Last year, we made notable progress on legislative and regulatory issues important to credit unions, but we don't plan to rest on our laurels. NAFCU is working to further advance our 2016 top priorities. Here are three issues we are working on this year.
Establishing National Data Security Standards for Retailers
Last year, the Cybersecurity Information Sharing Act, a NAFCU-supported bill that would encourage faster sharing of cyber-threat information among the business and government sectors, was signed into law by President Obama as part of the year-end omnibus package. Recently, the president also introduced the Cybersecurity National Action Plan as part of his 2017 budget.
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However, more needs to be done to protect consumers from cyberattacks. Despite Target's huge data breach in December 2013 and the tidal wave of retail data breaches since, we still have no national data security standards for retailers. According to the Identity Theft Resource Center, the number of U.S. data breaches in 2015 totaled 781, the second-highest year on record since the group began tracking breaches in 2005.
Financial institutions, including credit unions, adhere to stringent standards under the Gramm-Leach-Bliley Act to help safeguard consumers' sensitive personal and financial information, yet retailers are not held to any similar standard.
The Data Security Act of 2015, H.R. 2205, bipartisan legislation introduced by Reps. Randy Neugebauer (R-Texas) and John Carney (D-Del.), would hold retailers responsible for implementing security measures to protect consumer data. S. 961 is the companion bill introduced by Sens. Tom Carper (D-Del.) and Roy Blunt (R-Mo.) in the Senate. We will continue our efforts to ensure this legislation becomes law in the 114th Congress.
Ensuring Overdraft Rulemaking Does Not Limit Credit Union Programs
The CFPB has never been shy about its plans to regulate overdraft programs. While the timeline for the rulemaking is still in flux, recent CFPB actions illustrate that the bureau is not waiting for a rule to push the industry toward the practices it deems appropriate. Based on Director Richard Cordray's remarks at the bureau's February field hearing, the CFPB is promoting a "new" best practice for financial institutions – to design and offer deposit accounts that will help consumers manage their spending and avoid overdrafts and fees.
For credit unions – member-owned cooperatives – this practice is well ingrained. Credit unions have long maintained share accounts that, like all their products, are specifically tailored to meet the needs of their communities in a reasonable, affordable and safe manner.
Clear Rules of the Road
Since its inception in 2010, the CFPB has been reluctant to release any formal guidance on the statutes and regulations it enforces. A glaring case in point is the bureau's unwillingness to offer clear parameters for what constitutes unfair, deceptive, or abusive acts or practices. Currently, UDAAP has no implementing regulations, and Cordray has said none will be forthcoming. Instead, the CFPB is choosing to define and expand its UDAAP authority through enforcement actions and consent orders. This creates unnecessary uncertainty for all players in the marketplace.
The Wall Street Journal recently reported that the CFPB "roughly doubled" its number of enforcement cases in 2015, with a total of 59 settlements and 11 lawsuits. Moving against true bad actors in the industry is a good thing, in our view. However, we think it would be better for everyone – financial institutions as well as consumers – if the CFPB provided clear rules of the road. We stand ready to work with the CFPB to make greater transparency and guidance on TRID, UDAAP and other issues a reality.
B. Dan Berger is president/CEO of NAFCU. He can be reached at 703-522-4770 or [email protected].
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