Archive for the ‘CONSUMER PROTECTION’ Category

The Regulation of State Banks

Monday, February 25th, 2013

Is a state law that is preempted from enforcement against national banks also preempted from enforcement against out-of-State, State banks? That was the question in Baptista v. PNC Bank, 91 So. 3d 230 (Fla. 5th DCA 2012).

RBC Bank was a North Carolina bank. One of its account holders wrote a check to Ms. Baptista.  Ms. Baptista went to one of RBC’s branches in Florida, and presented the check for payment. Ms. Baptista did not have an account at RBC. The teller charged Ms. Baptista a $5.00 check-cashing fee.

However, Florida Statutes, section 655.85 provides that “an institution may not settle any check drawn on it otherwise than at par.” Accordingly, we filed a class action suit against RBC. After some preliminary discovery, RBC moved for summary judgment. It claimed that because section 655.85 is preempted from enforcement against national banks, it was also preempted from enforcement against out-of-State State banks, pursuant to title 12 U.S.C. § 1831a(j)(1). Section 1831a(j)(1) provides in part: 

(1)Application of host State law. The laws of a host State, including laws regarding community reinvestment, consumer protection, fair lending, and establishment of intrastate branches, shall apply to any branch in the host State of an out-of-State State bank to the same extent as such State laws apply to a branch in the host State of an out-of-State national bank.

At the time of RBC’s motion, every court that had addressed the issue had interpreted section 1831 to mean that statutes that are preempted from enforcement against national banks are also preempted from enforcement against out-of-State State banks. The trial court granted RBC’s motion for summary judgment, and we appealed.

On appeal, we pointed out that section 1831 does not refer to the “enforceability” of State laws; only to the “applicability” of State laws. We argued that although section 655.85 is “unenforceable” against national banks it is “applicable” to them. We noted that section 655.85 is only preempted from enforcement against national banks because enforcement against national banks would conflict with 12 C.F.R. § 7.4002. However, enforcement of section 655.85 against State banks would not conflict with section 7.4002, because section 7.4002 does not apply to State banks. We argued that section 1831 only prevents States from discriminating against out-of-State State banks. In other words, if a State law provides that it does not apply to national banks, section 1831 prevents that law from applying to out-of-State State banks. Section 655.85 does not discriminate against out-of-State State banks because section 655.85 applies to all banks.

RBC argued that section 1831 was enacted to place State banks on par with national banks, and to preserve competitive equality between national banks and State banks. It said that Congress’ intent was to remove incentives for banks to charter at the federal level rather than the State level, and vice-versa, in order to insure the health and stability of our dual banking system. It argued that having to adjust to bank policies and procedures on a State-by-State basis, and having to stay current on the changes in each State’s laws would be virtually impossible for State banks, and that they would be forced to either abandon banking in foreign States or increase fees to depositors.

The court said that RBC’s arguments contorted the express language of section 1831. It said that the statute simply prohibits States from discriminating against out-of-State State banks. It concluded that section 1831 was not applicable because section 655.85 applies to all banks. Accordingly, the court reversed, and remanded the case for further proceedings.

RBC subsequently filed a petition for a writ of certiorari with the Supreme Court of the United States, but the petition was denied.

Bank of America sued for not crediting payments to credit card accounts upon receipt

Saturday, November 28th, 2009

CPLS and Morgan and Morgan have partnered in an action against Bank of America to force the Bank to credit payments made by consumers to their credit card accounts upon receipt by Bank of America. The named plaintiffs, Jennifer Mendoza and Heydee DeLeon, both had credit cards with Bank of America. They both made payments on their cards on a Saturday at a Bank of America Banking Center on or before the date due, but Bank of America did not credit their accounts until the following business day, causing a $39 late fee, despite the express terms of the Bank’s credit card agreement which requires the Bank to credit the payment upon receipt. Bank of America moved to dismiss the case, but a Federal Judge refused to dismiss the case, finding that there is a valid case for Breach of Contract. The plaintiffs seek to have the case certified as a national class action so that they can stop the Bank from violating the terms of their contract. For more information, please contact Cynthia Conlin, Esq. at cconlin@cplspa.com

Is your Bank charging your employees fees for cashing your payroll checks without your knowledge?

Sunday, November 22nd, 2009

Is your bank charging your employees to cash their payroll checks. Our firm discovered that Bank of America and other banks are charging between $5.00 to $10.00 to cash payroll checks when your employees who are not customers of the bank present their payroll checks to the bank in person. To say the least, this practice was very disturbing to us, especially since it also affects our employees. Our investigation into this practice revealed that the banks have been engaging in this practice for almost 10 years and that this fee is a major revenue source for large national banks and mid sized regional banks.

According to the Consumers Union Southwest Regional Office (http://www.consumersunion.org/finance/noncustsw1001.htm): “Those most likely to be affected by non-customer check cashing fees are individuals often referred to as the unbanked, individuals without their own bank account, who go to banks to cash their paychecks. A study of the Survey of Consumer Finances found that more than half of families without checking accounts are nonwhite or Hispanic, and 85 percent have incomes of less than $25,000. The rising costs of having a bank account combined with the lack of access to a local bank and branch offices have made keeping an open bank account difficult for some families… In an effort to increase profits, banks are looking for other revenue sources. In addition to directing resources into check-cashing operations, banks are tapping into a new market of low income and minority consumers – this time directly – by charging check-cashing fees, even for checks drawn against their own customer’s accounts. Mark Ferrulo, a public interest advocate for Florida PIRG, noted, ‘that used to be part of the package. This fee really just serves to add to the income stream. ‘ It’s almost pure profit.”

Our firm was so outraged with this practice that we sued Bank of America on bahelf of employees in Florida who have been charged for cashing their payroll checks. Not suprisingly, Bank of America vigorously defended its practice and relied upon letters from the Office of the Comptroller of Currency (OCC) addressed to Bank of America for its defense. In support, they argue that your empoyees are the bank’s non relationship “customers” and as “customers” they can charge them the fee. When we reviewed the letters from the OCC to the bank, we noted that, althought the OCC is required to provide notice and an opportunity for the public to comment on the opinion letters, it did not; instead, it relied soley on the information provided by the bank. Suprisingly, in the face of the letter the OCC acknowledged that the bank reqeusted that the informatin it provided be kept confidential and the OCC has obliged. So, there is no way of telling whether or not the information relied upon is enough to provide a sufficient and valid basis for the OCC’s opinion that your employees are customers of the bank.

If you or your emplyees are affected by this unfair bank practice and would like to find out more please feel free to email Tee Persad at attorneypersad@cplspa.com.