AFSPA
ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

February 6, 2018


Consumer watchdog delaying new prepaid card protections by one year

The Consumer Financial Protection Bureau on Thursday said it would delay, by one year, the implementation of new rules for prepaid payment cards and the agency said it will add more flexibility to the regulations to address industry concerns.

The move comes as acting director Mick Mulvaney overhauls the agency's approach and mission. Republicans and business groups have long complained the CFPB, which was created in the wake of the global financial crisis, was too aggressive. In a memo to his staff this week, Mulvaney said the agency would act with "humility and prudence" and no longer "push the envelope."

The agency's rule on the prepaid market, which took nearly six years to finalize, has been among its most criticized.

The prepaid card market has exploded in recent years. Consumers uploaded $65 billion to the cards in 2013, up from nearly $1 billion a decade earlier, according to the CFPB. By 2020, consumers are projected to hold prepaid cards worth $116 billion, the agency said.
SURECARE SERVICES

INDIANA: Payday loan bill with 222% interest passes Indiana House

Law now before the Senate; could raise APR of unsecured consumer loans to 222 percent

INDIANAPOLIS - A bill that would allow payday lenders to charge fees three times the existing felony loansharking rates passed the Indiana General Assembly and was forwarded to the state Senate this week.

State law requires that loans not exceed interest rates of 72 percent per year. But by offering short-term loans, typically about two weeks long, payday lenders circumvent the annual rate restrictions. According to research by the Indiana Working Families Institute, the average payday loan's Annual Percentage Rate (APR) exceeds 300 percent.

The payday lending bill that passed 53 to 41 in the state House on Wednesday would create a new tier of payday loans, lasting longer than the traditional two weeks.

If it passes muster in the Senate, the new "unsecured consumer installment loan" could have Annual Percentage Rates (APRs) up to 222 percent. The loans' terms would be between three and 12 months, and could be taken out on principals of $605 to $1,500. For example, on a three-month loan of $605, a consumer would be charged up to $144 in monthly maintenance fees and $91 in a nonrefundable original fee, adding up to a total payment of $840.
Dreher Tomkies LLP

CFPB puts Equifax probe on ice

WASHINGTON (Reuters) - Mick Mulvaney, head of the Consumer Financial Protection Bureau, has pulled back from a full-scale probe of how Equifax Inc failed to protect the personal data of millions of consumers, according to people familiar with the matter.

Equifax (EFX.N) said in September that hackers stole personal data it had collected on some 143 million Americans. Richard Cordray, then the CFPB director, authorized an investigation that month, said former officials familiar with the probe.

But Cordray resigned in November and was replaced by Mulvaney, President Donald Trump's budget chief. The CFPB effort against Equifax has sputtered since then, said several government and industry sources, raising questions about how Mulvaney will police a data-warehousing industry that has enormous sway over how much consumers pay to borrow money.

The CFPB has the tools to examine a data breach like Equifax, said John Czwartacki, a spokesman, but the agency is not permitted to acknowledge an open investigation. "The bureau has the desire, expertise, and know-how in-house to vigorously pursue hypothetical matters such as these," he said. Read more at REUTERS

A_S Management

ALABAMA: Alabama payday loan reform proposal would increase time to repay loan

MONTGOMERY, Ala. - Alabama lawmakers will once again try for reform in the payday and title loan industry.

Thursday, concerned citizens from all walks of life came to the statehouse to pressure lawmakers to reform the industry.

This year, they are rallying around Senate Bill 138, which is a lot simpler, than proposals in previous years. If passed, it would provide some relief to borrowers, but it would also leave the door open for lenders to continue charging high rates, and continue to make a profit.

Supporters call it a compromise and say this is the year to pass it.

Rev. Carolyn Foster of Greater Birmingham Ministries was one of many who visited the State House Thursday, asking lawmakers to support Senate Bill 138.

"There is nothing faithful, nothing honest about taking a vow to serve the people of Alabama while allowing them to be held hostage to exploitive and abusive lending practices," Foster said.

Sen. Arthur Orr (R- Decatur) is the sponsor of the "30 Days To Pay Bill." It changes the number of days to repay a loan from ten to 30 days. Read more at ABC 3340

CFSA Conference

8 Stocks To Play The Mulvaney Era At The CFPB

One of President Donald Trump's top campaign promises was to eliminate regulations and free up U.S. corporations to operate will fewer restrictions. One of Trump's first targets after taking office was the Consumer Financial Protection Bureau, which was created in the wake of the mortgage crisis to protect American consumers from predatory activities by banks and other financial institutions.

According to Height Securities analyst Edwin Groshans, Trump-appointed CFPB director Mick Mulvaney, who has a history of criticizing CFBP oversight, will loosen the reins on the financial industry, creating a number of potential investment opportunities.

"The change in the Consumer Financial Protection Bureau's leadership is positive for payday and auto title lenders, indirect auto finance companies, debt collectors, and, to a lesser degree, prepaid card issuers and mortgage lenders," Groshans wrote earlier this week.

Groshans said regardless of whether or not Mulvaney's official appointment is blocked in court, the Trump-era CFPB will be relatively impotent no matter who ends up in charge.
Insight.tm

Instant Bank Verification. by Walt Wojciechowski

Lenders need the ability to instantly verify bank statements, account details, employment history and balances. When determining a borrowers ability to repay a loan, it's absolutely crucial that lenders have the tools they need to find out this information fast and efficiently. Without access to this vital data, it can lead to poor judgment calls when approving loans.

According to the U.S. Federal Reserves, during the first quarter of 2017, 2.18 percent of all consumer loans were delinquent. This is the highest delinquency rate since 2014. Although this number remains historically low, lenders will still need to find new ways to mitigate their exposure to risk from borrowers to find new growth channels.

Why you should use Instant Bank Verification
MicroBilt's Instant Bank Verification (IBV) provides lenders with real-time transactional data from more than 20,000 financial institutions worldwide. This banking information allows them to identify the extensive credit history of a potential borrower, customer, partner or themselves. With this information in hand, the end user can make more informed decisions about the potential for loan defaults, insufficient funds fees and more.

Although a review of a person's credit history provides useful data about their payment habits, it doesn't always provide a thorough picture. IBV supplements the credit history with an alternative credit check that fleshes out any gaps and gives lenders a more thorough and robust
microbilt

Democrats lash out at consumer watchdog amid reports the agency is dropping Equifax investigation

Democratic lawmakers lashed out at the Consumer Financial Protection Bureau on Monday amid a report that the agency was backing off an investigation into a massive data breach at Equifax last year that exposed sensitive data about millions of people.

Reuters, citing former officials familiar with the probe, reported that the CFPB has not taken routine steps to move forward with an investigation into the incident, including ordering subpoenas or seeking sworn testimony from Equifax executives.

The report stirred backlash from Democratic lawmakers, who have feared that President Trump's pick to temporarily lead the agency, Mick Mulvaney, is weakening the consumer watchdog. Failing to investigate the data breach would put "145 million Americans at risk [and] is malpractice," said Sen. Sherrod Brown (Ohio), ranking Democrat of the Senate Banking Committee. Sen. Catherine Cortez Masto (D-Nev.) said, "The Trump administration has chosen to protect Equifax while denying Americans justice and accountability." Read more at THE WASHINGTON POST

MerchantBoost

Consumer Financial Protection Bureau appears to shed its aggressive reputation

The Consumer Financial Protection Bureau last year sued four lenders affiliated with a Northern California Native American tribe, alleging their costly loans violated interest rate caps in more than a dozen states.

The enforcement action came amid a probe into yet another high-interest lender, World Acceptance, which the federal watchdog was considering accusing of consumer-protection law violations.

Months later, the agency issued tough regulations aimed at reining in the practices of payday lenders, including limiting the number of costly short-term loans they can offer to cash-strapped Americans.

But since the start of this year it's been a different story.

The bureau asked a federal judge in Kansas to dismiss its case against the tribal-affiliated lenders, ended its investigation of World Acceptance and said it may reconsider its payday-lending rules.

Welcome to the new CFPB under White House budget chief Mick Mulvaney, appointed by President Trump in November to temporarily lead the bureau after the departure of Obama appointee Richard Cordray. Read more at LOS ANGELES TIMES

Secure Check Cashing Systems

Appeals court CFPB ruling a big win for consumers

In 2016, a panel of three judges of the U.S. Court of Appeals for the D.C. Circuit held that the structure of the Consumer Financial Protection Bureau (CFPB) was unconstitutional.

The CFPB has a single executive (unlike some agencies, which are headed by a multi-person commission), and the CFPB's head can only be removed by the president for a good cause, not just any political reason. The panel found that this was an infringement upon the president's proper constitutional powers.

Wednesday, the D.C. Circuit voted 7-3 in an en banc decision (meaning the entire court heard the case, not just three members picked at random) to overturn the panel and held that the CFPB's structure is indeed constitutional.

The decision of the full court, in an opinion by Judge Cornelia Pillard, tells us something very important about other challenges to the current leadership of the CFPB - that it is essential (and the Congress that passed Dodd-Frank considered that it was essential) that the bureau be independent. Read more at THE HILL

CFSA Conference

Trump administration strips consumer watchdog office of enforcement powers in lending discrimination cases

The Trump administration has stripped enforcement powers from a Consumer Financial Protection Bureau unit responsible for pursuing discrimination cases, part of a broader effort to reshape an agency it criticized as acting too aggressively.

The move to sharply restrict the responsibilities of the Office of Fair Lending and Equal Opportunity comes about two months after President Trump installed his budget chief, Mick Mulvaney, at the head of the bureau. The office previously used its powers to force payouts in several prominent cases, including settlements from lenders it alleged had systematically charged minorities higher interest rates than they had for whites.

That unit now will move inside the office of the director, where staffers will be focused on "advocacy, coordination and education," according to an email Mulvaney sent them this week. They will no longer have responsibility for enforcement and day-to-day oversight of companies, he wrote.

The reorganization comes as Mulvaney looks to remake the agency into one that shows far more restraint than it did under his Democratic predecessor, Richard Cordray.
O_Keefe _ O_Malley

The Finance 202: Trump administration is winning the war on the CFPB

The Trump administration may have lost a battle this week in its bid to hobble the Consumer Financial Protection Bureau. But it looks to be winning the war.

My colleague Renae Merle scooped Thursday that the administration has stripped enforcement power from the CFPB office that polices discriminatory behavior by financial firms.

The Office of Fair Lending and Equal Opportunity has been one of the more effective operations within the consumer agency during its brief history. It has netted tens of millions of dollars in settlements, including against a New Jersey bank accused of redlining, and Ally Financial, which faced charges that it allowed minority borrowers to pay more for car loans. Now, Mick Mulvaney - a CFPB foe serving part-time as its acting director - is moving the office into his own. Its new focus there, per an email Mulvaney sent to staff and Renae reviewed, will be on "advocacy, coordination and education," which translates into giving up on enforcement or overseeing companies.

The news comes on the heels of a court loss for those hoping to bring the CFPB to heel. The U.S. Court of Appeals for the District of Columbia ruled Wednesday that the agency's single-director structure meets constitutional par and that the president can remove the director only for cause. Read more at THE WASHINGTON POST

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
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