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Consumer Banking and Payments Law: 5.16.1 Overview

In recent years, a number of crypto assets (sometimes called “cryptocurrencies,” “virtual currencies,” or “digital assets”) have been created, such as Bitcoin, Ether, Tether, Litecoin, Peercoin, Freicoin, and XRP. Crypto assets purport to be a form of private money that is not issued by a central bank or government. But in reality, these assets are primarily used for speculation and/or illicit finance.

Consumer Banking and Payments Law: 5.17.2.1 Remedy When Institution Fails to Follow Consumer Transfer Instructions—Section 1693h

Section 5.6.1, supra, discusses the EFTA’s general remedies and application to any violation. The EFTA also provides special remedies for several specific violations. The first of these is a special remedy for certain violations involving the failure to follow a consumer’s money transfer instructions. A financial institution is liable to a consumer under 15 U.S.C.

Consumer Banking and Payments Law: 5.17.2a.2 Good-Faith Conformity With Rules or Certain Approvals or Interpretations

The second EFTA statutory defense to liability provides that a defendant is not liable for any act done or omitted in good faith that conforms to any rule, regulation or interpretation by the CFPB or in conformity with any interpretation or approval by an official or employee duly authorized to issue interpretations or approvals under prescribed procedures, notwithstanding that the rule, regulation or approval is later invalidated.1536 Several other

Consumer Banking and Payments Law: 5.17.3 Who Can Be Held Liable for EFTA Violations?

The EFTA casts liability on “any person” who violates one of its provisions. Some of the EFTA’s substantive requirements and prohibitions apply only to financial institutions, but certain entities that do not hold consumer accounts but provide electronic fund transfer services are nevertheless subject to the EFTA in almost the same manner.1559 Some Regulation E provisions apply to any “person,” not merely financial institutions.1560

Consumer Banking and Payments Law: 2.1 Scope of This Chapter: Bank and Non-Bank Accounts Holding Consumer Funds

This chapter discusses issues primarily related to the bank-customer relationship and bank accounts.1 The Truth in Savings Act currently applies only to bank accounts, but some of the other topics discussed in this chapter may apply to non-bank financial service providers that hold consumer funds in deposit accounts or very similar types of accounts, like prepaid card accounts or mobile wallets.

Consumer Banking and Payments Law: 2.3.1 In General; Fiduciary Duty

When a customer opens a deposit account at a depository institution, the relationship between the bank and the customer is governed by the contract between the customer and the institution and by applicable statutes and regulations. The essence of the bank-customer relationship is that the bank owes the customer the money and is therefore a debtor of the customer.15

Consumer Banking and Payments Law: 2.3.2 Duty of Good Faith and Ordinary Care and Other Common Law Principles

Banks have a duty to act in good faith and use ordinary care in their dealings with their customers, arising both under common law and under the Uniform Commercial Code (UCC).18 The UCC does not create a separate duty of fairness and reasonableness that can be independently breached, but the duty to act in good faith and use ordinary care does color the interpretation of—and duties under—the UCC.19 A specific, applicable provision of the UCC may trump a more generalized common law duty.

Consumer Banking and Payments Law: 2.5.1 Overview and Scope

The Truth in Savings Act (TISA) was passed in 1991 for the purpose of requiring clear and uniform disclosures of interest rates and fees in connection with deposit accounts so that consumers could make meaningful comparisons.28 The TISA also requires disclosure of a number of other aspects of savings and demand deposit accounts, and regulates the calculation of interest payable.