Last Week, This Morning

May 4, 2026

Below you will find several key developments in the financial services industry, including related developments in information privacy and data security, from the past week. We add an "Amicus Brief(ly)¹" comment to each item, where we briefly (see what we did there?) note for friends (and again?) of CounselorLibrary the important takeaways from the developments outlined in the email. Our legal reporters - CARLAW, HouseLaw, InstallmentLaw, PrivacyLaw, and BizFinLaw - provide more comprehensive, real-time updates of federal and state laws, regulations, litigation, and other industry items of interest. For a personal guided tour and free trial of any of these legal reporters, please contact Michael Willer at 614-855-0505 or mwiller@counselorlibrary.com.

On April 24, the Office of the Comptroller of the Currency issued an interim final rule that clarifies that a national bank's power under the National Bank Act to charge non-interest charges and fees includes the power to charge and collect interchange fees for processing credit and debit card transactions, regardless of whether those fees are set by the bank or a third party. An interchange fee is generally a fee paid to an issuer bank as part of a payment card transaction.

According to the OCC, 12 C.F.R. § 7.4002, which implements the NBA, "sets out national banks' broad authority to impose non-interest charges and fees and provides each national bank with the discretion to make business decisions about how to impose those charges and fees." The OCC issued the interim final rule because these preexisting powers under the NBA have recently come into question relative to the Illinois Interchange Fee Prohibition Act, which becomes effective on July 1, 2026. The IFPA, enacted in 2024, prohibits card issuer banks, card networks, and acquirer banks from charging or receiving interchange fees on the tax and gratuity portions of payment card transactions and restricts the use of payment card transaction data. The OCC believes that the IFPA would have created a complex and potentially unworkable standard for national banks attempting to comply with the state law. The OCC states that "[a]lthough the OCC believes that § 7.4002 already allows national banks to impose fees that are set by a third party, the OCC is revising § 7.4002 to make that explicit and resolve any uncertainty about the scope of the regulation. The OCC is also revising § 7.4002 to specifically include interchange fees as a type of non-interest charge or fee national banks may impose." According to the OCC, "[t]he NBA clearly permits national banks to make th[e] decision to [agree to the interchange fees set by the card networks], along with decisions about the payment card services to offer, the card networks with which to contract, and the terms of the agreements. Therefore, the applicability of § 7.4002 should not be read to change simply because a third party has a role in setting the non-interest charges and fees."

In addition, the OCC issued an interim final order that confirms that the NBA preempts the IFPA with respect to national banks and the Home Owners' Loan Act of 1933 preempts the IFPA with respect to federal savings associations.

The interim final rule and interim final order are effective on June 30, 2026. Comments on the interim final rule and order are due within 30 days after publication in the Federal Register.

Amicus Brief(ly): We remember a time when the states were passing high-cost mortgage loan laws modeled after the federal Home Ownership and Equity Protection Act, and the OCC reliably issued guidance asserting a federal preemption for national banks that might otherwise be subject to those state laws. But with a series of preemption cases over the past couple of years establishing that a national bank has to demonstrate that a state law prevents or significantly interferes with the exercise of its NBA powers, and the elimination of Chevron deference to agency interpretations, national banks should be sure that they take steps to "establish" non-interest fees like the interchange fee as a part of their preemption determination. They should also document how they arrived at their preemption position with respect to state limitations on such fees. Given the recent, narrower interpretations of this federal preemption power from the courts, it appears that national banks will have to carefully consider preemption positions even in light of favorable agency interpretations like this OCC action.

On April 22, the New York Department of Financial Services issued an industry letter reminding regulated entities of their obligations under the state's fair lending law - New York Executive Law § 296-a - and that covered credit decisions that result in disparate impact may constitute an unlawful discriminatory practice. The industry letter links to three consent orders entered into by the DFS and New York state-chartered banking institutions in 2021 and 2022 in connection with the banks' underwriting and pricing of retail installment sale contracts that they purchased from auto dealerships. The consent orders resolved allegations that the banks purchased RISCs from dealerships that included higher average dealer markups for certain minority buyers than the average dealer markups for non-Hispanic white buyers. Banks can provide dealerships discretion to mark-up prospective buyers' finance charge (interest) rates above the bank's risk-based "buy rate," i.e., the specified minimum finance charge (interest) rate at which the bank will approve and purchase a RISC from a dealership based on its underwriting and pricing criteria as applied to the buyer.

N.Y. Exec. Law Section 296-a provides that it is an unlawful discriminatory practice for any creditor to, among other things, "discriminate in the granting, withholding, extending or renewing, or in the fixing of the rates, terms or conditions of, any form of credit, on the basis of race, creed, color, national origin, citizenship or immigration status, sexual orientation, gender identity or expression, military status, age, sex, marital status, status as a victim of domestic violence, disability, or familial status[.]"

Amicus Brief(ly): The industry letter appears to be a direct reaction to recent regulatory moves from the federal banking agencies implementing new regulations that make clear that they do not interpret the Equal Credit Opportunity Act and Regulation B to recognize a "disparate impact" theory of liability and that they will not examine for disparate impact. Nothing has changed in New York vis-à-vis its fair lending law. By citing the three recent fair lending settlements with banks in the context of indirect vehicle finance, the DFS is just reminding banks of the settlements and that the recent federal developments do not change the way New York is thinking about fair lending. The DFS is saying expressly that it does recognize the disparate impact theory of liability - good information for state banks with indirect vehicle finance programs that allow dealer price discretion.

On April 28, Maryland Governor Wes Moore signed Senate Bill 582, which enacts a provision that prohibits a person from sending a check or other negotiable instrument to an individual if: (1) the check or negotiable instrument is sent in connection with an offer to extend secured credit to the individual and the individual has not submitted an application for or otherwise requested the extension of secured credit before receiving the check or negotiable instrument; or (2) the check or negotiable instrument is sent as part of an unsolicited offer to purchase real property. This provision does not apply to a person that sends to an individual: (1) a convenience check for the sole purpose of accessing an existing credit line of the individual; or (2) a prescreened firm offer of unsecured credit subject to regulation under the federal Fair Credit Reporting Act. Violators are guilty of a misdemeanor and subject to a fine not exceeding $500.

An individual who is sent a check or other negotiable instrument in violation of this new provision is not liable for the amount of the check or negotiable instrument unless the individual actually receives and negotiates the check or negotiable instrument.

S.B. 582 is effective on October 1, 2026.

Amicus Brief(ly): Live checks are not the most popular form of unsolicited marketing for loans anymore, but there are creditors that use them in certain contexts. This new law does not prohibit creditors from using them altogether since lenders offering unsecured credit can still use live checks in prescreened firm offers of credit. Supporters of the bill raised concerns common to this form of advertising: consumers may be deceived by the solicitation and believe (notwithstanding clear disclosures) that they are getting free money; these advertisements target the most vulnerable consumers with expensive debt; and creditors should only be offering credit to consumers who request it. Those concerns carried the day in Maryland, and creditors have until October 1 to adjust their marketing practices, if necessary.

On April 28, Maryland Governor Wes Moore signed Senate Bill 94 to prohibit certain tipping practices by lenders and earned wage access providers.

Specifically, S.B. 94 amends provisions of the Commercial Law Article of the Maryland Code to prohibit lenders from accepting a tip from a consumer or giving a consumer the option to provide a tip. The new law also amends provisions of the Commercial Law Article governing EWA providers to prohibit them from soliciting or retaining tips, gratuities, or other donations and to provide a disclosure to the consumer that the EWA provider is prohibited from doing so. The law also states that an EWA provider may not make any false, misleading, or deceptive statement regarding fees, rates, terms, or conditions of earned wage access products. If fees or rates of fees are advertised by a licensee, the Commissioner of Financial Regulation "may require the licensee to state the fees or rates of fees fully and clearly in any manner the Commissioner considers necessary to prevent misunderstanding by a prospective consumer." The law prohibits an EWA licensee from discriminating against a consumer on certain specified bases.

In addition, S.B. 94 provides that an EWA licensee is not subject to a penalty for a violation if the licensee, in good faith: (1) performed or failed to perform an act in reliance on an attorney general opinion or reliance on a regulation, opinion, or interpretation written by the Commissioner; or (2) used a form or procedure that has been approved by the Commissioner and the attorney general.

S.B. 94 is effective on October 1, 2026.

Amicus Brief(ly): A safe harbor for reliance on regulator guidance is helpful when the regulators have taken a permissive stance on a regulatory issue, but reliance on that guidance requires providers to be vigilant for changes. In this case, the safe harbor may not be as useful because the state is not just prohibiting the tipping structure that has been a fairly common feature in some EWA products - the new law also requires providers to disclose to Maryland consumers that tips are not allowed and requires them to return any tips a consumer sneaks through within seven days after receipt of the tip. Not much room for interpretation there.

On April 23, the New York Court of Appeals, New York's highest court, held that the federal Graves Amendment preempts a New York law that requires vehicle rental and leasing companies to maintain primary liability insurance coverage on the vehicles they own.

The Graves Amendment shields vehicle rental and leasing companies from vicarious liability for damages caused solely by their customer's negligent use of the rented or leased vehicle. The Graves Amendment contains a savings clause that limits its preemptive effect. The savings clause excepts state laws imposing financial responsibility or insurance standards on vehicle owners for the privilege of registering and operating a motor vehicle and state laws imposing liability on entities engaged in the business of renting or leasing motor vehicles for failure to meet the financial responsibility or liability insurance requirements under state law.

Section 370 of New York's Vehicle and Traffic Law requires vehicle rental and leasing companies to carry primary liability insurance coverage. Under the law, such companies must meet minimum insurance standards for claims arising from bodily injury and property damage.

The New York Court of Appeals concluded that the Graves Amendment preempts the primary liability insurance coverage requirement in Section 370 because it would force vehicle rental and leasing companies to insure against vicarious liability that federal law prohibits states from imposing. The court rejected arguments that Section 370 is a financial responsibility law subject to the Graves Amendment's savings clause. Therefore, the car rental company that was the defendant in this case was relieved of the obligation to meet New York's insurance standards. The court clarified that its decision does not affect Section 370's basic requirement that car rental companies maintain minimum insurance for vehicle registration, which remains valid as a financial responsibility law under the savings clause.

Amicus Brief(ly): This decision is a clear win for vehicle lessors, establishing a bright-line limitation on state law requirements that try to impose vicarious liability on lessors for the actions of their lessees. To be clear, lessors insure their fleets because they have legal and financial exposure if something happens to their vehicles out on the road and because states impose financial responsibility requirements on vehicle owners. But in the specific case of leased vehicles, the operators (i.e., consumer lessees) have primary financial responsibility for what happens as they drive those vehicles. The Graves Amendment is designed to keep primary liability for damages that arise from driver negligence with the driver's primary insurance and to specifically preempt state laws to the contrary. The court's decision is appropriate, and the result is good for lessors.

---

¹ For the unfamiliar, an “Amicus Brief” is a legal brief submitted by an amicus curiae (friend of the court) in a case where the person or organization (the “friend”) submitting the brief is not a party to the case, but is allowed by the court to file the brief to share information or expertise that bears on the issues in the case.