Products October 21, 2021

BPAS Introduces New Tool to Prevent Benefit Account Fraud

The BPAStify tool uses a live video identity verification process.

Reported by

BPAS, a provider of retirement plans, benefit plans, fund administration and collective investment trusts (CITs), has launched BPAStify—a new fraud prevention tool that is part of the firm’s overall security efforts.

Under BPAStify, a participant requesting certain assistance through the BPAS participant service center or other means may be required to go through additional scrutiny using a live video identity verification process via smartphone, tablet or computer. When complete, the recording will be shared with the client’s human resources (HR) team, which will verify that the caller is truly the employee in question and provide approval to BPAS.

Get more!  Sign up for PLANSPONSOR newsletters.

BPAS says the tool not only helps with authentication and employer review, but, in the event of a fraud attempt, the recording itself could be used by law enforcement to identify and prosecute fraudsters. Considering the dollars at stake, BPAS makes this clear on the recorded calls.

“When we decide to invoke BPAStify, we notify the caller that the account has been flagged for additional scrutiny,” says Joe Buczek, manager of the BPAS participant service center. “The caller’s reaction tells you something right away. When you’re dealing with the real participant, there is almost always an immediate willingness to cooperate; they appreciate the added vigilance to protect their account. In cases where there is a refusal to cooperate or some technological reason why the caller can’t participate, it’s a big red flag. We freeze the account and initiate additional security measures to protect the plan assets.”

BPAS notes that in the wake of well-published data breach incidents and the Department of Labor (DOL)’s guidance about retirement plan cybersecurity, service providers have implemented a bevy of new measures to galvanize their programs, including multifactor authentication, added security questions, changes to electronic payment polices and other confidential or proprietary measures.

“We will continue to refine the BPAStify program and build additional technology around it,” says Linda Pritchard, senior vice president of BPAS operations. “There is only one individual who has the right to access an account or attempt to withdraw assets—the actual participant. We have no higher imperative than to protect plan assets for our customers.”

Compliance October 20, 2021

Plaintiffs Ask Supreme Court to Take Up Case Against CalSavers

They say ERISA pre-empts the state-run retirement program, therefore invalidating it, but that argument has been previously rejected by both an appellate and a district court.

Reported by

Nearly six months after the 9th U.S. Circuit Court of Appeals rejected their lawsuit, the plaintiffs in an Employee Retirement Income Security Act (ERISA) pre-emption lawsuit have petitioned the U.S. Supreme Court to take up their case.

The lawsuit, filed by the Howard Jarvis Taxpayers Association, sought to block the CalSavers Retirement Savings Program on the grounds that the ERISA, a piece of federal legislation, pre-empts CalSavers, therefore invalidating the program. These claims were previously rejected by both the 9th Circuit and the District Court for the Eastern District of California.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

In its dismissal earlier this year, the appellate court found that ERISA does not pre-empt CalSavers in the way the plaintiffs suggest. In summary, the court’s logic was that CalSavers is not an ERISA plan because it is established and maintained by the state, not employers. Furthermore, it does not require employers to operate their own ERISA plans, and it does not have an impermissible reference to or connection with ERISA. Nor does CalSavers interfere with ERISA’s core purposes, the court ruled, concluding for all these reasons that ERISA does not pre-empt the California law.

As is the standard procedure in Supreme Court appeals, the appellants early in their petition offer a short and succinct summary of their legal question: “Considering California’s infamous record of mismanagement, corruption and the cavernous underfunding of its public employee retirement systems, is California permitted under federal law (ERISA) to now require private employers to automatically debit employee paychecks and surrender those earnings to the state to manage as ‘retirement savings,’ despite the state expressly disclaiming any fiduciary accountability, and despite Congress having exercised its authority under the Congressional Review Act to veto a Department of Labor [DOL] regulation that briefly carved out an ERISA safe harbor for such state-run automatic retirement savings plans?”

The last part of the question refers to actions the DOL took between 2015 and 2017. In short, the DOL under former President Barack Obama first crafted a rule that would provide a pathway for states like California to create retirement savings programs that would not be subject to all the normal rules and requirements put on private employers under ERISA. President Donald Trump’s administration later did away with this “safe harbor” rule.

The Howard Jarvis Taxpayers Association’s appeal to the Supreme Court includes various arguments to the effect that, once in state hands, participant employees’ money will not have the security that Congress intended.

“[Participant assets] will not be protected by any fiduciary duty or contractual liability, but will be at risk under a statute that expressly disclaims any responsibility for loss,” the appeal alleges.

The full text of the appeal is available here.

«