Compliance Update with Amy K

​IRS alert on ERC fraud; NCUA offering free webinar to discuss efforts to combat bias in home valuations; ND unclaimed property fundamentals; and more. 

SCAM ALERT
The IRS is renewing its alert to businesses concerning the Employee Retention Credit (ERC). As explained in the alert – “The IRS and tax professionals continue to see a barrage of aggressive broadcast advertising, direct mail solicitations and online promotions involving the Employee Retention Credit. While the credit is real, aggressive promoters are wildly misrepresenting and exaggerating who can qualify for the credits.”

The IRS reminds anyone who improperly claims the ERC that they must pay it back, possibly with penalties and interest. A business or tax-exempt group could find itself in a much worse cash position if it has to pay back the credit than if the credit was never claimed in the first place.

So, it's important to avoid getting scammed. The IRS recommends working with a trusted tax professional. Eligible employers who need help claiming the credit should work with a trusted tax professional; the IRS urges people not to rely on the advice of those soliciting these credits. Promoters who are marketing this ultimately have a vested interest in making money; in many cases they are not looking out for the best interests of those applying.

Don't apply unless you believe you are legitimately qualified for this credit. Details about the credit are available on IRS.gov, and again a trusted tax professional – not someone promoting the credit – can provide critical professional advice on the ERC.
 
NCUA – Combatting Appraisal Bias Webinar
The National Credit Union Administration (NCUA) will be hosting a free webinar on June 21 at 12:00 p.m. (CT) titled - “Expanding Homeownership Opportunities by Combatting Appraisal Bias.” In recognition of National Homeownership Month, the NCUA is hosting the webinar to discuss federal government efforts to combat bias in home valuations and increase opportunities for homeownership. The webinar will also provide information about relevant resources available for consumers and credit union professionals. Registration can be found here.
 
ND Unclaimed Property
The North Dakota Unclaimed Property Division will be offering two free webinars where participants will learn the essential unclaimed property fundamentals and skills needed to file accurate reports. Participants will leave with important knowledge and resources to ensure their company complies with state unclaimed property laws. (N.D.C.C. 47-30.2) Any business or entity is a potential holder of unclaimed property.  The North Dakota Unclaimed Property Division understands that holders are the first and vitally important link to returning unclaimed property to rightful owners. Email [email protected] to register.

June 27, 10 AM (CT) – Unclaimed Property Reporting 101,  Learn the fundamentals.

June 28, 10 AM (CT) – Preparing the Manual Online Report (MOR), Instructions on creating the report.
 
CFPB Enforcement Action
The Consumer Financial Protection Bureau (CFPB) took action against Citizens Bank for violation of Truth In Lending which was finalized recently through a stipulated final judgment and order resulting in a $9 million penalty. Enforcement actions are useful training/educational tools to do a self-check to make sure any processes that caused this bank to pay a huge fine aren’t also being done in-house.

As alleged in the complaint, the CFPB brought this action due to the Banks’ failure to reasonably investigate and appropriately resolve billing error notices and claims of unauthorized use, failure to properly credit consumers’ credit card accounts when unauthorized use and billing errors occurred, and failed to provide credit counseling disclosures to consumers as required by Regulation Z.

Among things the Bank has agreed to do under the Stipulated Final Judgment and Order, in addition to paying the $9 million penalty, include:

• Maintain policies and procedures designed to ensure that the treatment, handling, and resolution of billing error notices and unauthorized use claims are in accordance with TILA and Regulation Z.
• Prohibit bank’s employees from requiring consumers to complete, in support of a credit card claim, a fraud affidavit containing language requiring the consumer to submit the affidavit under penalty of perjury;
• Maintain procedures designed to ensure that, when billing error notices and unauthorized use claims are found to be valid, any fees or finance charges to be refunded to consumers are calculated from the date of the error or unauthorized use;
• Maintain procedures designed to ensure that consumers who call Bank’s toll-free number seeking credit counseling are given at least three referrals to credit counseling services in the state in which the billing address for the account is located or the state specified by the consumer, as required under 12 C.F.R. § 1026.7(b)(12)(iv)(A);
• Maintain policies and procedures to test the bank’s compliance with TILA and Regulation Z.

 
InfoSight Highlight – Spotlight on the Marketing Team.
This section provided by - Mary Ann Koelzer, Senior Technology Products Manager, League InfoSight
Effective marketing is critical to any credit union’s success. From website and home banking content, to social media posts, email marketing, lobby boards, and statement stuffers, the marketing team is responsible for reaching existing and potential members through engaging information about the credit union’s products and services while also ensuring that all marketing messages are compliant with federal and state advertising laws and regulations.
The number and complexity of compliance rules can make it hard to keep up.

Here are 5 ways the Advertising Channel in InfoSight can help ease this burden!

1. Ensure your marketing materials are accurate: All advertisements, promotions, and communications must be accurate and not deceptive or misleading in any respect and may not misrepresent the products and services that credit unions offer to their members. The Advertising Channel provides product-specific compliance information such as advertising loans, deposit accounts, consumer leases, and overdraft programs.

2. Help you understand and follow relevant regulations: The topics in the Advertising Channel are written in concise, easy to understand language that explains the law or regulation, why it’s important, and what the credit union needs to do to comply. InfoSight covers topics that might be less familiar to your staff like Website Accessibility, Endorsements and Testimonials, NCUA Advertising Signage Requirements, and Night Deposit Facilities.

3. Train employees in compliance: All staff who contribute to marketing efforts need to be aware of and follow regulations. InfoSight is available free of charge to ALL staff members of affiliated credit unions. Helpful items from InfoSight including advertising checklists, compliance summaries, FAQs, and resources, give your marketing staff the information they need in a format and language that is straightforward and will help inform and educate your staff.

4. Monitor compliance changes: The marketing team needs to stay on top of changes in laws and regulations and update marketing materials and messaging, and policies and procedures accordingly. The InfoSight dashboard can be customized to show updates to selected channels (like Advertising!) so you can be alerted when changes are on the horizon. Most recently the Telephone Consumer Protection Act was updated to include the effective date of the Pallone-Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (TRACED Act), which was originally published back on February 25, 2021. 

Partner with the compliance team: Compliance extends to and is the responsibility of all departments of the credit union. Collaboration between the Marketing and Compliance teams is essential, and InfoSight helps bring your teams together with valuable information to get you on the same page to create an efficient process and ensure that any marketing or advertising efforts are both in compliance and meet the credit union’s messaging goals and objectives. 

As always, DakCU members may contact Amy Kleinschmit with any compliance related questions.