Bank Law Monitor

Bank Law Monitor

A Legal Blog for the Financial Services Industry

Core Considerations for Core Contracts

Posted in Banking

Available Lease Signature Contract

Negotiating the terms of a core processing contract makes haggling over a used car seem like child’s play. For most banks, the reality is stark—you might get some wiggle room on price if you’re willing commit to a longer term. You might also get a few changes on issues that “really matter.” But with only a few major core providers to choose from, these providers tend to think they hold most of the cards and don’t like to deviate from their form of master agreement. And when they do, they always seem to want a price adjustment. So it pays to be laser focused on the issues that matter to your institution and let the rest go. Here are some “core” considerations for your next core contract negotiation, or to any other major contract your bank may be considering.

Beware the Discount
Discounts are good, right? They save your bank money, and make you feel like you’ve negotiated a great deal. But before popping open the champagne, pause to consider what tradeoffs you’re being asked to make. Like cable providers, core providers often try to bundle services to get you to purchase things you weren’t otherwise intending to buy. They also may require you to agree to a longer term than you expected. Lastly, don’t excitedly push your team to meet a “discount deadline” at the risk of losing focus on other key issues in the contract—those so-called “deadlines” are usually flexible. Continue Reading

Banks Fight Back Against ADA Website Claims

Posted in Banking

What do financial institutions, restaurants, and clothing stores have in common? They’re the most recent targets of demand letters from plaintiffs’ law firms threatening lawsuits because the institution’s website supposedly violates the Americans with Disabilities Act (ADA). These law firms then offer to improve the accessibility of the institution’s website for a hefty fee. They call it “consulting services;” some banks and credit unions see it differently – calling it extortion and fighting back. The resistance might be working.

The scheme works like this: the bank (often a small community bank with a limited litigation budget) receives a demand letter from a firm purporting to represent a potential customer who’s visually impaired. The letter alleges that the bank’s website fails to comply with the ADA in any number of ways, from font sizes that’re too small to menus that’re too graphical. The firm will typically boast a list of dozens of lawsuits they’ve filed but offer to avoid litigation if the bank agrees to engage the firm to improve its website. The firm’s so-called “consulting fees” range from $15,000 to $50,000—all to settle a single plaintiff’s claim. Paying this fee doesn’t prevent the bank from receiving a similar demand letter the very next day. Continue Reading

No Credit History, No Problem: CFPB Ponders Novel Credit Scoring Ideas

Posted in CFPB, Credit Cards

Last month, the CFPB issued a Request for Information (“Request”) to identify potential ways to increase credit access for underserved segments of the population. In particular, the CFPB noted that certain groups of individuals lack enough credit history to obtain a reliable credit score. While the CFPB’s Request was primarily directed at the financial services industry, the Request also sought input and comments from all interested members of the public.

Generally speaking, an individual’s credit score (and creditworthiness) is assessed based on his or her credit report. A credit report includes a variety of information about the individual’s financial history, including whether he or she regularly makes debt payments on time and the types of debt he or she has incurred (such as mortgages, credit cards, and other forms of loans). This information is then plugged into an algorithm (or generated by a third party, such as FICO or VantageScore Solutions) to calculate the individual’s credit score. The higher the credit score, the easier it is to obtain credit at favorable rates (and vice-versa). Continue Reading

The Future of the CFPB Under the Trump Administration

Posted in CFPB, Trending News, UDAAP

Update (2/16/17):  The U.S. Court of Appeals for the District of Columbia granted the CFPB’s request to reconsider its earlier ruling with respect to the President’s ability to remove the Director of the CFPB. This ruling provides a glimmer of hope for the continuity of the CFPB’s leadership. Oral argument is set for May 24, 2017.


Ever since its inception as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Consumer Financial Protection Bureau (CFPB) has faced heavy criticism. Many believe the CFPB lacks accountability and engages in improper “regulation-through-enforcement” tactics. One of the CFPB’s biggest critics, House Financial Services Committee Chairman Jeb Hensarling (R-Texas), has stated:

“The CFPB undoubtedly remains the single most powerful and least accountable Federal agency in all of Washington. When it comes to the credit cards, auto loans, and mortgages of hardworking taxpayers the CFPB has unbridled, discretionary power not only to make those less available and more expensive, but to absolutely take them away.” Continue Reading