MICHIGAN CREDIT UNION LEAGUE



IssueSummaryStatusElectronic Notarization(Passed Senate)Current law in all but two states requires that an individual seeking the performance of a notarial act must physically appear before a notary public for positive identification. While Michigan has adopted the Uniform Electronic Transaction Act, it does not participate in electronic notarization (e-notary). Representatives from the Secretary of State indicated that E-SIGN and UETA already authorized e-notary; however, current state rules do not permit electronic notarization.Remote electronic notarization (REN) would allow notary publics and individuals to sit at their own personal computers and conduct a notarial transaction. The parties would log into a platform that would verify identities and then would proceed to create a video chat connection between the notary and the individual. The entire transaction would be done via the video chat and the document would be signed and sealed entirely online. Senator Peter MacGregor is the main sponsor of SB 664. This legislation passed out of the senate 37-0 and is now in the House Financial Services committee where it will be taken up in the fall. Under the legislation, the Secretary of State and DTMB would approve tamper-evident technologies within 90 days after enactment for notaries to use if they choose to notarize documents electronically. Representative Diana Farrington is the main sponsor of HB 5811. This legislation would allow for remote electronic notarization in the State of Michigan. This legislation passed both Chambers and was signed by the Governor in June. SB 664 is expected to be to the governor’s desk before the legislature convenes for the year. Please encourage your Representative to support SB 664 through to passage in the House. Data Breach Notification & LiabilityOver the past decade, an increasing number of businesses and state agencies have reported massive data breaches. Wendy’s had a large data breach in 2015 impacting hundreds of thousands of Michigan credit union members. Credit unions continue to bear the majority of financial costs of data breaches. While pin-chip cards (EMV technology) represent an improvement in payment technology, these only impact one aspect of the electronic payment process. States must ensure all of those who participate in the payments system share the costs resulting from data breaches. Additionally, State laws should ensure institutions and citizens impacted by breaches are notified in a timely fashion. In early October 2017, Data Breach legislation (SB 632-633) was introduced in the State Senate by Chairman Darwin Booher.This legislation will require the individual, agency or business that incurs a breach to notify their card processor that a breach has occurred within 3-days. The legislation also creates a cyber-security council in which two members of the financial industry would participate. In September 2018, Representatives Diana Farrington and Joe Graves introduced HB 6405-6406 to create an entirely data breach notification act. This legislation would require notification by the breached entity within 45-days and various tiers of notification based on the size of the breach. The legislation also includes guidelines for security standards that the entities storing data should adhere to. The MCUL supports SB 623-633 and HB 6405-6406 and encourages you to contact your legislators to encourage their support of these packages. Payday Lending ExpansionMany Michigan consumers are feeling the pinch from revolving, high-interest credit extended by alternative financial service providers such as payday lenders. Credit unions and other depository institutions are heavily regulated at both the state and federal levels whereas payday lending storefronts are only regulated at the state level. In Michigan, the Deferred Presentment Service Transaction Act (DPSTA) regulates these alternative provider products. However, in advance of new federal rules seeking to curb industry abuses, several payday lending companies are pursuing state reforms to further expand their product and lending authority. SB 430-432 were introduced in June of 2017 by State Senators David Robertson (R) and Vincent Gregory (D). This legislation would create an entirely new act for payday lenders called the Small Loan Regulatory Act. Under the Small Loan Regulatory Act created in SB 431, a licensee would be able to offer borrowers a small loan with a maximum $2,500 to be repaid within 2 years with triple-digit interest rates (vs. current 30-day, $600 loan). These bills expose Michigan consumers to predatory loan products with inadequate consumer protections. The House is looking at legislation that would provide payday lenders that authority to utilize installment loan products however, the most that a member could take out it one $1,250 or 2 of the $600 traditional payday loans; they could not take out both. There would be 11% interest on the 1st $500 of the $1,250 installment loan product and it would be tiered from there on the additional $750. This new product would be for a 1-year term. Currently no language has been introduced however, with this year being a lame duck session it could move very quickly through the process in December. Please encourage your State Legislator to oppose this legislation. IssueSummaryStatusMaintain CU “Not-for-Profit” Tax Status In 1937, Congress granted credit unions a not-for-profit status based on their cooperative structure. To this day, credit unions continue to operate as democratically controlled cooperative institutions, serving their members on a not-for-profit basis. As cooperatives, credit unions have a long-standing tradition of protecting their members’ interests. The credit union not-for-profit tax status is good public policy that benefits all Americans. More than 5.3 million consumers have chosen to become a member at one of Michigan’s 227 credit unions. Nationally, there are more than 100 million credit union members. The credit unions’ not-for-profit tax status enables all CUs, regardless of asset size, to provide high quality, low cost financial services to their members. In late 2017, Congress passed, and the President signed into law, H.R. 1, the Tax Cuts and Jobs Act (PL. 115-97). While this bill did impact many popular tax provisions, it did not change the credit union not-for-profit tax status. Credit unions must remain vigilant as those opposed to the credit union not-for-profit tax status will continue to advocate for change. When speaking with your federal lawmakers please: Thank them for their 2017 statement in support of the credit union not-for-profit tax status. One was received from each member of the delegation. Ask the lawmaker for their continued support of the credit union tax status and urge them to work with leadership to ensure that it is preserved in the future. Data Security ReformIn recent years, several major national retailers reported massive data breaches. The list of retailers incurring breached card data continue to grow, and includes national names such as Target, Home Depot, Michaels, Neiman Marcus and Wendy’s, among others. The Target breach exposed card or personal identifying information of nearly 70 million consumers nationwide. Stolen information from this breach began turning up in the illegal marketplace, costing credit unions over $30 million. The retail industry’s self-policing is clearly inadequate. Financial institutions are required to assume the costs related to card replacement, fraud control and member communication.MCUL supports efforts to help Michigan credit unions combat data breaches. MCUL and CUNA will continue to work with Congress at all stages of the legislative process until common sense data breach legislation is passed into law. Please ask your lawmakers to support legislation that reflects the following principles: Includes strong national data protection and consumer notification standards with effective enforcement provisions. Recognizes robust data protection and notification standards to which credit unions and banks are already subject. Provides for preemption of inconsistent state laws and regulations in favor of strong federal data protection and notification standards. Affords credit unions and banks the clear authority to inform customers and members about a breach, including where it occurred. Shares responsibility for all those involved in the payments system for protecting consumer data. The costs of a data breach should ultimately be borne by the entity that incurs the breach.Overdraft Protection ServicesOn August 1, 2018 Senators Cory Booker (D-NJ) and Sherrod Brown (D-OH) introduced the Stop Overdraft Profiteering Act of 2018 (S. 3343). In the House, Representative Carolyn Maloney (D-NY-12) introduced a similar bill, H.R. 3606, the Overdraft Protection Act of 2017. S. 3343 would ban overdraft fees on ATM withdrawals and debit card transactions while restricting fees for checks and recurring payments to one per month and no more than six in a single calendar year. Meanwhile, H.R. 3606 would enforce a limit of not more than one overdraft fee per month and not more than six overdraft fees in a single calendar year, per transaction account, regardless of payment type. The principle benefit of these services is realized by the member. They no longer face a declined transaction charge, monetary penalties, and other legal exposure for overdrawing on an important transaction, they pay a small fee to carry on with their business, which can be mundane or related to critical health, professional or family expense. MCUL opposes S. 3343 and H.R. 3606 as the bills would severely restrict consumer access to overdraft protection services valued by credit union members. Please urge your lawmakers to oppose S. 3343 and H.R. 3606. ................
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