NEWS: September 14

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Dreher Tomkies LLP
Equifax hack renews battle over the Consumer Financial Protection Bureau

In the wake of the Equifax breach, businesses, lawmakers and individuals are grappling with the issue of protecting personal information - and for Congress, that could mean increased regulation and oversight.

"Typically the credit reporting agencies like Equifax don't get the same kind of routine oversight [as banks and financial institutions] ... Generally nobody looks at them until something happens," Scott Vernick, top privacy and cybersecurity expert at Fox Rothschild, told FOX Business. "I don't think anyone sort of stopped to think about the fact that you only have three credit reporting agencies [and] each of them holds about 200 million records."

In addition to a congressional hearing, Vernick predicts both the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) will play a larger role in the oversight of credit reporting agencies moving forward, a transition that would potentially secure the future of the CFPB.

On Monday, a group of Democratic senators wrote a letter to Equifax CEO Richard Smith about the company's TrustedID forced arbitration clause, citing the incident as proof the CFPB, and its final arbitration rule, are needed now more than ever: "the need for the Consumer Financial Protection Bureau's (CFPB) recently finalized rule that would prospectively limit the use of forced arbitration clauses and reopen the courtroom doors for consumers," the letter stated.

The rule, which protects the ability of consumers to file class-action suits, is currently at risk of repeal under the Congressional Review Act. But advocates see the Equifax hack as a prime example of why the CFPB needs its resources and independence. Read more at FOX BUSINESS
One-Third of Monthly Transactions for FIs and Online Lenders Are Fraudulent

Fraud remains a significant problem for financial services to solve, especially as digital and online banking becomes more prevalent in the industry. For the average FI and online lender, approximately one-third of all monthly transactions will be fraudulent.

This is according to the 2017 True Cost of Fraud survey by LexisNexis Risk Solutions, released last week. The survey of nearly 2,000 executives in risk and fraud found that identity fraud is a significant threat for FIs and lenders, especially those that are using primarily digital or online solutions.

About 31% of transactions per month for financial service companies are fraudulent, the study found (based on the average number of transactions an FI completed per month being 1,672, and the average number of reported fraudulent transactions being 519 for that month).

For online lenders, 36% of monthly transactions are fraudulent, with an average of 2,457 monthly transactions (877 of which are fraudulent). Read more at BANK INNOVATION
The Top Five Employee Perks Your Company Needs To Attract Talent

Job openings in the U.S. reached a record high in June. While this is good news for employees searching for new jobs, it's bad news for companies. Hiring has been difficult and more competitive for companies in recent months. The current unemployment rate is 3.7%, and for decades wages have been nearly flat for middle-wage workers, only growing 0.2% per year from 1979 to 2013, according to the Economic Policy Institute. Flat wages means that a company can't offer overly high salaries to recruit new employees, so they must find new methods for recruiting and retaining employees.

Is your company finding it hard to hire or retain your current employees? Below are recommendations for essential work perks that every company should offer during the hiring process to keep their employees happy:

1. Financial Wellness Programs

Employee financial wellness programs are an increasingly popular work perk. Nearly half (47%) of Americans cannot afford an unexpected $400 expense, according to a Federal Reserve study. In other words, Americans need better financial education. While the workplace may seem like an odd place for these types of programs, research shows that employees who feel comfortable financially are more likely to stay at their jobs. Read more at FORBES
Many millennials lack a credit track record. by Walt Wojciechowski

Credit is the means by which businesses - both large and small - make decisions on who to lend to. However, with many young adults still living in their parents' home, determining creditworthiness has become increasingly difficult, particularly as it pertains to millennials.

An estimated 15 percent of millennials - generally considered as those who range between 18 and 35 years of age - still call their childhood home their primary place of residence, according to a recent survey conducted by the Pew Research Center. All things considered, 15 percent isn't a substantial share, but it is when compared to people from older generations when they were in their early 20s and 30s. For example, just 10 percent of Generation Xers lived with their folks at these ages and roughly the same percentage of baby boomers, at roughly 9 percent.

What's causing millennials' failure to launch? Theories abound, from an inability to find employment to racking up student loan debt. Either way, because many millennials aren't making many credit-related decisions, it's preventing them from gaining the credit they need to establish having the capability to make payments in a timely manner.

Millennials represent largest generation
They aren't exactly from a small generation either. Born between 1982 and 2000, millennials in the U.S. total approximately 83 million, according to numbers crunched by the Census Bureau. This makes them the largest generation in the country, outnumbering baby boomers by roughly 8 million. Read more at MICROBILT
CFSA Annual Conference
Mystery surrounds Cordray's plans

It's become a guessing game in Washington: Is Richard Cordray running or not?

The director of the controversial Consumer Financial Protection Bureau (CFPB) is said to be mulling a bid for governor of Ohio, where he served as attorney general and state treasurer, and could announce his plans at any moment.

But there's a catch.

Federal law prevents Cordray, a Democrat, from campaigning while he serves as director of the CFPB. That's forced lawmakers, reporters and industry lobbyists to scrounge for clues about his intentions.

Leaders of congressional committees and trade groups that interact frequently with Cordray speculate that his relaxed demeanor in recent meetings indicates he's headed out the door. Cordray's allies say nothing has changed.
Meanwhile, Republicans and business groups that have long sought to rein in Cordray and the CFPB are convinced a recent uptick in bureau action shows the director is trying to finish up several high-profile rules before he steps down.

"It seems like a lot of Republicans are trying to wish him away," said Rep. Dan Kildee (Mich.), a senior Democrat on the House Financial Services Committee, who was a Michigan county treasurer while Cordray was Ohio's. Read more at THE HILL
Richard Cordray could step down soon, leaving the Consumer Financial Protection Bureau in limbo

The Republican push to oust Richard Cordray as director of the Consumer Financial Protection Bureau soon might get a boost from an unexpected source: Cordray himself.

Cordray's term as the bureau's first and only director doesn't expire until next summer. But there is widespread speculation that he will run for the Democratic nomination for governor of his home state of Ohio.

His departure could leave the controversial watchdog agency, created in the aftermath of the 2008 financial crisis, in limbo for months and jeopardize regulations covering consumer arbitration clauses and payday lending.

A former Ohio attorney general, Cordray would need to step down soon to launch a bid for the 2018 election. The first Democratic candidates debate is Sept. 12. He could announce his intentions as early as Monday, when he is scheduled to speak at the AFL-CIO's annual Labor Day picnic in Cincinnati.

Cordray's departure probably would trigger a messy succession fight at the bureau. The Obama-era creation has been praised by consumer advocates for high-profile enforcement actions that have led to billions of dollars in refunds and penalties. But Republicans complain it is too powerful and limits Americans' access to credit.

It's unclear who would take over as acting director. And Democrats, led by Sen. Elizabeth Warren (D-Mass.), who conceived of the idea for such an agency, are expected to mount a fierce campaign against whomever President Trump nominates as a replacement.

"I think there will be a very big controversy, and it will become very contentious," said Alan S. Kaplinsky, head of the consumer financial services group at the Ballard Spahr law firm. "It's certainly not going to be clear sailing." Read more at LOS ANGELES TIMES

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.


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.

  • 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

Dennis Shaul, CEO CFSA
Kim Phan, Ballard Spahr

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

Ballard Spahr LLP, an Am Law 100 law firm with more than 500 lawyers in 13 offices in the United States, provides a range of services in litigation, business and finance, real estate, intellectual property, and public finance. Our clients include Fortune 500 companies, financial institutions, life sciences and technology companies, health systems, investors and developers, government agencies and sponsored enterprises, educational institutions, and nonprofit organizations. The firm combines a national scope of practice with strong regional market knowledge. For more information,
Bureau Supervision Requires Some Companies to Change Practices to Prevent Future Violations

Washington, D.C. - The Consumer Financial Protection Bureau (CFPB) today announced that recent supervisory actions resulted in $14 million in relief to more than 104,000 harmed consumers from January through June 2017. Findings in today's Supervisory Highlights report include that some banks misled consumers about checking account fees or overdraft coverage, and some credit card companies deceived consumers about pay-by-phone fees. The report also found some auto lenders had wrongly repossessed consumers' vehicles, and some debt collectors improperly communicated with consumers about debts. CFPB's examiners also found some companies did not follow the Know Before You Owe mortgage rules and some servicers failed to follow steps required by the Bureau's mortgage servicing rule to work with borrowers trying to avoid foreclosure. Read more at Consumer Financial Protection Bureau

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