Letter to FDIC et al from PIRG and SBPC concerning a “junk fee bonanza”

In a letter, the Student Borrower Protection Center and US PIRG call on the Federal Deposit Insurance Corporation, North Carolina Department of Justice, and North Carolina Office of the Commissioner of Banks to intervene in the proposed “Deposit Processing Services Agreement” (DPSA) between First Carolina Bank and BM Technologies. As the letter outlines, the advocates’ concerns include that the DPSA stands to impose a junk fee bonanza on students and small retailers in college towns, that BMT faces managerial deficiencies and a legacy of predatory conduct that render it unlikely to meet prevailing standards for banks’ third-party risk management, and that FCB is likely unready for the massive influx of novel out-of-state business that the partnership would involve. The advocates urge regulators to initiate careful scrutiny of First Carolina and BM Technologies rather than approve the DPSA.

[excerpt from letter, emphasis added]

On March 22, 2023 the financial technology company BM Technologies (BMT, previously“BankMobile”) announced a “Deposit Processing Services Agreement (DPSA)” with FCB, a state-chartered Federal Deposit Insurance Corporation (FDIC) member bank.[…]The initiation of this partnership will involve the transfer of an estimated $500 million in deposits related to BMT’s work in the campus banking space from another FDIC member institution to FCB. Management teams from both BMT and FCB have indicated that this transfer requires regulatory approval. For at least the reasons enumerated below, the partnership contemplated under the DPSA stands to undermine sound banking practices and to put both students and other consumers at risk.[…]The specific terms of this deal amount to BMT and FCB imposing a junk fee bonanza on students and mom-and-pop college town retailers. The agreement discussed here is driven by BMT’s desire to partner with a bank that is small enough to be exempt from the Durbin Amendment’s cap on interchange revenue, thereby allowing BMT to skim off a greater share of the cash that changes hands when students pay for basic necessities.


Ed Mierzwinski

Senior Director, Federal Consumer Program, PIRG

Ed oversees U.S. PIRG’s federal consumer program, helping to lead national efforts to improve consumer credit reporting laws, identity theft protections, product safety regulations and more. Ed is co-founder and continuing leader of the coalition, Americans For Financial Reform, which fought for the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, including as its centerpiece the Consumer Financial Protection Bureau. He was awarded the Consumer Federation of America's Esther Peterson Consumer Service Award in 2006, Privacy International's Brandeis Award in 2003, and numerous annual "Top Lobbyist" awards from The Hill and other outlets. Ed lives in Virginia, and on weekends he enjoys biking with friends on the many local bicycle trails.

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