The first meeting in 2024 of the Bankers Compliance Task Force was held on January 23. The Bankers Compliance Task Force is a group of bankers from banks of all sizes who meet quarterly to discuss and receive training on current compliance topics as well as legal and regulatory trends. At that meeting, we discussed many topics relevant to our banking clients’ ongoing regulatory compliance concerns, but as usual, the Overdraft and Fair Lending developments discussed were a large focal point of the meeting.

Overdraft Insights

The Consumer Financial Protection Bureau (CFPB) recently ordered Atlantic Union to pay $6.2 million for “illegal overdraft harvesting” and “illegally enrolling thousands of customers in checking account overdraft programs.”

The CFPB alleged that Atlantic Union did not obtain proper consent from consumers at account opening at a branch when consumers were opting in to the payment of debit card and ATM transactions. Atlantic Union employees orally provided the consumer with the Reg E opt-in options and asked the consumer to opt in orally, and then employees would input the option into the bank’s computer system prior to printing the written consent form. The consent form was later printed and provided at the end of the account opening process, and the form was pre-populated with the choice the consumer had made orally.

Our primary takeaways from this order are that banks should not use pre-completed opt-in forms prior to providing a consumer with written Reg E opt-in disclosures and that any written policies and procedures will likely be requested as part of examinations.

Atlantic Union also allowed existing customers to open a new account over the phone. The CFPB alleged that Atlantic Union employees, during the opt-in process over the phone, did not have a script and provided misleading statements related to the opt-in and associated fees.

Fair Lending Highlights

The first redlining consent order of 2024 — and the eleventh so far resulting from the Department of Justice’s (DOJ) Combatting Redlining Initiative — was issued in January against Ameris Bank, headquartered in Atlanta, but the order related to its lending in the Jacksonville, Florida metropolitan statistical area (MSA).

The DOJ alleged that Ameris did not have any branches in majority-Black or -Hispanic census tracts in the bank’s Jacksonville assessment area and that 20% of these tracts were in majority-Black or -Hispanic areas. The bank closed two branches it had in census tracts with minority populations, including a branch that was the closest to most of the majority-Black and -Hispanic branches, which was a financially high-performing branch. Further, an internal Community Reinvestment Act (CRA) analysis indicated that the bank might face fair lending risks if this branch were to be closed.

Additionally, the DOJ alleged that Atlantic Union avoided marketing and outreach efforts to majority-Black and -Hispanic areas. The bank hired a CRA mortgage banker who had no previous experience and did not originate any loans during the entire time of employment with the bank. Further, the DOJ alleged that the bank failed to “supervise its mortgage bankers to ensure coverage of the assessment area” and failed to “take meaningful efforts to compensate for its lack of branches or outreach in majority-Black and Hispanic neighborhoods. The Bank agreed to invest: $47.5 million in a loan subsidy fund; $120,000 per year ($600,000 total) in partnerships with community or governmental organizations to provide residents of majority-Black and Hispanic census tracts in Jacksonville with services related to credit, financial education, homeownership, and foreclosure prevention;” and $180,000 per year ($900,000 total) on advertising, outreach, and financial education aimed at majority-Black and -Hispanic census tracts. In addition to monetary investments, the bank agreed to implement an outreach plan, to advertise residential loan products to majority-Black and -Hispanic census tracts, to create posters and brochures, to conduct six outreach programs a year, and to develop a consumer financial education program.

During the 2023 Interagency Fair Lending Webinar, the coordinator of the Combatting Redlining Initiative mentioned that referrals from the agencies have increased and that the DOJ had recently released a public service announcement video and a two-page know-your-rights document, respectively “Combatting Modern Day Redlining” and “Redlining and Your Rights.”

The following statements by an official with the DOJ at the Community Reinvestment Act and Fair Lending Colloquium in November 2023 were recently published: “We are proud of the work we have been able to accomplish in these past two years through the Combatting Redlining Initiative. But we are by no means done. We are also focusing on unlawful practices such as reverse redlining and steering.” He also offered advice on how to avoid redlining, including implementing any recommendations from examiners; understanding the full scope of communities served and adjoining areas; getting involved with community groups; and conducting a community needs assessment.

The next meetings of the Bankers Compliance Task Force will be held in April 2024.