ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

NEWS: July 26

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MerchantBoost

Republicans move to repeal financial rule opposed by banks

WASHINGTON (AP) -- Targeting government regulations, the Republican-led House on Tuesday voted to nullify a rule that would let consumers join together to sue their banks or credit card companies rather than use an arbitrator to resolve a dispute.

The repeal resolution passed by a vote of 231-190, almost entirely along party lines.

The Consumer Financial Protection Bureau finalized the rule just two weeks ago. It bans most type of mandatory arbitration clauses, which are often found in the fine print of contracts governing the terms of millions of credit card and checking accounts.

Republican lawmakers, cheered on by the banking sector and other leading business groups, wasted no time seeking to undo the rule before it goes into effect next year. They'll succeed if they can get a simple majority of both chambers of Congress to approve the legislation and President Donald Trump to sign it.

The numbers are likely on their side, just as they were earlier this year when Republicans led efforts to upend 14 Obama-era rules.

GOP lawmakers described the rule as a bad deal for consumers but a big win for trial lawyers. They said the average payout for participants in a class-action lawsuit was just $32 in the financial disputes the consumer bureau studied.     Read more at ASSOCIATED PRESS

Insight.tm

Payday Lenders' Operation Choke Point Challenge Survives Dismissal. by Manatt Phelps & Phillips LLP

Payday lenders can move forward with their suit against federal regulators challenging the controversial Operation Choke Point, a Washington, D.C., federal court judge has ruled.

What happened

A payday lender alleged that the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency violated its right to due process under the Fifth Amendment of the U.S. Constitution.

The plaintiffs alleged, among other things, that the federal banking regulators participated in a campaign to force banks to terminate their business relationships with payday lenders. As part of Operation Choke Point, the defendants engaged in pressure tactics such as threatening banks with painful examinations by supervisors or enforcement actions, the plaintiffs told the court.

The payday lender-now joined by other members of the industry-filed a motion for preliminary injunction to halt the financial regulators from harming their reputation, applying informal pressure to banks to encourage them to terminate business relationships with the plaintiffs, seeking to deny the plaintiffs' access to financial services and attempting to deprive the plaintiffs of their ability to pursue their line of business. Read more at LEXOLOGY

MicroBilt

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 Read more at MICROBILT

Incite Business

Leawood payday lender Scott Tucker files appeal to overturn $1.26 billion fine

Payday loan businessman Scott Tucker wants an appeals court to toss out a $1.26 billion fine against him last year from a case filed by the Federal Trade Commission that accused the Leawood resident of fraudulent lending practices.

Tucker, a professional race car driver who made his fortune in short-term consumer loans, argues that the FTC reached beyond its authority in its case against him, relied on lousy evidence in determining the amount of the $1.26 billion fine and failed to prove that his company's loans were deceptive.

Tucker, through his attorneys, filed a 110-page brief late Friday before the 9th U.S. District Circuit Court of Appeals that also argues that a judge handling the case ignored evidence that favored Tucker in deciding that the FTC had built a persuasive case showing that his company extended and collected on illegal loans. Read more at KANSASCITY.COM

FactorTrust
Greg Rable
SURVEYING THE ALTERNATIVE CREDIT DATA LANDSCAPE

There is a Korean saying that simply states, "It is dark under a lamp." That concept-that a lamp illuminates everything out in front of it, but can't shed light on what lies just beneath-helps remind us that we don't always need to look far for the answers we seek. Sometimes they can be nearby, right beneath our noses.

When it comes to competing for and analyzing underbanked consumers-113 million people in the United States-we cannot rely on traditional credit reporting to reveal valuable insight on them. That insight exists, however, even though it's not obviously illuminated by mainstream sources. In order to find it, we have to look in another place: the alternative credit data landscape. And the good news is that this readily accessible wealth of information sits right beneath the proverbial lamp.

Who are the Underbanked?

They underbanked are typically consumers who often have existing banking relationships-usually a checking account-but do not use traditional credit options either by choice or due to past credit challenges.

A report by the Center for Financial Services Innovation (CFSI) shows revenue from interest and fees paid by the underbanked exceeds $89 billion annually, which points to an immense opportunity.1

The truth is that these consumers are quite different than advocacy groups would have you believe. By reviewing the data available through FactorTrust's database, we have been able to reveal that the average loan applicant is 39 years of age, while the average borrower is 41. With the FactorTrust Underbanked Index1, we have also identified that 45 percent of underbanked consumers has a bachelor's degree or higher, 52 percent of them are employed within the primary areas of retail, quick serve restaurants and government and their average monthly income is $2,936 (or $35,232 annually)-more than 50 percent of American workers who make less than $30,000 annually (according to the Social Security Administration.) 2

Who is Targeting the Underbanked?

As you might imagine, numerous industries target the underbanked consumer. Consider, specifically, the auto finance industry, which according to the previously mentioned CFSI studies, continues to be the highest volume and one of the fastest-growing product areas for these consumers. Underbanked (or non-prime, as they are also known) auto loans increased recently due to sheer growth in the number of customers fitting that profile, a willingness to take on riskier, larger loans and auto loan interest rates reaching all-time lows. Read more at FACTORTRUST

Dreher Tomkies LLP

Banks' greed on full display with check-cashing fee for non-customers

When it comes to corporate greed, there are some fees charged by big companies that are so indefensible, so blatantly money-grubbing, they almost have to be savored like a fine wine. Otherwise, it's just too painful to think these guys are routinely taking us to the cleaners.

For instance, there's the $1.75 that AT&T charges every month to not include your name and number in its automated phone directories. Frontier Communications, which purchased Verizon's wirelines in California, charges a whopping $2.50 monthly for the same non-service.

Then there's the $25 fee most major airlines charge just to check a bag. Or the fee of up to $3.50 many banks charge if customers have the nerve to use another bank's ATM - on top of whatever fee that other bank imposes.

And so we come to the fee du jour: the squeeze that banks put on non-customers to cash a check drawn on one of the bank's own accounts.

Bank of America is notifying its checking-account customers that, beginning Aug. 15, if non-customers try to cash a personal check at the bank written by a BofA account holder, the check casher will have to pay an $8 fee.

The fee applies to personal checks for $50 or more and matches an $8 fee that already applies to non-customers cashing BofA business checks.

Why, you might ask? Read more at LOS ANGELES TIMES

AFSPA Endorsed

Check cashing ordinance under scrutiny
Issues surrounding the city's ordinance regarding the distance allowed between check-cashing establishments has come under discussion by the Columbia City Council.

The city's planning commission voted last month to keep the 1,320-foot limit allowed between check-cashing businesses, which was voted by the council in 2015. The intent for adopting the ordinance was to prevent issues of clustering and the visual impact of having multiple establishments in commercial areas, Director of Development Services Paul Keltner said.

The item was brought before the council last week to discuss, and if there could be options to either change the ordinance, issue a cap on the number of check-cashing businesses allowed or if the 1,320-foot restriction should remain. City staff found when comparing Columbia to similar municipalities that it was actually one of the least-restrictive. Keltner added that when it comes to zoning, every use in the city's zoning ordinance includes limited-use standards, such as distance requirements.

"If you really think about it, there is not one thing in this city that doesn't have a limited-use standard on it, even a pool or a separate structure in your backyard has regulations on it. There are spacing requirements even on the smallest detail of a driveway," Keltner said. "We looked at that to kind of set up the response that maybe this [ordinance] was either being unfair or even how legal it was to do."

Council members agreed that, even though businesses like these tend to have a negative reputation to business investors and the general public, they are legitimate and have the right to operate within the city. Some members, however, expressed their concern over whether changing the ordinance will open the doorway causing the city to become overrun with them. Read more at COLUMBIA DAILY HERALD

CFSA
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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