ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

NEWS: September 28

NEWS is brought to you by AFSPA Endorsed SUPPLIERS

FactorTrust
Big changes coming for credit firms in wake of Equifax hack, CFPB director says

Credit reporting agencies are going to have to get used to "a new regime" in the wake of the Equifax consumer data hack, a top Washington regulator said Wednesday.

Consumer Financial Protection Bureau Director Richard Cordray said Equifax, TransUnion and Experian are getting embedded regulators to ensure that similar breaches of private information don't happen again.

Companies "should welcome" the heightened level of scrutiny, Cordray told CNBC in a live interview on "Squawk on the Street."

"If they're going to restore public confidence in this marketplace, and if they're going to create the kind of reforms necessary, they're going to have to recognize the old days of just doing what they want, being subject to lawsuits now and then, are over," he said. "There has to be a scheme of preventive monitoring in place. They're going to have to accept that, they're going to welcome that, they're going to have to be very forthcoming."

Fallout continues from the Equifax scandal, in which up to 143 million Americans - about 43 percent of the total population - had personal data exposed due to a breach discovered on July 29. The hack wasn't disclosed until nearly six weeks later.

Multiple investigations have been opened on the matter, and CEO Richard Smith announced his retirement this week.

CNBC has reached out to the three credit-rating companies for comment.

Cordray said the Equifax hack was "far beyond" what had happened at Target and Home Depot several years ago and demanded strong reaction. Read more at CNBC

What CFSA Members Need to Know About the CFPB's Final Arbitration Rule
Hosted by Ballard Spahr LLP

Please join CFSA and Ballard Spahr for a complimentary webinar series to be held
throughout 2017. During this third webinar in a four-part series, we will discuss the
CFPB's proposed arbitration rules.

Overview
In 2011, the U.S. Supreme Court upheld the use of class action waivers in consumer arbitration agreements. Nevertheless, the CFPB has issued proposed rules that would prohibit the use of such waivers. This is a watershed event in the history of consumer arbitration. Please join us for a discussion of what the CFPB is proposing and how it could affect CFSA members and others in the payday loan industry.

Topics
  • The background of the CFPB's arbitration rulemaking;
  • The CFPB's proposed rules on consumer arbitration agreements;
  • Whether CFSA members will be covered by the proposed rules;
  • When the proposed rules might become effective;
  • Whether existing arbitration agreements will be grandfathered;
  • Whether arbitration agreements should continue to be used for individual arbitrations;
  • Possible legal and political challenges to the rules;
  • What CFSA members can do now to maximize the utility of your class action waiver;
  • What CFSA members should do now if you don't have a class action waiver; and
  • Alternative methods of reducing class action exposure.

Tuesday, October 3, 2017 | 12:00PM - 1:00PM ET

Moderators:
Dennis Shaul , CEO CFSA
Kim Phan , Ballard Spahr 
Speakers:
Alan S. Kaplinsky , Ballard Spahr
Mark J. Levin, Consumer Financial Services Litigation

This program is open to CFSA Members, Ballard Spahr clients, prospective clients,
and  members of the financial services industry
There is no cost to attend.
This program is not eligible for CLE credits.

Please register at least two days before the webinar. Login details will be sent to all approved registrants. For more information, contact Daniel Martin at martind@ballardspahr.com
 
Defenders of the CFPB's Newest Financial Regulation Are Ignoring Crucial Facts

Senate Republicans could vote as soon as this week to repeal the CFPB's ban on arbitration clauses.

In the wake of the Equifax breach, in which hackers stole names, social security numbers, and other personal information for more than 143 million people from the credit scoring agency's databases, Americans are rightfully more concerned about holding financial institutions accountable for misusing or losing valuable data.

Democrats have now tried to turn the Equifax breach to their political advantage, whipping up a dry-but-important battle over financial regulation into a populist squall.

Republicans want to repeal a new rule by the Consumer Financial Protection Agency banning arbitration clauses in contracts signed between consumers and financial services companies, including banks and credit card companies. The new CFPB rule requires disputes or settlements in banks fraud or other customer betrayal cases to be settled through class-action lawsuits rather than a third-party arbitrator. Despite mixed evidence, the CFPB says banning arbitration is good because it allows consumers "their day in court."

Republicans have turned to the Congressional Review Act to wipe the CFPB's arbitration rule off the books. The law is a now-familiar tool used to repeal about a dozen Obama-era regulations since President Donald Trump took office in January.

The House voted along party lines in July to pass a CRA resolution repealing the rule, and the Senate is set to vote on the same resolution perhaps as soon as this week. The White House has indicated its support for the move

"Forced arbitration is a tool that big corporations use to silence victims of corporate fraud or corporate abuse," Sen. Sherrod Brown, D-Ohio, said Tuesday during brief remarks on the Senate floor, invoking the Equifax breach. "Forcing these families to sign away their rights is not only wrong, it's dangerous." Similar rhetoric is blaring from television screens in some states, like Maine, where ads funded by Allied Progress Action, a progressive campaign organization, are targeting Republican senators seen a swing votes on the CRA resolution. "Big corporations like Equifax got caught trying to sneak it past you," the ads say, referring to the arbitration clauses sometimes included in financial services contracts. Read more at REASON.COM
Dreher Tomkies LLP
CFPB's First National Survey on Financial Well-Being Shows More Than 40 Percent of U.S. Adults Struggle to Make Ends Meet

Bureau Releases Interactive Online Tool to Help Consumers Measure Their Financial Well-Being

WASHINGTON, D.C. - Today, the Consumer Financial Protection Bureau (CFPB) released the results of a first-of-its-kind national survey on the financial well-being of U.S. consumers that showed that more than 40 percent of U.S. adults struggle to make ends meet.
The survey provides measurements and insights on the financial well-being of specific groups of consumers as well as the population as a whole. In addition to the survey, the Bureau also released an interactive online tool allowing consumers to measure their level of financial well-being.

"These survey results are beginning to measure and examine the financial well-being of consumers," said CFPB Director Richard Cordray. "And the new tool we are releasing allows consumers to measure their own financial well-being and helps them take better control of their financial futures."

National Financial Well-Being Survey

The National Financial Well-Being Survey was conducted by the CFPB in 2016. Using the 10 question scale developed by the CFPB, the survey provides the first-ever national data directly measuring the financial well-being of U.S. consumers. Upon answering the 10 questions provided, consumers were given a score from 0-100. In the survey, the average consumer score was 54. The consumer sample used to conduct the survey was designed to be representative of U.S. households. In addition to responding to the questions which are included in the financial well-being scale, people participating in the survey answered questions about a host of other measures. These measures include individual, household, and family characteristics; income and employment; savings and safety nets; financial experiences; and money behaviors, skills, and attitudes. Major findings from the report include: Read more at CFPB
MicroBilt
Giving employees a hand in learning how to handle money

With one credit card paid off and two more to go, Bill Stiner was determined to stick with his plan of total debt elimination after finishing a 9-week course at his church with other members of the congregation who also had declared war on their debt.

"Everybody in class paid off debt," he said, referring to the program at Life Stone Church on Carson Street. "But I didn't pay off all the debt. I'm still in the middle of that."

Not long after the church program ended this summer, Mr. Stiner was pleasantly surprised to find out that his employer - Aerotech - had decided to offer the very same course to its employees for no charge.

He was one of the first employees in his workplace to sign up.

More employers are starting to focus on the financial well-being of workers. In addition to basic employee benefits such as healthcare and life insurance, financial wellness programs sponsored by companies are helping more workers overcome personal financial challenges, reduce their debt and prepare for retirement.

Aerotech, based in O'Hara, is one of four companies in the Pittsburgh region that are bringing financial education into the workplace through a money management course created by Nashville, Tenn.-based talk radio host Dave Ramsey called SmartDollar.

The other area companies are Downtown-based TeleTracking, S&T Bank, and HarbisonWalker International, which is based in Moon. Read more at POST-GAZETTE
Insight.tm
CFPB Action Against Equifax Imminent

Add the Consumer Financial Protection Bureau to the list of federal agencies expected to punish Equifax for the massive security breach that exposed the personal data of around 143 million Americans.

According to a Reuters news report, the consumer finance watchdog, created after the 2008 financial crisis, will utilize the wide-ranging powers it has used with Wall Street to come down on Equifax.

The Federal Trade Commission and the Department of Justice are already investigating the cyberattack.
In addition, Equifax is being sued by the state of Massachusetts, and is also facing a class-action lawsuit filed on behalf of 28 million small businesses impacted by the breach and another suit just filed by Summit Credit Union.

Because Equifax is not strictly a financial company, there was uncertainty over whether the CFPB has the power to penalize the firm for the breach. But legal experts said it is likely to weigh in using powers it wields under the 2010 Dodd-Frank Act.

"Its Dodd-Frank mandate gives the CFPB authority to investigate Equifax even without cybersecurity rules," said Quyen Truong, a partner at law firm Stroock & Stroock & Lavan who was the assistant director and deputy general counsel for the CFPB until early 2016.

The CFPB and legal experts said the regulator could pursue Equifax under an aspect of the Dodd-Frank Act that bans unfair, deceptive and abusive acts and practices (UDAAP). Based on this aspect of the law, the CFPB even fined Equifax in January for allegedly deceiving consumers about the usefulness and cost of credit score information they bought. Read more at PYMNTS.COM
MerchantBoost
Bank customers fork over $15 billion in fees in 2016, CFPB says

Most Americans would rather not shell out extra cash to their bank in overdraft fees. Sadly, many still do.

Altogether, Americans paid $15 billion in fees for bounced checks and other overdrafts last year, the Consumer Financial Protection Bureau has said.

Almost half of Americans who've had a checking account have been charged an overdraft fee at some point. In fact, the average consumer overdrafts more than twice a year and coughs up $35 in fees each time, according to a study released Tuesday by personal finance website NerdWallet.

Those who overdraw frequently waste much more, to the tune of $442 a year, according to NerdWallet's analysis of CFPB data. (For some banks, overdraft revenues are a significant part of their income, despite the Federal Reserve's 2010 regulations that sought to bar them from assessing these fees unless customers have opted into an overdraft protection program.)

Overdraft coverage, which means banks may charge you a fee when transactions including debit card purchases cause your account to drop below zero, sounds like a good deal, but it's usually better to steer clear, according to Kimberly Palmer, NerdWallet's credit cards and banking expert
. "It's really something to think twice about because overdraft fees can add up really quickly.

"A lot of people don't even know that overdraft fees are optional," she said.

And in most cases, they are also entirely avoidable. Here's how to get around them:
A_S Management
Payday lender operators forced to forgive $12M in loans

New York on Monday announced a settlement with two payday lender operators - barring them from working in the state and forcing them to forgive roughly 20,000 loans worth roughly $12 million.

Total Account Recovery (TAR), a payday loan debt collector, and E-Finance Call Center Support, a payday loan servicer, had for years profited from preying on borrowers who fell behind on the high interest- rate loans, some of which carried interest rates as high as 25 percent, according to the state's Department of Financial Services.

"Payday lending is illegal in New York, and DFS will not tolerate predatory actors in our communities," DFS Superintendent Maria Vullo said in a statement.

While payday lending is illegal in New York, state residents can fall prey to the predatory loans through out-of-state lenders trolling online.

Vullo called out E-Finance for making "unlawful misrepresentations" to New Yorkers when requesting payments and negotiating payment agreements.

Between 2011 and 2014, TAR succeeded in getting 2,119 delinquent borrowers to pay up. It collected a fee in each case, according to the DFS.

TAR, headed by Jeremy Schaffer, and E-Finance, headed by Joshua Mitchem, according to court papers, will pay a $45,000 penalty plus as much as $15,000 to cover the cost of sending notices to consumers whose loans were forgiven.

It isn't the first time that TAR and E-Finance - and related entities - have come under fire.
CFSA Conference
AFSPA
ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION 

AFSPA helps our members grow their Alternative Financial Services business by providing them with the best information, research, data, support, relationships and by vetting and presenting the best available product and service providers for the Alternative Financial Services Industry. 

Alternative Financial Service Providers Association
757.737.4088

315 Tuscarora St., Lewiston, NY 14092
dan@afspassociation.com
www.afspassociation.com