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Banking News: CFPB on Fake Reviews, OCC on CRA

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From crypto to cybersecurity, consumer protection and Fed policies, there is no shortage of news that impacts compliance, legal, risk management and marketing professionals within the financial services industry. We regularly monitor industry news and related regulatory updates.

Here’s a roundup of recent items impacting the financial services industry, from Consumer Finance Protection Bureau (CFPB) Policy Guidance on Bank Reviews to the OCC’s FAQs on changes to the Community Reinvestment Act (CRA).

CFPB on Bank Fake Reviews

Not to be missed, a recent headline from the nation’s top watchdog group caught the attention of financial services institutions: “CFPB Issues Policy on Contractual ‘Gag’ Clauses and Fake Review Fraud: Financial companies will face consequences for illegally manipulating or suppressing consumer reviews.”Here’s what you need to know:

As reported by the Independent Community Bankers of America (ICBA), in an update titled “CFPB issues guidance targeting review fraud,” ICBA alerted its membership to a March 23 policy announcement from the Consumer Financial Protection Bureau (CFPB). The CFPB has issued policy guidance regarding potentially illegal practices related to consumer reviews.

The CFPB’s guidance, issued on March 22, 2020, describes certain business practices related to customer reviews that are generally unlawful under the Consumer Financial Protection Act. The CFPB said its effort is related to the Federal Trade Commission’s recent vote to put hundreds of businesses on notice about fake reviews and misleading endorsements. It encouraged banks to ensure their customer review practices comply with all applicable laws, including the Consumer Financial Protection Act (CFPA).

The CFPB statement follows:

WASHINGTON, D.C. (March 22, 2020) — Today, the Consumer Financial Protection Bureau (CFPB) issued policy guidance regarding potentially illegal practices related to consumer reviews. The CFPB seeks to ensure that customers can write reviews, particularly ones posted online, about financial products and services that accurately reflect their opinions and experiences. The guidance also highlights that practices such as posting fake reviews or inserting clauses that forbid a customer from publishing an honest review may violate the Consumer Financial Protection Act.

“In America, no corporation should be able to silence a customer from posting an honest review online,” said CFPB Director Rohit Chopra. “Corporate disinformation campaigns that suppress legitimate reviews or manufacture fake reviews are not only a threat to free speech and fair competition, they are also illegal.”

Many families learn about and shop for credit cards, mortgages, and other financial products online, including through third-party websites that include customer reviews and ratings. Customer reviews are an important way to promote competitive markets. However, if reviews are unreliable, it might reduce the incentive for companies to provide quality service.

The CFPB’s guidance describes certain business practices related to customer reviews that are generally unlawful under the Consumer Financial Protection Act, including:

  • Contractual ‘Gag’ Clauses: Attempting to silence consumers from posting an online review can undermine fair competition. Banks and financial companies that include clauses in form contracts that forbid a consumer from posting an honest review may be engaged in unfair or deceptive practices.
  • Fake Reviews: Markets can be harmed if consumers cannot trust that online reviews are legitimate. Laundering fake reviews in ways that appear completely independent from the company to improve their ratings may constitute a deceptive practice.
  • Review Suppression or Manipulation: Consumers cannot easily shop and compare products and services when firms engage in practices to limit the posting of negative reviews or manipulate reviews to trick or confuse consumers. The guidance explains why these practices may be unlawful.

The CFPB’s effort is related to the Federal Trade Commission’s efforts to deter fake reviews and related fraud across the digital economy. The FTC recently voted to put hundreds of businesses on notice about fake reviews and misleading endorsements, which may result in significant penalties against marketers that engage in this misconduct.

Banks and financial companies should ensure that their customer review practices comply with all applicable laws, including the Consumer Financial Protection Act. Violations are subject to civil penalties and other legal consequences. Read the full bulletin, “Unfair and Deceptive Acts or Practices That Impede Consumer Reviews”

OCC Issues FAQs on Community Reinvestment Act (CRA) Changes

The ICBA also recently shared an update from the Office of the Controller of Currency (OCC). It’s worth noting that the role of the OCC is that it charters, regulates, and supervises all national banks and federal savings associations, as well as federal branches and agencies of foreign banks. An independent bureau of the U.S. Department of the Treasury, its mission is to ensure that national banks and federal savings associations operate in a safe and sound manner, provide fair access to financial services, treat customers fairly, and comply with applicable laws and regulations.

According to the ICBA member update, the OCC issued a Bulletin on February 22, 2022, which summarizes its responses to frequently asked questions about its December 2021 final rule that rescinded its June 2020 Community Reinvestment Act rule and reinstated the 1995 interagency CRA rule. You can find a PDF of the FAQs here: https://occ.gov/news-issuances/bulletins/2022/bulletin-2022-4a.pdf.

OCC Statement Highlights

The FAQs provide general information on the impact of the final rule on CRA bank type, qualifying activities, the transition period, assessment areas, and more, and address questions related to:

  • the impact of the final rule on CRA bank type
  • qualifying activities and the qualifying activity confirmation request system
  • the transition period
  • examination administration
  • assessment areas
  • targeted geographic areas
  • data reporting
  • changes to public notices and public files
  • strategic plans.

According to the OCC, the document provides information about potential CRA questions during the transition from the June 2020 CRA rule to the December 2021 CRA rule that is largely based on the rules adopted jointly by the OCC, the Board of Governors of the Federal Reserve System (Board), and the Federal Deposit Insurance Corporation (FDIC) in 1995, as revised (1995 rules). The final rule applies to national banks as well as federal and state savings associations, covered savings associations, and federal branches and agencies of foreign banking organizations subject to the CRA.

Bank Industry Response to OCC on CRA

ICBA Position: ICBA issues two responses to this, in a comment letter and joint letter with other banking industry groups which included:

  • American Bankers Association
  • Association of Military Banks of America
  • Bank Policy Institute
  • Community Development Bankers Association
  • Consumer Bankers Association
  • Housing Policy Council
  • Independent Community Bankers of America
  • Mortgage Bankers Association
  • National Association of Affordable Housing Lenders

ICBA said it supports the recission but opposes an outright return to the 1995 rule for provisions of the 2020 rule that banks have already implemented.

Stay tuned in and stay in touch with news and notices impacting financial services, and check out our Resources to stay apprised of related topics, trends and technology impacting the industry.

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