May 17, 2018

Time is running out for Congress to remove payday loan red tape

Many Americans have had to deal with an unexpected car repair while up against a due date for a utility bill. Regardless of income, this is a tough position to face but even tougher for those who don't have easy access to capital.

Unfortunately, this is the case for many. The Federal Deposit Insurance Corp. estimates that 30 million Americans are underbanked or unbanked. Given these circumstances, many turn to small-dollar loans to get out of the jam.

The short-term loans act as a cash advance that are paid back in full at the borrower's next pay period. Their convenience is essential for consumers as many banks are unwilling to engage in these types of transactions as the little return on fees is not enough to offset compliance costs. While not for everyone, they're crucial for many who live paycheck to paycheck, and especially for those who have difficulty qualifying for other types of credit. Read more at THE HILL
A Lawyer for Payday Lenders Is Confirmed for FTC Job

The new director of the Federal Trade Commission's consumer protection unit, a watchdog with broad investigative powers over private companies, stands out even in an administration prone to turning over regulatory authority to pro-industry players.

The director, Andrew M. Smith, has recently represented Facebook, Uber and Equifax - all companies with matters before the commission - and plans to recuse himself from dozens of cases now that he has been confirmed for the post.

And in 2012, Mr. Smith was also part of the legal team that defended AMG Services, the payday lender founded by the convicted racketeer Scott Tucker, whose predatory practices against impoverished borrowers eventually led to a $1.3 billion court-ordered settlement, the biggest in the commission's history.

"It's outrageous the F.T.C. would pick the lawyer for a criminally convicted racketeer's payday loan company as consumer protection chief," said Senator Elizabeth Warren, Democrat of Massachusetts, who opposed Mr. Smith's selection. "The agency should pick someone with a track record of protecting consumers, not companies that cheat people." Read more at NEW YORK TIMES
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As Regulators Make Predatory Lending Easier, Can Workers Break Free From Debt Trap Of Payday Loans?

In an administration and news cycle dominated by a seemingly endless stream of the President's words and tweets, it's the less discussed policy actions taken by the administration that are more worthy of outrage. The recent softening on the payday loan industry, relative to the strong regulation pushed by the Obama administration, is one such move that will have profound consequences for the American worker. Alan Rappeport in an article published in the New York Times, dives into a few examples of this softening including stopping investigations of fraudulent marketing practices, pulling back from lawsuits against particularly predatory providers, and halting Obama-era enforcement of tighter regulation including pushing for a repeal of the 2017 payday lending rules which would have created more oversight and tighter controls on the industry.

This is highly disappointing. The Consumer Financial Protection Bureau, established as a part of the financial regulation under Dodd-Frank, had taken particular aim at the payday loan industry under the leadership of Obama appointee Richard Cordray until he resigned last November. Recently he remarked, "I'm surprised to see any efforts aggressively to roll back efforts to rein in payday lending, because we had done extensive research on how these loans lead many people into debt traps that ruin their financial lives" Read more at FORBES
Dreher Tomkies LLP
Over-Emphasis on Enforcement at CFPB Leads to Inefficiency, ABA Says

The Consumer Financial Protection Bureau has to date over-emphasized enforcement activities as part of its regulatory toolbox, the American Bankers Association said in a comment letter to the bureau today. As a result, it has too seldom employed less adversarial supervisory solutions that facilitate compliance in a broader way. "Although the bureau has a robust supervision program, it has consistently chosen enforcement over supervision to address alleged compliance issues," ABA wrote, noting that over-reliance on enforcement wastes public and defendant resources, risks inadequate consumer redress through the court process and leads to a less transparent financial marketplace.

ABA specifically called out the previous CFPB director's practice of relying on "regulation by enforcement," in which regulated entities would be expected to review consent orders and other individual enforcement actions to glean insights for their own compliance efforts. "The bureau should not rely upon the process of bringing and settling enforcement actions as a means of providing guidance," ABA said. "Instead, the bureau should provide the kind of advance guidance that can make enforcement actions rarer and fairer." Read more at ABA BANKING JOURNAL
Money Worries Creating Workplace Stress

Increasingly, the financial concerns of employees are playing a more prominent part in workplace stress and the problem isn't set to go away in these economically turbulent times. But how are financial services firms addressing the stress induced by employees' financial concerns?

A Global Benefits Attitudes survey in 2017 by Willis Towers Watson revealed a sharp rise in money worries for US employees: 48% of US employees worry about their current financial state and 59% worry about their future financial state. More than a third of US employees believe their financial problems are negatively impacting their lives. In 2017, Neybar published its "DNA of Financial Wellbeing" which revealed that 70% of employees under 34 had been affected by money worries.

Michael Gilmartin, senior manager for Deloitte remarks that workplace stress is not purely caused by physical causes. Read more at FORBES
Retailers need more robust means of preventing new account fraud. by Philip Burgess

Ensuring a people are who they say they are can be trickier than it seems. With identity theft and fraudulent activity on the rise, retailers offering finance and leasing options need to have the means to accurately check an applicant's personally identifiable information (PII).

The prevalence of identify theft
New technologies and innovative methods continue to provide routes for criminals to steal a person's identity. Although the switch to microchip-equipped credits in 2015 stemmed the tide, new account fraud has become the focus of identity thieves, according to the Insurance Information Institute. New account fraud happens when a person opens a financial account or fills out a credit application using stolen personally identifiable information.

Unfortunately, this isn't small potatoes crime either. Despite the industry's best efforts, the total number of fraud victims reached a record high in 2016, according to Javelin's 2017 Identify Fraud Study. After hovering between 12.6 million and 13.1 million victims between 2012 and 2015, 15.4 million people fell victim to identify fraud last year.

This rise increased the haul of fraudsters, who caused $16 billion in losses, an increase of $700 million over 2015. Read more at MICROBILT
National Debt Holdings
Email Course Available to Help Get Your Finances in Shape from the CFPB

The Consumer Finance Protection Bureau (CFPB) is offering an email based course to help you manage your finances wisely.

The 21-day email course, which will consist entirely of emailed study materials which include financial management tools, expert advice, savings strategies, ways to pay down debt, budgeting suggestions, tools to track your spending, and questions to reinforce the lessons begins in June of 2018.

The course will help you find new ways to meet your financial goals and stay out of debt.

To sign up for the program, called the "Get a Handle on Debt Boot Camp", check out the CFPB website. There is no cost or obligation to you.
A_S Management
COLORADO: In an effort to protect borrowers, ballot initiative to cap "payday loans" clears legal hurdle

Demetrius Johnson had no savings, no job and nowhere else to go.

So he went to a Speedy Cash in southeast Denver to get a loan. The storefront was adorned with neon signs promising fast cash, which Johnson said was as inviting as the Las Vegas Strip. And like in Sin City, he said, the house usually wins; within 10 minutes, he left the lender with $500 in hand, which he says he needed to help pay rent, car insurance and child care. Seven years later, he still hasn't been able to pay back loan.

"Something that is very easy to grab can also cut you," Johnson told The Colorado Independent. "There's always these asterisks and small print."

The loan morphed into an $800 bill, he says. And like nearly a quarter of people who take out these loans, he wasn't able to pay it back. That's because these companies often charge annual interest rates nearly 10 times that of a credit card when accounting for fees. For people like Johnson looking for quick cash, these loans can turn into years of debt. Read more at COLORADO INDEPENDENT
Employment Skip Tracing
CFPB to Fold Watchdog Office That Oversees Student Loans

Student loan borrowers may soon have one less resource for help. The Consumer Financial Protection Bureau (CFPB) recently announced plans to downsize its Office of Students and Younger Consumers division - a part of the CFPB involved in oversight of the student loan industry.

This division focused on protecting student loan borrowers from debt collectors, loan servicers, and predatory lenders abuses, according to Consumer Reports. The latest news was released via an internal staff memo on May 9. In the memo, CFPB interim director Mick Mulvaney said the Office of Students and Younger Consumers will be folded into the CFPB's financial education office amid other organizational changes "to make the bureau more efficient, effective and accountable."

More than a dozen consumer advocacy organizations criticized the news, including Suzanne Martindale, senior attorney for Consumers Union, who said via Consumer Reports that the office has been crucial in helping ensure lenders and loan servicers have been treating borrowers fairly.
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