Class Action Lawsuit Could Require Work by Credit Unions

A class action lawsuit filed in Oregon may impact credit unions with members who live in or who have used their debit cards in Oregon.

The lawsuit impacts consumers who used their debit card at an Oregon ARCO or Oregon ampmminimart during the period from January 1, 2011 through August 30, 2013. The purchase must have been made with the debit card and the consumer must have been charged a fee for using their debit card.

Consumers have the ability to opt out of this lawsuit. If they do not, they will automatically be a part of the class if their card was identified as having been used at one of the merchants listed.

It is important to note that the consumer does not need to be a resident of Oregon, the only triggering requirement is that they used a debit card at an Oregon location of the businesses listed, and were charged fees for doing so.

A website is available for consumers to learn more information.

Why is This Important to Credit Unions?

While credit unions are not responsible for going through their records to determine who is eligible to be party to the lawsuit, credit unions are beginning to receive notice of upcoming subpoenas. The courts will be subpoenaing hundreds of thousands of records from financial institutions with affected members. The subpoenas will include a request for the name, address, phone number, email address, and social security number of any of the identified card holders.  The information provided will be treated as highly confidential by the courts and the third party that is working to gather the information.

What Should Credit Unions do Now?

Credit unions don’t need to worry about gathering this data until they receive the subpoena and the associated data (list of debit card numbers). If you do receive a subpoena and have questions, the attorneys listed on the subpoena can help answer questions for you.

Compliance Question of the Week

If initial disclosures are silent on skip payments, does the credit union have to provide the disclosure for skip payments on closed-end loans if a fee is charged?        

No, Regulation Z does not require subsequent disclosures for skip payments on closed-end loans. Generally, the only time the new Truth in Lending (TIL) disclosures are required for closed-end loans is if a refinancing occurs. This is because the existing obligation is replaced by a new obligation for the same consumer. If the existing agreement is only being modified, no new disclosures are required.

Related Links:

12 CFR 1026.20

Legal Briefs

Consumer Financial Protection Bureau (CFPB)

The CFPB issued guidance to mortgage brokers transitioning to “mini-correspondent lenders.”

The CFPB released a new interpretive rule to help lenders understand how to handle the new Regulation Z requirements on the Ability-to-Repay Rule involving successors-in-interest situations.

The CFPB issued a memo to staff stating that it is their policy to recognize all lawful marriages, including same-sex marriages, in regards to the rules they administer including the Equal Credit Opportunity Act and Truth in Lending, and the Real Estate Settlement Procedures Act.

The CFPB published an article on its blog aimed at helping housing counselors understand the new lending regulations better. The article includes links to different tools for housing counselors to ensure they understand the protections that are available to struggling mortgage borrowers.

The CFPB released a report detailing how remittance transfer information can be used to help consumers whose credit records are considered unscorable.

Federal Reserve Board (FRB)

The July issue of FedFocus is now available.

The meeting minutes for the June Federal Open Market Committee have been released.

Federal Housing Finance Agency (FHFA)

The FHFA issued draft requirements for private mortgage insurance companies that insure loans guaranteed by Fannie Mae and Freddie Mac.

National Mortgage Licensing System & Registry (NMLS)

The NMLS announced that it will hold an open meeting with the NMLS Ombudsman on August 5 from 9-11:30 a.m. in Seattle, in conjunction with the American Association of Residential Mortgage Regulators.

Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of July 11, 2014. The last update prior to this was July 10, 2014.

Questions? Contact the Compliance Hotline: 1.800.546.4465,

Posted in Compliance News.