included in this membership field, nor has he alleged any facts in his Complaint to suggest he is [a member] or otherwise eligible to become a member of Northwest FCU.  As a result, Plaintiff is unable to deposit money in, or obtain a loan or other services from Defendant. 

Plaintiff is unable to show that he has suffered an injury in fact or that there is certain impending future harm.  [Plaintiff] cannot make this showing because he has not established that he is entitled, or would ever be entitled, to utilize any services provided by Northwest FCU." Carroll v. Northwest Federal Credit Union, No. 1:17-cv-01205, slip. op. at 5 (E.D. Va. Jan. 26, 2018).

In addition, the court found that a website is not a place of public accommodation subject to Title III ADA protections:

"Plaintiff's claim also fails because the website is not a place of public accommodation.  Title III of the ADA prohibits discrimination in public accommodations based on disability.  The statute provides for a list of entities that are considered public accommodations.  Notably absent from the list is the term "website".  Not only is "website" not found on the list, but the statute does not list anything that is not a brick and mortar "place".  Over the years Congress has extensively amended the ADA; however, at no point did Congress choose to add websites as a public accommodation."  Id. (citations omitted).

The War Rages On

The decision is a huge first win for credit unions in the battle against these unwarranted ADA legal actions.  But the war is not over.  The lower court's decision is not considered binding under common law principles: “A single district court decision . . . has little precedential effect[, and i]t is not binding on . . . other district judges in the same district.” See, U.S. v. Articles of Drug Consisting of 203 Paper Bags, 818 F.2d 569, 572 (7th Cir. 1987).

Other judges in the same district and in various other federal jurisdictions will likely consider similar credit union ADA cases soon. While the decision in Carroll is persuasive authority—especially as it is the first case to rule on whether credit union membership is necessary to establish standing—the decision is not binding precedent on other courts or federal jurisdictions. 

NAFCU has filed three additional amicus briefs to support credit unions in several similar cases, and on January 5th NAFCU stood with one of those credit unions while the judge heard oral arguments on their motion to dismiss.  We will continue to fight for our members against these unfair suits.  Meanwhile, the plaintiff in Carroll has filed an amended complaint.  Because the court dismissed the case "without prejudice," the plaintiff was free to amend his complaint and refile a new suit.  Notably, however, the plaintiff is still not a member of the credit union.  Stay tuned. 

For more information about ADA website litigation and NAFCU's ongoing efforts to stand up for credit unions on this issue, please visit our dedicated ADA webpage here.

RDC Patent Infringement Letters; Court Issues Motion to Dismiss in ADA Case

Written by Brandy Bruyere, VP of Regulatory Compliance

In recent weeks, NAFCU has heard from multiple credit unions who have received letters from a firm alleging that the credit union's remote deposit capture function infringes on USAA's patents in this area. As widely reported in many news outlets, USAA started developing RDC technology in 2005 and now holds about 50 RDC-related patents. In 2012, USAA was involved in a dispute with another RDC provider, where the parties claimed each side infringed on the other's patents. The case ultimately ended in a settlement in 2014. Then, in 2017, noting that USAA wanted to "work toward recovering the investment" the institution made in RDC technology, USAA began sending letters to financial institutions via a law firm called Epicenter Law. In more recent months, credit unions have also started to receive similar correspondence.

Specifically, the letters "invite" the credit union to pay a licensing fee (unspecified in amount) to patent USAA's rights that are allegedly infringed by the credit union's RDC program. While the letters stress that the attorneys "are not litigation counsel" but rather focus on negotiating "patent licensing deals," the issue is still raising questions from credit unions.

If you receive a letter or have questions on this topic, a good place to reach out is to the credit union's RDC vendor(s). The credit union's agreement with the particular vendors may address indemnification in these kinds of claims. Our understanding is that at least some vendors have taken the position that their technology is not infringing on USAA's patents, and some vendors have even taken the position that they are not aware of any patent infringement by the vendor's technology – but that position may vary from vendor to vendor. NAFCU continues to monitor this issue and will keep members posted of any activity that develops.

ADA Motion to Dismiss. A federal judge in Virginia issued an order granting a credit union's motion to dismiss in a case claiming the credit union's website was not compliant with the ADA. NAFCU filed an amicus brief in this case supporting the credit union's arguments and continues to fight for credit unions on this issue. Credit unions can find more information on ADA website litigation here.

Lawyer Dog. Sometimes I wonder how much English my dog actually understands. I spend a large portion of my evenings policing Lemmy so he will not steal Nolan's food. Last week, I sternly told Lemmy to go to bed because he came pretty close to taking a PB&J from Nolan. Lemmy interpreted my order and went to bed but this is the barest of compliance, in my opinion.

ADA Compliance: What's the deal with websites?

Written by: André B. Cotten, Regulatory Compliance Counsel

Hello, compliance friends! The NAFCU Compliance Team has recently noticed an increase in questions related to potential Americans with Disabilities Act (ADA) website requirements. Credit unions are always eager to help their members, and we've had many credit unions asking about the status of ADA regulations, especially for websites. Today's blog post is meant to provide a very high-level overview of the statutory framework, rulemaking and enforcement activity, and potential for litigation with regard to ADA website compliance.

How the ADA Applies to Credit Unions

Generally, the ADA is intended "to provide a clear and comprehensive national mandate for the elimination of discrimination against individuals with disabilities" and "to provide clear, strong, consistent enforceable standards" addressing such discrimination. See, 42 U.S.C. § 12101(b). The ADA is a complex, fact-specific area of law, and some states have their own statutes addressing similar issues, so consulting with counsel may be necessary to fully assess ADA legal issues and risks. One way the ADA applies to credit unions is through Title III of the Act, which sets standards for certain "public accommodations." Public accommodations include banks and other "service establishments," so these provisions have been interpreted to apply to credit unions. As a result, the ADA requires credit unions to meet standards for "newly constructed or altered places" and has wide-ranging implications that impact how to communicate with persons with disabilities, which ultimately impacts the issue of website accessibility.

ADA discrimination is broadly defined by five categories. The one most applicable to websites is a provision that prohibits excluding, denying services or treating members with disabilities differently because of a lack of "auxiliary aids and services." This generally involves accommodations for persons with vision and hearing related disabilities, providing aids and services like closed-captions, interpreters, Braille materials and similar tools.

There are exceptions such as if the credit union can show that offering services with auxiliary aids and services would fundamentally change the nature of the services, or providing an auxiliary aid would cause an "undue burden." However, these exceptions are generally interpreted narrowly. Overall, the definition of discrimination is highly technical and includes several legal terms of art that are somewhat clarified in the Department of Justice ADA regulations.  

Possible Litigation Risk

ADA website accessibility can present some litigation risk for businesses that are public accommodations, including credit unions. One way a credit union can run afoul of the ADA is by not taking the steps in regulations that address when "auxiliary aids and services" may be necessary to meet objectives like effective communication with individuals with disabilities.

An important question in assessing the risk involved in these issues is what are the possible penalties and damages for ADA violations that may stem from litigation. The ADA permits the DOJ to assess civil penalties, which are currently up to $75,000 for the first ADA violation, and up to $150,000 for additional violations. The ADA and its regulations do not authorize statutory penalties for plaintiffs. However, a court can force a business to meet accessibility standards as part of a private lawsuit and award plaintiffs their attorney's fees, costs and expenses in a suit. Additionally, litigation risk can stem from state statutes. Overall, the rise in litigation is a continuing trend that is in part influenced by the DOJ's previous rulemaking and enforcement activity.

Rulemaking Efforts and Enforcement

In 2010, the DOJ issued an advanced notice of proposed rulemaking (ANPR) aimed at starting the process for adopting formal standards for website accessibility. While acknowledging that neither the Act nor existing regulations "specifically address access to websites," the DOJ indicated its position that the ADA is broad enough to apply to websites.

After collecting information in 2010, the DOJ did not take further rulemaking action that would impose a clear standard for credit unions to follow with regard to website accessibility for persons with disabilities.

In regards to enforcement actions, during the Obama Administration, the DOJ intervened in private lawsuits on the issue of website accessibility, taking the same position set forth in the 2010 ANPR, which is the ADA is broad enough to apply to the websites of public accommodations like credit unions.

For example, on May 31, 2011, the DOJ entered into a settlement agreement with Wells Fargo, indicating that discrimination includes the failure to "provid[e] a website that is accessible to individuals with disabilities, including blind individuals who use screen readers to access web content that is visual and providing captions for deaf individuals . . ." While Wells Fargo committed to making its website more accessible as part of the settlement, the DOJ did not require specific standards to be followed.

In later cases, such as a consent decree with H&R Block in 2014, the DOJ went a bit further than in the Wells Fargo case and actually required H&R Block to commit to following a specific standard in making its website accessible that is known as the Web Content Accessibility Guidelines 2.0 Level A and AA. These are voluntary standards with a dozen separate components. The DOJ also required H&R Block to make not only its website accessible, but its mobile applications as well. Despite not adopting a formal website accessibility standard, the DOJ continued to require this standard in its enforcement actions.

Currently, the Title III rulemaking has been listed as "inactive" on the DOJ's most recent rulemaking agenda. It also appears that formalizing this rule is not a priority for the Trump administration, and it is unclear how the current administration will address these issues from an enforcement perspective. However, the risk for credit unions from private litigations remains active.

Conclusion

Moving forward, a credit union may need to consult with its local counsel to discuss the trends in jurisdictions where it operates relating to potential demand letters and lawsuit activities. Some credit unions may also consider adopting accessibility measures based on the potential litigation and reputation risks. There are also consultants that work to make websites accessible for persons with disabilities and perform ongoing work for changes in content over time which comes with various upfront and continuing expenses.

For further information, please see the March 2017 Monitor Compliance Article written by the VP of Regulatory Compliance, Brandy Bruyere.

 

RBC2: A Penny for Your Thoughts, pt 3.

Written by Alicia Nealon, Director of Regulatory Affairs

Welcome back to the third installment of our series of posts where NAFCU’s Compliance Blog will break down different portions of RBC2 and highlight the key issues that we are looking for your feedback on.  Today’s topic is the treatment of CUSO activity.

One key change between this proposal and the original involves the risk-weighting of investments in CUSOs and loans to CUSOs.  Under the original proposal, investments in CUSOs were assigned a risk-weight of 250 percent and loans to CUSOs were assigned a risk-weight of 100 percent. RBC2, however, would lower the risk-weight to 150 percent for equity investments in CUSO, and retain the 100 percent risk-weight for outstanding loan balances to CUSOs.  Also, RBC2 will exclude loans and investments in CUSOs if those assets were already consolidated into the credit union’s statement of financial condition under generally accepted accounting principles (GAAP) - a move sought by NAFCU during the original proposal.   

While RBC2 reduces the investment risk-weighting and accounts for the CUSOs consolidated into a credit union’s books, it continues to assign different risk-weights to investments in CUSOs and loans to CUSOs.  Despite many commenters, including NAFCU, arguing that there should be only one risk-weight for CUSO activity and that it should not exceed 100 percent, NCUA retained different treatments for investments in CUSOs and loans to CUSOs.  The agency explains that they are risk-weighted differently because they are treated differently in the event of liquidation or bankruptcy. 

While NCUA lowered the risk-weight for investments in CUSOs, the proposed 150 percent risk weight still fails to consider the different types of services provided by a given CUSO.  For example, an investment in a CUSO engaged in low-risk activities like providing compliance assistance would be assigned the same risk-weight as an investment in a CUSO engaged in mortgage or commercial loan underwriting.  Despite being lowered, the proposed 150 percent risk-weight could still be improved to assess a more meaningful risk distinction between the risks various types of CUSOs pose…..at least that is my humble opinion, but I’d love to hear yours….

It is also worth mentioning that under FDIC's rules, equity investments that are less than 10 percent of a bank’s capital are risk-weighted at 100 percent. FDIC characterizes such investments as "insignificant." Because NCUA already restricts federal credit unions to only investing up to 1% of their assets in CUSOs in the aggregate, an argument could be made that credit union’s investments in CUSOs should be considered “insignificant” for the sake of the agency’s capital rules and be weighted at 100 percent as in the FDIC system. Again, my opinion...whats yours?

What does everyone think? Does your credit union believe the revised risk-weights reflect the real risks associated with investments in CUSOs and loans to CUSOs? Would the proposed 150 risk-weight force your credit union to reconsider current and future investments in CUSOs? Should investments in CUSOs be risk-weighted at 100 percent like FDIC equity investments? 

As you consider these questions, be sure to take a look at NAFCU’s Regulatory Alert 15-EA-02, our Capital Reform Issue Page, or reach out to me directly ([email protected], 703-842-2266) with your thoughts. 

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NAFCU Webcast. A Deep Dive into the Final Privacy Rule -You may be able to reduce your regulatory burden! Now, if your credit union meets the CFPB’s eligibility requirements, you can save money by posting your annual privacy notice online. Find out if your credit union meets the eligibility requirements, examine the posting requirements, and get detailed instruction on how to use the required model form with this good-news NAFCU webcast.

NAFCU's Fred Becker to Retire; ADA Lawsuits; NCUA-CFPB Town Hall Webinar

Written by Steve Van Beek

NAFCU’s Fred Becker to Retire July 31^st.  NAFCU’s President and CEO Fred Becker recently announced his decision to retire after 13 very successful years leading NAFCU.  Becker will be replaced by Dan Berger who has led NAFCU’s Government Affairs department – including NAFCU’s Compliance team – since 2006.  The motto at NAFCU is “business as usual.”  Looking at the transition through the compliance lens, we’re excited because, like Fred before him, Dan has detailed experience with the compliance issues facing credit unions (as does NAFCU’s Chief Operating Officer Anthony Demangone).  To see more about Fred Becker’s retirement and his future plans, check out this interview with CU Broadcast.  

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ADA Lawsuits.  There has been an uptick in new ATM lawsuits – this time alleging noncompliance with the Americans with Disabilities Act.  The new speech output requirements became effective in March 2012 and the lawsuits started soon after.  Now is a very good time to audit and document your compliance with the new ADA requirements.  Past blog posts on the ADA can be found here.   

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NCUA-CFPB Town Hall.  On Tuesday, February 5^th, NCUA Chairman Debbie Matz and CFPB Director Richard Cordray will be on a free Town Hall webinar.  The webinar starts at 3:00 p.m. on February 5^th and registration is open.  You can also submit questions in advance by using this link.    

Upcoming Compliance Deadlines - Spring 2012

Written by Steve Van Beek

There are a few upcoming deadlines to make sure your credit union is making progress on.  

HMDA Reporting.  The deadline for HMDA submissions is March 1, 2012.  NCUA issued a Regulatory Alert earlier this month - 12-RA-01 - that highlights the reporting deadline.  

ADA & ATMs.  The March 15, 2012 deadline for compliance with the ADA requirements for ATMs is quickly approaching.  Remember, document your process and your communications with your vendors as it could be useful if there are delays and the CU faces a lawsuit.   

The speech output requirements apply to all ATMs and need to be in place by March 15, 2012.  The physical access requirements apply to ATMs that are altered after March 15, 2012.  The physical access requirements also apply to any new ATMs added after March 15, 2012.  Existing ATMs that comply with the 1991 ADA standards for physical access and are not altered would not need to be modified.  Additional information is available in last month's blog post.

Durbin - Unaffiliated Networks.  The requirement for unaffiliated networks goes into place on April 1, 2012.  This requirement means credit unions need to have two unaffiliated networks - such as one PIN network and one signature network - for processing transactions.  Additional information and details on this requirement can be found in our January 30th blog post.   

NLRB Notice.  Credit unions should be posting the National Labor Relations Board (NLRB) Employee Rights poster by April 30, 2012.  A couple past NAFCU blog posts discussed this issue in more detail:  January 4, 2012 and December 2, 2011.  

Deadline Approaching for ATM Compliance with ADA Standards; 12-FCU-01

Written by JiJi Bahhur, Regulatory Compliance Counsel

Just a friendly reminder that the physical access and speech output requirements for ATMs go into effect March 15, 2012.  The speech output requirement applies to all ATMs on March 15, 2012.  The new physical access requirements apply to ATMs that are altered or added after March 15, 2012.  Existing ATMs would not need to be modified to meet the new physical access requirements.     

The technical requirements for both physical access and speech output can be found in the 2010 ADA Standards for Accessible Design.  Of noted importance were the reach requirements for ATMs, which has been changed from 54” to 48”, and also, the requirements for floor space for wheelchair access, which had been altered to provide more clearance room for individuals in wheel chairs.  Additionally, new ATM keypad requirements were added.  Note: Drive-up ATMs are not required to comply with the reach and floor space requirements.  

For compliance with the speech output requirements, ATMs will be required to have speech output enabled so that users may listen to directions via telephone headset or in a similar nature.  Further, the addition of Braille instructions and tactilely discernible keys are required.     

For additional information on ADA-ATM compliance, check out our August 4, 2010 and September 16, 2010 blog posts and NAFCU’s Final Regulation.   

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Steve mentioned yesterday that there had not been a Letter to Federal Credit Unions issued in 2012.  That changed yesterday afternoon when NCUA issued Letter to Federal Credit Unions 12-FCU-01 addressing the Operating Fees for FCUs.  

Ex Parte Communications; Upcoming Webcasts

Written by Steve Van Beek

The CFPB's General Counsel penned a recent blog post discussing the CFPB's Policy on Ex Parte Communications during the rulemaking process.  The CFPB's policy can be found here.

The blog post provides an overview of which discussions and conversations will be subject to this policy - as well as when the policy starts for a particular rulemaking:

"This policy generally requires public disclosure of ex parte presentations made to CFPB staff concerning a pending rulemaking. This way, the general public will have access to the input that CFPB is receiving.......

.......Once the CFPB publishes a proposed rule in the Federal Register or on the CFPB’s website, the ex partepolicy comes into play. The policy also comes into play when the CFPB publishes an interim final rule with a request for comment. During this stage, the primary way CFPB collects public input is through written comments that are posted on the public rulemaking docket.............................

.........................However, during this stage, members of the public may wish to provide oral or written comments directly to CFPB staff regarding the rulemaking, or CFPB staff may wish to obtain information directly from members of the public. The input CFPB receives in this manner is considered ex parte because it is outside of or in addition to the formal comment process. The CFPB’s policy requires that these ex parte presentations be summarized and disclosed on the public docket. In this way, members of the public can be informed of the input CFPB is receiving. This policy recognizes that ex parte communications can be a valuable source of information that can improve the quality of CFPB’s rulemaking. At the same time, the policy recognizes the need for disclosure to promote openness and fairness." 

Keep in mind that this policy comes into play after a rule has been proposed.  The blog post doesn't discuss if it applies to existing proposed rules that the CFPB inherited from other agencies.  For example, the Fed had quite a few Reg Z proposals that it did not finalize before authority transferred to the CFPB.

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NAFCU has two upcoming HR webcasts that might be of interest to your credit union.  First is an August 31st webcast on Managing Leave under the ADA and the FMLA.  The second webcast is an September 21st webcast on Complying with Wage and Hour Laws.  Both webcasts will feature Manesh Rath, a partner at Keller & Heckman. 

We have a combo package available where credit unions can register for both webcasts and save $100 on the bundle.  For NAFCU members, the webcasts are $199 each or $299 for both.       

This and That...

Posted by Anthony Demangone

I'll cover a ton of ground in this one, as my e-mail inbox is overflowing at the moment.  I've include links to a number of interesting articles and blog postings today. Well, hopefully you'll find them to be interesting...

ADA and ATMs. The National Federation of the Blind has sued United Airlines , claiming their electronic kiosks violate two California laws, one of which protects disabled California citizens.  If someone at your credit union does not understand the importance of coming into compliance with the new ADA expectations, just show them the press release from the NFB.

Reg D adjustments.  The Fed has announced its annual adjustment for reserve calculations and deposit reporting for Regulation D. 

Reg E.  The Fed has issued Consumer Affairs Letter CA 10-12, which announces revised inter-agency exam procedures for Regulation E. It is a fantastic resource for Regulation E issues.

Board minutes. Here's a great article that discusses numerous issues regarding board minutes.  (The Metropolitan Corporate Counsel, written by Christopher S. Connell of Stradley, Ronon, Stevens & Young, LLP)  Who should take the notes? What should the minutes contain?  Can and should individual directors take notes?  Pass this along to your board parliamentarian. 

NCUA.  NCUA has released its board meeting schedule for 2011. It may be worthwhile to place these dates on your calendar, as these are the dates when new rules and proposals would be issued from NCUA.  Those rules have a tendency to throw a wrench into the works of an otherwise normal compliance officer workday. 

Social media.  Are attorneys and compliance officers "social media killers?"  Here's a nice discussion of the issue. (Bank Lawyer's Blog.)

Compliance. Here's a nice discussion on the role of compliance within a corporate entity. (The Metropolitan Corporate Counsel, Hubert Klein, Lily Bradow.) 

ATMs and the ADA; NCUA Board Meeting

Posted by Anthony Demangone

Earlier, we wrote about how the Justice Department had issued new ADA regulations that very well may require changes to be made to credit union ATMs.   The rules were set to take effect six months after publication in the Federal Register.  As they were published yesterday, the effective date for the changes regarding existing ATMs looks to be March 15, 2011.   

The changes are hard to navigate.  And here's why.  In short, these final rules adopt and make mandatory accessibility guidelines that were issued, and then amended, back in 2004 and 2005, respectively.  So, you really won't see the nuts and bolts of the changes that affect ATMs in the regulations.  Rather, you'll see that information in the guidelines. With that in mind, here's how you may want to consider tackling this compliance issue:

• Read our original blog post on the issue here.  
• You can access the Federal Register notices here.  But again, there's not a ton of meat in there regarding the required ATM changes.
• Rather, you'll likely want to focus on the guidelines themselves. The new ATM standards are set forth in Section 707 of the guidelines.
• Contact the company that services your ATMs. Ask them what must be done to your ATMs to bring them up to speed.  They may already be in compliance.
• If you can show that upgrading an ATM would constitute an "undue burden," you'll need to meet the requirements.  That term is defined, and it is fairly complicated.  In addition, it may be an uphill battle to show why you aren't able to upgrade your ATMs while every other bank or credit union in the country is required to do so.

NAFCU is preparing a Final Regulation for NAFCU members to detail the changes.

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Today, NCUA will host its monthly board meeting.  The draft items should be available here by 9 a.m. today.

ATMs and the ADA; Secretary Geithner on Reg Reform

Posted by Sarah Loats

The Justice Department has revised its ADA regulations including its Standards for Accessible Design under the ADA. This rule imposes new standards for ATMs, which are set forth in Section 707 of the guidelines.

Some of the standards include ensuring the same degree of privacy for input and output of information is available to all individuals, speech output capability, and providing adequate clear floor or ground space.

Unless a credit union determines that doing so would result in an "undue burden," it may need to bring existing ATMs into compliance. The text below is an excerpt from the final rule adopting enforceable accessibility standards:

ATMs. The 2010 Standards set out detailed requirements for ATMs, including communication-related requirements to make ATMs usable by individuals who are blind or have low vision. In the NPRM, the Department discussed the application of a safe harbor to the communication-related elements of ATMs. The NPRM explained that the Department considers the communication-related elements of ATMs to be auxiliary aids and services, to which the safe harbor for elements built in compliance with the 1991 standards does not apply.

The Department received several comments regarding this issue. Several commenters representing banks objected to the exclusion of communication-related aspects of ATMs from the safe harbor provision. They explained that the useful life of ATMs--on average 10 years--was longer than the Department noted; thus, without the safe harbor, banks would be forced to retrofit many ATMs in order to comply with the proposed regulation. Such retrofitting, they noted, would be costly to the industry. A few representatives of the disability community commented that communication-related aspects of ATMs should be excluded from the safe harbor.

The Department consistently has taken the position that the communication-related elements of ATMs are auxiliary aids and services, rather than structural elements. See 28 CFR part 36, app. B at 728 (2009). Thus, the safe harbor provision does not apply to these elements. The Department believes that the limitations on the effective communication requirements, which provide that a covered entity does not have to take measures that would result in a fundamental alteration of its program or would cause undue burdens, provide adequate protection to covered entities that operate ATMs.

NAFCU's Regulatory Affairs team is working on a Final Regulation summary of this rule. The final rule is effective 6 months from publication in the Federal Register.

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The Secretary of Treasury Timothy Geithner spoke about Reg Reform on Monday. In his speech, he laid out the core principles that will guide them in the reform going forward:

1. Speed - including speeding up the pace of rule-writing.
2. Full transparency and disclosure.
3. To not layer new rules on top of old ones, but to streamline and simplify.
4. To safeguard freedom of innovation and competition while at the same time preventing abuse and excess risk.
5. Create a more level playing field, domestically and globally.
6. Bring more order and coordination to the regulatory process.

In addition, his comments on consumer protection specifically indicate that they will be looking at simplifying disclosures for credit cards, auto loans, and mortgages. And, in regards to mortgages, he noted that they will be meeting next month with experts in the mortgage industry to discuss how to combine the "two separate and inconsistent federal mortgage disclosure forms." I assume he's talking about the RESPA and TIL disclosures.