Consumer Compliance Trends By Kelly Shafer, CPA, Suttle & Stalnaker Violation Number of Violations Percentage of Total Violations Truth in Lending Act Disclosures (TILA/ Regulation Z) 441 36% Inadequate Flood Insurance (FDPA) 136 11% Electronic Funds Transfer Errors (EFTA/ Regulation E) 129 11% Deposit Account Disclosures (TISA/ Regulation DD) 101 8% Re-Presentment Practices (Section 5 of FTC Act) 96 8% Total 903 74% Notably, violations of the Truth in Lending Act comprised the most significant portion, at 36% of the total citations during the year. The most common violation, comprising 9% of total TILA violations, related to inaccurate or incomplete disclosures of closing cost information on the closing disclosure document. Violations were also noted under Regulation E of the Electronic Funds Transfer Act. Commonly cited issues included inadequate investigation of electronic funds transfer errors, failure to report the results of the investigation to the customer and errors that were not corrected timely, with these areas making up 46% of EFTA violations. Violations of Section 5 of the Federal Trade Commission (FTC) Act made up 8% of total citations. The FDIC frequently cited institutions for charging multiple non-sufficient funds (NSF) fees for the re-presentment of the same transaction, while the disclosures did not clearly describe the institution’s re-presentment practice. This violation represented 58% of all FTC Act citations. A Look Ahead The issues noted by examiners in the 2023 supervisory report influence several consumer compliance trends expected to impact the regulatory landscape in the coming year. The following are a few of the areas anticipated to garner regulatory attention: Fair Treatment of Consumers: Expect a continued emphasis on consumer treatment, including transparency in fees and product terms and conditions. Examiners are scrutinizing practices to ensure they are not misleading to customers. This is seen most notably in the recent focus on overdraft fees and re-presentment practices. Customer Complaint Practices: In addition to exam results, customer complaints drive regulatory changes. Examiners are focusing on how institutions handle customer complaints with an expectation for banks to have effective mechanisms in place to address concerns In this article, we will review the top consumer compliance issues identified by the FDIC in a recent supervisory report and examine upcoming trends that are expected to gain attention from examiners during the latter half of 2024 and into 2025. The FDIC’s consumer compliance supervisory report released in the spring of 2024 highlights trends cited by examiners for the most recent calendar year. The results are summarized from nearly 900 consumer compliance examinations conducted during 2023. The FDIC’s consumer compliance exams use a risk-focused methodology, resulting in the most frequently cited violations involving regulations representing the most significant potential for consumer harm. 2023 Consumer Compliance Highlights Trends in consumer compliance exam citations essentially center around five areas identified in the chart below. These areas comprised 903 of the total 1,227 violations and made up 74% of violations cited by examiners in 2023. 12 West Virginia Banker
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