Skip to main content

Search

Consumer Banking and Payments Law: 1.5.1 Overview

Federal banking law or regulations may preempt the application of state law to products or services offered by banks and credit unions. The law of preemption is summarized only briefly here as it relates to deposit taking and payments activities. It is addressed in detail in two other treatises in this series:

Consumer Banking and Payments Law: 1.5.9 NBA and OCC Preemption of Visitorial Activities

Some states and cities have considered using their own contracting powers to impose conditions on the financial institutions with which they do business. While in general state and local governments can set the terms of their own contracts and choose what institutions receive those contracts, preemption issues could arise if the contracting process is viewed as a broader attempt to regulate national banks or federal savings associations.

Consumer Banking and Payments Law: 1.5.10.2.1 Introduction

Courts have generally held that the National Bank Act and the OCC regulations do not preempt a challenge to a bank’s deception regarding overdraft fees. They have generally reached the same conclusion regarding a bank’s manipulation of the order of posting charges and deposits in order to maximize overdraft fees, especially if deception is involved.201 Courts often contrast these claims with claims that challenge the amount of the fee or the bank’s right to impose it.

Consumer Banking and Payments Law: 1.5.11.1 Gift Card Inactivity Fees and Expiration Dates

Courts have split over challenges to gift card expiration dates and inactivity fees, some finding the claims preempted,237 others rejecting preemption challenges.238 Some of these decisions deal with the question of whether state law is preempted as to a non-bank entity that sells a gift card that has some connection with a bank—an issue mooted by the Dodd-Frank Act amendments that limit preemption to banks themselves, not to agents of banks.239 Mo

Consumer Banking and Payments Law: 1.5.13 Federal Credit Union Act Preemption of State Law

The National Credit Union Administration (NCUA) has been less aggressive than the OCC and the OTS in preempting state laws. Nonetheless, the Federal Credit Union Act (FCUA) and NCUA regulations under it preempt some state laws governing deposit accounts. The Dodd-Frank Act did not revise the preemption standard governing the FCUA, but the same Barnett Bank preemption standard should apply to state laws that apply to federal credit unions.259

Home Foreclosures: 3.4.3.3 The Eaton Decision

In Eaton v. Federal National Mortgage Association,183 the Massachusetts Supreme Judicial Court looked at the related question of whether, at the time of foreclosure, the “mortgagee” must also have authority to enforce the promissory note that the mortgage secures.

Home Foreclosures: 3.6.1 Do Borrowers Have Standing to Challenge Loan Document Transfers?

Lenders have occasionally argued that borrowers lack standing to challenge the validity of preforeclosure transfers of mortgages, deeds of trust, and notes. According to the lenders, the validity of assignments and other transfers of loan documents is purely a matter between the parties to these transactions and borrowers have no stake in questions about their validity.302 Lenders have raised these standing objections most frequently in the context of non-judicial foreclosures, when borrowers file complaints to enjoin or set aside a sale.