April 2020 Vendor Management News

Staying on top of the latest vendor management news and resources is more important than ever. Take a look at the latest third-party risk updates and articles our experts recommend during the month of April. 

Recently Added Articles as of April 30

It's anything but quiet this week as more help is sought for consumers affected by the pandemic. Meanwhile, the fintech industry gets a much anticipated financial boost from a big name in the industry. That and more in the industry news this week...take a peek!

CFPB calls on FCC for help: CFPB Director Kathy Kraninger sent a letter to Federal Communications Commission (FCC) Chairman Ajit Pai urgently requesting that the FCC readdress its ruling against financial institutions contacting customers around issues related to the pandemic. On the behalf of the CFPB, Kraninger emphasized that by allowing financial institutions to call customers they would be better able to provide assistance and clarify questions around lending. "As consumers lose their jobs or get furloughed, they have an immediate need to speak with their mortgage lender to secure their housing," wrote LaBerge. "These calls provide consumers with critical information about how they can safely access their assistance from their credit union during the pandemic." Will increased communication help alleviate anxieties around housing?  

FIS unveils plan to invest in fintech: Florida-based fintech giant FIS unveiled its goal to invest $150 million in fintech startups over the next three years. Their plan will focus on emerging technology specifically around AI and machine learning, digital enablement, automation, data and analytics, security and privacy and distributed ledger technology, to name a few. The FIS Chief Growth Officer stated that this decision comes as part of a commitment to investing in significant innovations and technologies to further improve the way the world pays, banks and invests.  

Montana Supreme Court rules prepaid card refunds ok: In Bratton v. Sisters of Charity of Leavenworth Health System, Inc., the Montana Supreme Court ruled that a healthcare provider’s use of prepaid cards to issue refunds to patients was not in violation of Montana law. The primary concern was that the healthcare provider transferred its payment responsibility over the bank issuing the prepaid cards; however, the Montana Court found that because the moneys were drawn directly from SCL Health’s general account and not the bank’s, SCL was not in violation of the state’s laws. Could the whole thing have been avoided if SCL just issued checks instead?

Recently Added Articles as of April 23

As we attempt to march onward, the globe seems to be experiencing the overwhelming sense of standing still. Yet, legislation and committee action continue to change and flex in response to this strange new world as individuals, businesses and organizations everywhere are holding their breath, waiting to see what the next few weeks will bring.

Pandemic sparks business continuity plan facelifts: As a result of the global crisis brought on by COVID-19, many businesses have been prompted to take a closer look at their business continuity plans. Operations everywhere ground to a halt due to gaps in business continuity plans (BCPs), poor communication and changing business needs. The pandemic has been costly in many ways, and for businesses everywhere, a painful lesson for those with outdated or missing BCP and pandemic planning provisions.  

CFPB advisory committees to converge for town hall: The Consumer Advisory Board, Community Bank Advisory Council, Credit Union Advisory Council and Academic Research Council will meet on May 1^st, virtually that is, in a call open to the public in order to address consumer-related concerns due to the pandemic. The call will also focus on specific consumer groups, including students, older Americans and the needs of underserved members of the community. To join the call, prospective attendees must RSVP by April 30.

State attorney generals ask CFPB director to roll back FCRA relief efforts: At least 21 state attorney generals as well as the District of Colombia and Puerto Rico grouped together to send a letter to CFPB Director Kraninger asking to withdraw guidance surrounding credit reporting. The most pressing concerns are the belief that the CFPB’s suggested guidance is misrepresented and that it does not plan to enforce the CARES ACT reporting provisions or dispute investigation deadlines. Is this a case of he-said, she-said?

FFIEC updates BSA/AML Exam Manual: On April 15, the FDIC announced that the Federal Financial Institutions Examination Council would update several sections surrounding exam procedures inside of its FFIEC Bank Secrecy Act/Anti-Money Laundering Examination Manual. The FDIC stressed that these are not new requirements and should help provide transparency and enhance a risk-focused approach to BSA/AML supervision. These updates were published alongside an interagency statement which provides added detail around the new inclusions.

Regulators ease up on mortgage service providers: On April 3^rd a joint statement was issued by the CFPB, Federal Reserve, FDIC, NCUA, OCC and the Conference of State Bank Supervisors to help provide some added leniency around an already very delicate economy driver —housing. The joint statement underscored that it would not take supervisory or enforcement action for delays in sending mitigation-related notices, establishing live contact with borrowers late on payments or sending written early intervention notices to borrowers. The update also lightens up on lenders who have offered short-term payment forbearance and short-term repayment plans. As we continue to weather the storm that is COVID-19, does this signal the warning bell that another squall is coming? Is another housing crisis on the horizon?

NCUA adjusts exam procedures due to COVID-19: As of March 16, the National Credit Union Administration decided all exams would be held off-site in response to the COVID-19 pandemic. The NCUA also published guidelines around the mandated policy, stating that credit unions are not required to provide documentation or make staff available for discussions with examiners at this time, unless approved by the Office of Executive Director. Additionally, even if an examination is not scheduled for quite some time, NCUA staff may contact a credit union to request documentation needed to complete off-site examination activities. The NCUA also approved virtual meetings to discuss examination details if both the credit union staff and officials were willing. Are virtual meetings here to stay?

Recently Added Articles as of April 16

While nothing really feels normal, our day-to-day demands we keep pushing forward in response to our new circumstances. This week, in industry news, we have cyberattacks, praise to a regulator for their COVID-19 response, a recap on regulatory expectation and lots more to be aware of.

Fintechs given the green light to make emergency business loans: After lobbying to help small businesses, online lenders such as PayPal, Intuit QuickBooks Capital and Square Capital were given the go-ahead to provide consumers with loans to help keep them afloat during the COVID-19 crisis. While the federal government offered small businesses with 500 or fewer employees loans of up to $10 million, with the option for forgiveness is spent on payroll and basic overhead, most borrowers don’t need that much. Instead, many borrowers are looking for loans of $25,000 or less, which has been difficult to obtain from most banks. This is where fintech lenders come into play. Do you think this was a good move, or are there already too many cooks in the lending kitchen?

Cyberattacks threaten vulnerable travelers: Even though the airline industry has been traveling light as of late, it hasn’t stopped cyber terrorists from hacking travelers at the San Francisco airport. While travelers may have not been the intended target, SFO confirmed a data breach in which cyber attackers had stolen Windows passwords and were able to access personal information through two access points — SFOConnect.com and SFOConstruction.com. While none of this is necessarily new information, it does serve as a stern reminder that WiFi networks are not safe and can leave personal information exposed. 

Prepaid cards save the day: An unexpected hero has arisen from the ashes of the pandemic…prepaid cards. During the crisis, the federal government has leaned on the use of prepaid debit cards to dole out financial aid, helping consumers pay their bills and avoid unnecessary fees. Over the next several weeks, prepaid accounts will be an important tool to help Americans with the financial crisis gripping our global economy — especially those without checking accounts. While many will receive money through direct deposit as part of the federal stimulus package, others do not have that option. Instead of checks, the prepaid cards will also help minimize in-person interactions while protecting users from fraud under specific electronic fund regulations.

FTC reimburses $1M+ to victims of online scams: After Sellers Playbook Inc. scammed consumers into believing they could make large amounts of money selling products through Amazon, the FTC and the Minnesota Attorney General’s office is now sending checks to victims who filed complaints about the company. The FTC, alongside CFPB, is also righting another batch of consumers who fell prey to another scam involving golf and kitchen gadgets sold under the guise of “risk-free” trials. Those consumers are also receiving reimbursement, averaging around $34 each. Bad actors never rest, but it seems justice sometimes prevails.

OCC praises FinCEN’s COVID-19 response: In recognition of the hardships the coronavirus has proven, the OCC has also issued bulletin in support of FinCEN’s regulatory guidance, attempting to offer some relief for financial institutions struggling to meet BSA obligations. Bulletin 2020-34 supports by including certain provisions such as exempting these institutions from the beneficial ownership requirements new loans extended to existing customers under the Coronavirus Aid, Relief and Economic Security (CARES) Act Paycheck Protection Program. The OCC encourages financial institutions to take a risk-based approach when managing their BSA programs during the health crisis, and the OCC will consider the actions taken by banks to protect and assist employees, customers and others in response to the COVID-19 pandemic, including any reasonable delays in BSA report filings and other risk management processes.

FinCEN issues COVID-19 AML update for financial institutions: With more people working remotely, fraudsters are using the vulnerability of our current world situation to their advantage. Scams and schemers have adapted their strategies, and in response, FinCEN has issued guidance that stresses the importance of a risk-based approach to the financial industry’s compliance with anti-money laundering obligations. Specifically, the guidance asks that the institutions “consider, evaluate, and, where appropriate, responsibly implement innovative approaches” to mitigate fraud. However, the guidance does not provide any further detail around these vulnerabilities. Is the guidance enough to help bolster our financial institutions amid the one-two punch of both economic stress and cyber schemes? 

KPMG recaps regulatory expectations for financial institutions: With provisions, regulations and updates shifting in response to the crisis, it can be difficult to keep a solid grasp on what’s expected of our financial institutions, and by extension, what consumers should be doing. The KPMG released a roundup of all the most relevant regulations and guidance, including the expansion of credit availability through the Paycheck Protection Program, the Main Street Expanded Loan Facility and the Municipal Liquidity Facility, among others. Additionally, the recap also includes a detailed outline of federal banking regulators rules as well as the SEC-issued orders and state regulatory actions — a useful, well-organized tool in a time of chaos and confusion. 

Recently Added Articles as of April 9

Although the pandemic has effectively shut down many operations, industry news never takes a night off. Take a peek at a few of the top headlines this week.

401k looking smaller than you remembered? Don’t panic: The pandemic has wreaked havoc, not only on the globe’s physical health, but it’s financial health as well. And due to the market volatility, many have noticed their retirement accounts aren’t looked as robust as they did just a few months ago. That’s pretty scary. But, if you’re still able to work, there’s a few things that should help those contributions. This includes lower prices on shares of good stock, as well as a company match. While you may be tempted to hold back on your typical contribution; however, you’ll lose out on your company investment too. Additionally, the money in your 401k is safe from taxes! If you redirect your funds into your checking account, you’re looking at some hefty tax repercussions. So, for now, when it comes to your retirement, the best thing you can do is sit tight, stay calm and carry on.

As infections mount, airlines ground most NYC-area flights: New York continues to fight hard against rapidly increasing infections. In response, American Airlines has made the decision to halt most of its services to and from the New York City area, choosing to operate just 13 flights a day out of La Guardia, JFK and Newark Liberty airports. The move seems to be a part of a cascading effect stemming from United Airlines’ announcement last Saturday that it would reduce its flights from both Newark and La Guardia, from 157 to 17. Delta Airlines too has cut its New York services by 90%, while Budget airline and Spirit also plan to suspend flights. It’s important to note most airlines will continue to provide critical flights for essential personnel and goods. However, declining demand for air travel combined with the CDC’s more fervent warnings don’t paint a rosy picture for airlines…at least not in the near future.

Confusion rocks the lending world as Trump proclaims the virus relief package, “flawless.”:  Amid the chaos COVID-19 has left in its wake, layoffs and economic strain has left the world wondering how it will recover. And while the $349 billion stimulus program was passed to help provide some financial relief, for some the move feels much like trying to use a band aid to stymie a hemorrhage. Trump told reporters on Saturday that the relief process has been “flawless so far,” however, banks are struggling to keep up with the flood of loan requests and small business owners have expressed fear and frustration that the money will run out before their requests have been processed. Tech issues have plagued the process as well, with numerous banks witnessing repeated SBA portal crashes. Both President Trump as well as Democrats, including Nancy Pelosi (who recently made comments around the stimulus package) recognize that it’s likely more financial aid will be needed.

Mortgage servicers urged to assist struggling homeowners:  Both federal and state regulators alike have issued guidance that allows mortgage servicers to help provide some relief to homeowners affected either directly (or indirectly) by the virus. Once a borrower makes a request, citing hardship due to the virus, the lender may enact the CARES Act, which allows up to 180 days of payment forbearance. The act helps to lessen some of the regulatory requirements on both the lending and borrowing side to make the process easier, while also creating lenience around delays due to high call volumes. Much of the provisions seem to function on “good faith,” but the real question is: will it buy enough time?

The Cabinet Regulatory Tracker publishes its April deadlines:  From comment deadlines and compliance dates to delayed actions and expiration dates, the updated list provides an overview of all the most important regulatory need-to-know for the month of April. Some of these dates include rule changes to modify the trade reporting fees applicable to FINRA/NYSE as well as FDIC unsafe and unsound banking practices around brokered deposits. Take a peek to make sure you’ve got your calendar up-to-date!

Movenbank, one of the first “anti-banks,” announces closure: Founded in 2011 by Brett King, Movenbank (which in more recent years just goes by Moven) was one of the first new breed of banks to completely forgo brick and mortar. The mobile-only, low fee app championed a wave of new-age banking options, inspiring a healthy list of rivals, including Digit, Varo Money and Even, to name a few. Although King cites the virus as one of the reasons for the shut-down, the bank’s sister company, Moven Enterprises, will continue on. So while Moven may officially be “moven on out” April 30^th, the other side of the business will focus on the enterprise software, which will provide mobile banking software to a suite of traditional banks. In fact, Moven is also teaming up with a Saudi firm to create a fintech service geared towards savvy Saudis who prefer a more streamline payment option.

Recently Added Articles as of April 2

Checkout the latest news from this past week with information on the continued affects of the COVID-19 virus on vendor risk management.

Marriott data breach: While it seems we’re in unprecedented territory with the current pandemic, consumer data is still at risk. The Marriott confirms a data breach, affecting up to 5.2 million consumers. Marriott responded by giving guests the option of accessing a data monitoring service for a year.

Massachusetts enacts financial state of emergency: The regulation aims to protect consumers from debtors and creditors who may try to unfairly or deceptively collect debt during this challenging time. Is it enough to slow down the scammers?

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