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  • District court compels arbitration of biometric privacy suit

    Courts

    On May 15, the U.S. District Court for the Northern District of Illinois granted an online photography company’s motion to compel arbitration in a biometric privacy lawsuit, notwithstanding the company’s unilateral modification of arbitration terms after the lawsuit was filed. According to the opinion, the plaintiffs created an account on the company’s website in August 2014. In May 2015, the company added an arbitration provision to its Terms of Use. In June 2019, the plaintiffs filed the proposed class action alleging the company violated the Illinois Biometric Information Privacy Act (BIPA) “by using facial-recognition technology to extract biometric identifiers for ‘tagging’ individuals and by ‘selling, leasing, trading, or otherwise profiting from Plaintiffs’…biometric information.’” In September 2019, the company sent an email to all of its users that its account Terms of Use were updated, including provisions regarding arbitration. The email stated that if users continued to use the website or did not close their account by October 1, 2019, they were deemed to have accepted the updated terms. The plaintiffs’ account remained open as of October 2, 2019. The company moved to compel arbitration of the plaintiffs’ claims. The plaintiffs argued that the September 2019 email did not create a binding agreement to arbitrate and that it should not apply retroactively to the June 2019 claim.

    The court rejected the plaintiffs’ arguments, concluding that they were already bound to arbitration by the 2015 update to the company’s terms of use, because the terms accepted in 2014 included a “change-in-terms” provision, allowing the company to revise terms from time to time by posting revisions. Moreover, the court disagreed with the plaintiffs that the September 2019 email was “an attempt by [the company] to ‘surreptitiously’ bind unwitting putative class members to arbitration agreements,” noting that the 2019 modifications did not significantly alter users’ rights under the arbitration agreement and the court would “not rely on the 2019 email to find that any putative class members agreed to arbitrate.”

    Courts Arbitration Privacy/Cyber Risk & Data Security Class Action

  • Global advisory addresses illicit shipping and sanctions evasion practices

    Financial Crimes

    On May 14, the U.S. Departments of State and Treasury, along with the U.S. Coast Guard, issued a global advisory warning the maritime industry of deceptive shipping practices used by Iran, North Korea, and Syria to evade economic sanctions. The “Sanctions Advisory for the Maritime Industry, Energy and Metals Sectors, and Related Communities” expands upon previously issued advisories and discusses due diligence approaches that entities, including financial institutions, should employ to monitor illicit activity and mitigate the risk of potentially engaging in prohibited activities or transactions. Among other things, the advisory provides a list of general compliance practices that may help entities “in more effectively identifying potential sanctions evasion.” These include: (i) institutionalizing sanctions compliance programs; (ii) establishing Automatic Identification System (AIS) best practices and contractual requirements to monitor for manipulations and disruptions, which may be an indication of potential illicit or sanctionable activity; (iii) monitoring ships throughout the entire transaction lifecycle, including those leased to third parties; (iv) knowing your customers and counterparties; (v) exercising supply chain due diligence; (vi) incorporating these best practices into contractual language; and (vii) engaging in industry information sharing of challenges, threats, and risk mitigation measures.

    See here for previous InfoBytes coverage on global shipping advisories.

    Financial Crimes OFAC Sanctions Department of Treasury Department of State Of Interest to Non-US Persons North Korea Iran Syria

  • Louisiana Securities Division extends operations guidance

    State Issues

    On May 18, the Louisiana Office of Financial Institutions, Securities Division, updated guidance (previously discussed here) regarding its operations to extend the guidance to June 5, 2020, in light of the Louisiana governor’s extension of the state of emergency until that date. The guidance addresses, among other things, submission of registration and fees, conduct of remote examinations, and processing of licensing and registration applications.

    State Issues Covid-19 Louisiana Securities Examination Licensing

  • Nevada Dept. of Business and Industry extends work from home guidance

    State Issues

    On May 18, the Nevada Department of Business of Industry, Division of Mortgage Lending extended its provisional guidance allowing licensed mortgage loan originators to work from home (previously covered here) until August 31, 2020.

    State Issues Covid-19 Nevada Mortgage Lenders Mortgage Origination Mortgages

  • Nebraska authorizes virtual annual meetings for credit unions

    State Issues

    On May 18, the director of the Nebraska Department of Banking and Finance released guidance allowing state-chartered credit unions to hold their annual meetings and certain special member meetings virtually, provided that certain requirements are met. 

    State Issues Covid-19 Nebraska Credit Union

  • Maryland regulator reminds student loan servicers of obligation to report suspended payments as current

    State Issues

    On May 18, the Office of the Maryland Commissioner of Financial Regulation issued an advisory to student loan servicers and credit reporting agency registrants to remind them of their furnishing obligations under the federal CARES Act to ensure that suspended payments are not reported as delinquent. The advisory notes that it has come to the office’s attention that a student loan servicer of a significant amount of federal student loan debt was not accurately furnishing information and reminds servicers that under Maryland’s Student Loan Servicing Bill of Rights, it is a violation of Maryland law to knowing or recklessly provide inaccurate information or refuse to correct it.

    State Issues Covid-19 Maryland Student Lending Student Loan Servicer Credit Reporting Agency CARES Act

  • FinCEN advisory warns of Covid-19 medical scams, provides guidance on reporting suspicious activity

    Federal Issues

    On May 18, the Financial Crimes Enforcement Network (FinCEN) issued an advisory and companion notice on medical scams related to the Covid-19 pandemic that provide detailed instructions for financial institutions filing reports of Covid-19-related suspicious activities. The advisory outlines numerous red flag indicators and case studies addressing Covid-19 medical-related fraudulent activity to assist financial institutions in detecting, preventing, and reporting suspicious transactions. FinCEN also encourages financial institutions to consider additional contextual information, such as a customer’s historical financial activity and whether a customer exhibits multiple indicators, before making a determination that a transaction is suspicious. FinCEN further advises financial institutions—when taking a risk-based approach to Bank Secrecy Act compliance—to perform additional inquiries and conduct investigations as necessary.

    The companion notice provides, among other things, that suspicious activity reports (SAR) should only include Covid-19 statements tied to suspicious activity and that statements related to Covid-19’s impact on SAR filing abilities should not be included. However, FinCEN states that filers who previously included these references are not required to file corrected reports. For fraud schemes, including those that exploit the Covid-19 pandemic, FinCEN reiterates that full details related to SAR filings and supporting documentation should be submitted as quickly as possible. The notice also addresses information sharing among financial institutions and provides contact information for reporting Covid-19-related criminal activity to other agencies.

    Federal Issues FinCEN Covid-19 Financial Crimes Bank Secrecy Act SARs Of Interest to Non-US Persons

  • Washington amends and extends proclamations regarding state of emergency, garnishments, and accrual of interest

    State Issues

    On May 15, the Washington governor issued Proclamation 20-49.1, which amends and extends Proclamations 20-05 (declaring a state of emergency) and 20-49 (regarding garnishments and accrual of interest). Proclamation 20-49 was previously covered here. Proclamations 20-05 and 20-49 are amended to (i) recognize the extension of statutory waivers and suspensions by the Washington legislature until the sooner of the termination of the Covid-19 state of emergency or 11:59p.m. on May 21, 2020, whichever is first, and (ii) similarly extend the prohibitions contained in those proclamations until the earlier of the aforementioned dates.

    State Issues Covid-19 Washington Debt Collection

  • New Mexico issues public health order

    State Issues

    On May 15, the New Mexico Department of Health issued an order directing that essential businesses must operate in accordance with the applicable Covid-Safe Practices section of the All Together New Mexico: Covid-Safe Practices for Individuals and Employers. Essential businesses include banks, credit unions, insurance providers, brokerage services, and investment management firms, among others.

    State Issues Covid-19 New Mexico Credit Union Insurance Broker-Dealer Investment Adviser

  • Colorado Banking and Financial Services commissioners provide guidance on Safer at Home orders

    State Issues

    On May 15, the Colorado Banking and Financial Services commissioners provided additional guidance on the Safer at Home orders. The commissioners continue to encourage Colorado state-chartered financial institutions to work with affected borrowers and customers, and provide payment relief to consumers impacted by Covid-19. For example, financial institutions are encouraged to waive fees for services (e.g., overdraft fees, ATM fees) and provide accommodations such as eliminating minimum balance requirements on accounts and increasing daily withdrawal limits on ATMs.

    State Issues Covid-19 Colorado Financial Institutions Consumer Finance Overdraft ATM

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