Offset HELOC to upset CFPB

One of my favorite shows growing up was, believe it or not, Golden Girls. All four women brought different dynamics to the show. Blanche was fun, Sohpia was mischievous, Rose was um…well… from St. Olaf. But Dorothy… Dorothy was the law and order. She oftentimes had the opposite, yet annoyingly righteous, opinion from everyone else. When one of the roommates orchestrated a kooky plan to escape the nursing home, scam the bingo table, or score a date, Dorothy’s scowling look scared them straight. And speaking of Ms. Zbornak, we have an update from the consumer protection industry’s Dorothy: the CFPB. The following is a summary of the CFPB update:

On November 30th, 2022, the CFPB filed an amicus brief arguing that Regulation Z’s prohibition against offsetting credit card accounts, also applies to HELOC accounts accessed by credit cards. The amicus brief is in response to a federal court’s ruling in Lyons v. PNC Bank. It appears PNC and Lyons entered into an agreement granting the bank a contractual right of offset to pay most indebtedness, except credit cards unless permitted by law. When Lyons fell behind on his HELOC account, accessed by credit card, the Bank applied about $1400 from his account to pay off the delinquent balance. This happened TWICE over the objection of Lyons, which prompted the lawsuit (he lost).

It is well accepted that credit unions cannot pay off past due credit card debt with funds from the member’s share account held by the credit union, no matter how tempting it may be. The CFPB explains in its summary the following:


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