Maryland regulator: Banks and credit unions should lift automated holds imposed on CARES Act recovery rebates

State Issues Covid-19 Maryland Bank Compliance Credit Union CARES Act Debt Collection

On April 30, the Maryland commissioner of financial regulation issued guidance to banks and credit unions in light of the April 29 executive order prohibiting garnishment or setoff of CARES Act recovery rebates. The guidance “strongly” urges Maryland-chartered depository institutions to “immediately” review their automated systems to ensure that they do not intercept, hold, or set-off against CARES Act recovery rebate payments made through direct deposit. The guidance also urges depository institutions to cash CARES Act recovery rebates issued as checks for customers and non-customers alike, and to do so without charging any fees to consumers.  Any entity that seeks to engage in collection efforts against CARES Act rebate payments would be in violation of the Maryland Debt Collection Practices Act.