• June 6, 2003


    The Federal Trade Commission (FTC) has announced that consumers throughout the country will be able to register their telephone numbers for the national do-not‑call registry beginning in July 2003. The national registry will generally prohibit telemarketers from calling individuals that have registered their telephone numbers on the registry. Consumers may register by telephone or Internet. Registration via the Internet will be available July 1. Telephone registration will be available to consumers in states west of the Mississippi (including Minnesota and Louisiana) on the same date, while registration for consumers residing in the remainder of the country will be available a week later. Access to the registry by telemarketers is still scheduled to be available in September 2003, with enforcement beginning in October 2003.

    Sellers and telemarketers subject to the national registry should have procedures in place so that as of October 2003, calls are not made to individuals who have registered their telephone numbers with the FTC.

    This is an area in which sellers and telemarketers must continue to comply with state regulation, including state do‑not‑call registries, that are not preempted by federal laws, including the recently amended FTC Telemarketing Sales Rule. While telephone communication with customers and potential customers offers many advantages, it is also an area of significant state and federal regulation, from do‑not‑call lists affecting solicitation, to automated dialing and announcing devices registration and disclosure requirements, telephone contract requirements and monitoring and recording restrictions, many of which are addressed in various DLT Digests. We have found that many third party telephone service vendors are seeking to avoid licensing and registration requirements by relying on exemptions that may or may not be available to their principal or expecting their principal to obtain requisite registration or licensing, not withstanding statutory language and independent contractor clauses. This is of particular concern to depository institutions that are being expected to monitor and assure the regulatory compliance of third party service providers.

    ² Mike Tomkies and Chuck Gall


    Plaintiffs Bank of America and Wells Fargo attended a hearing in the U.S. District Court for the Northern District of California on May 30, 2003 in connection with lawsuits filed against the Daly City, Contra Costa and Alameda Counties regarding “opt‑in” financial privacy ordinances. The lawsuits, filed on September 10, 2002, October 10, 2002 and May 5, 2003 respectively, have since been consolidated.

    The plaintiffs reportedly urged U.S. District Judge Claudia Wilken to block cities and counties from enforcing the ordinances on federal preemption grounds. The complaint in the Daly City case alleged that the ordinances would constrain the plaintiffs from sharing information about their customers contrary to their rights under the federal Fair Credit Reporting Act, the National Bank Act and the Gramm‑Leach‑Bliley Act. The case heard Friday is likely to affect similar laws recently passed in San Francisco and Santa Cruz County.

    These cases demonstrate the breadth of the current preemption debate, moving from specific issues of exportation under usury preemption to broader issues affecting bank practices and operations. Bold statements of authority by the Office of the Comptroller of the Currency and other federal regulators, continuing industry challenges to the exercise of state authority and a series of legal victories in various courts, as well as rising state and potential congressional reaction, are setting the stage for possibly significant changes in the general understanding of financial services regulation at the state, federal and local government levels. These changes bring into question fundamental principles and historical perspectives and may have a dramatic impact on the future landscape of the consumer financial services industry. While the ultimate outcome may yet be uncertain, understanding the regulatory chess game that is unfolding will be critical to identifying and addressing the changes in the relative competitive advantages and disadvantages among industry participants that will develop as the result of legal, rather than economic, influences. DLT lawyers regularly monitor these changes and have participated in several recent programs describing emerging issues and trends in the ongoing debate.

    ² Mike Tomkies


    The Federal Reserve Board (FRB) on May 28, 2003 announced that it is seeking public comment on a proposal to amend Regulation K to require Edge and Agreement corporations and U.S. branches, agencies and other offices of foreign banks supervised by the FRB to establish and maintain procedures reasonably designed to ensure and monitor compliance with the Bank Secrecy Act (BSA) and related regulations.

    The BSA generally requires a financial institution doing business in the United States to keep records and make reports that have a high degree of usefulness in criminal, tax or regulatory proceedings. The FRB’s proposal to amend Regulation K would require Edge and Agreement corporations and U.S. branches, agencies and other offices of foreign banks to implement and maintain compliance programs similar to those already required for domestic financial institutions. The FRB’s proposal is designed to be consistent with regulations recently issued by the Department of the Treasury under section 352 of the USA PATRIOT Act, which requires all financial institutions to maintain effective anti‑money‑laundering programs. The FRB believes that the proposed regulation will not impose any material additional administrative burden for affected institutions because the FRB has, as a matter of safety and soundness, consistently expected such entities to maintain programs to ensure compliance with all applicable provisions of the BSA.

    Comments on the FRB’s proposal should be submitted by June 30, 2003.

    Mike Tomkies


    On June 4, the Federal Reserve Board (FRB) announced that it is seeking nominations to fill nine appointments to its Consumer Advisory Council. The new council members will begin their three‑year terms in January 2004.

    Letters of nomination are due to the FRB no later than August 15, 2003 and should include a resume. The FRB prefers electronic nominations but will also accept nominations by regular mail. To access the nomination form or for more detail on what information to include in the nominations, see

    Mike Tomkies