October 1, 2019


'They Are Coming For You': Cyber Security Experts Warn Of Potential Threat

LARIMER COUNTY, Colo. (CBS4)- "They are coming for you," that's the message behind the Cyber Security Summit in Loveland. The FBI Internet Crime Complaint Center estimates the loss from internet theft, fraud, and exploitation in 2018 topped $2.7 billion.

That's part of the reason why the Larimer County Sheriff's Office and the Fort Collins Area Chamber of Commerce gathered online security experts together to take part in the Cyber Security Summit. The goal was to educate small business operators how to protect their valuable information.

Larimer County Sheriff Justin Smith told CBS4 the number of reports that come into his office fluctuates each month, however many are not reported at all.

"If something doesn't quite sound right, if you receive some kind of a threatening message before you click on an email, or before you respond to that individual, stop, call your local law enforcement agency, report to them what's being sent to you an seek their advice, maybe this is some sort of legitimate business or whether this is some potential cyber crime. It starts with your local law enforcement, you don't have to call the FBI," he said.
Read more at CBS DENVER

CFSA Conference
CFSA 2020

Elizabeth Warren Is Wrong about Payday Lenders

Last week, I had an interesting conversation with a man who used to work in automotive lending. Do you know who the car-finance guys really miss? "Saab," he said. "The Saab customer was the best." The people who bought Saabs turned out to be as sensible and practical as the people who designed them - good credit, appropriate incomes, sensible down payments. "It wasn't like Porsche or Land Rover," he said. "Nobody bought a Saab because it fulfilled some fantasy." But fantasy moves a lot of cars, too. I used to know a guy who owned a used-car dealership, one of those buy here, pay here, your job is your credit! places that cater to the low end of the market. Not the Saab buyer. One afternoon, he sold a flashy 280ZX to an obvious no-money scrub. But he wasn't worried. "I've already sold that car nine times," he told his friends, "and when this guy misses his payment, I'll repo it and sell it again."

Saab is long gone, but there are still Saab types out there. A lot of them, in fact, and lenders love doing business with them - not only automotive lenders but other kinds of consumer lenders, mortgage lenders, credit-card companies, commercial banks, etc. People with banged-up credit, negligible savings, lower incomes, etc. may present more tempting investments on paper, because they pay higher interest rates and more fees, but you have to do a lot of work to collect that extra revenue, and that work costs money - which is, of course, why it's only the Saab guys who get to borrow on Saab-guy terms. But not everybody is a Saab guy, and the alternative for the scrubs isn't some magical regulatory solution that empowers them to borrow on Saab-guy terms - the alternative is little or no access to credit at all.


4 Trends That Will Rewire the Inner Workings of the Fintech Industry

The past few decades have seen entrepreneurs sprinting to innovate and exploit outdated process gaps for riches.

Financial technology (fintech) refers to the infrastructure for modern digital payment rails, payment processing, back-end settlement of assets on capital markets and many other financial pieces of software and hardware.

With a lot of different software and hardware needs on the part of financial institutions, the past few decades have seen entrepreneurs sprinting to innovate and exploit outdated process gaps for riches.

These four impending trends won't just rewire the inner workings of the fintech industry, they'll create space for further innovation on the part of agile startup entrepreneurs.

1. Quantum computing
Modern computers are based on binary code that is interpreted by the computer as ones or zeros -- each binary digit represents a binary state (on or off). Quantum computers turn that notion on its head by leveraging quantum phenomena such as quantum entanglement and superposition.
Read more at Entrepreneur Media


Fintech lenders have doubled their market share in 4 years

Dive Brief:
  • Fintechs are providing 49.4% of unsecured personal loans as of March, according to a study released Tuesday by credit reporting agency Experian, more than twice the 22.4% share they held in 2015.
  • Borrowers with slightly lower - or near-prime - credit scores (601 to 660) make up a larger percentage of the fintech customer base when compared against traditional banks.
  • Experian said it did not investigate why consumers are increasingly turning to fintechs for loans. But the trend comes as traditional banks are partnering with fintechs to launch digital lending platforms.
Dive Insight:
In addition to doubling their market share in the past four years, fintechs have opened twice as many loans in that time frame - 1.3 million new loan originations as of March, compared with 656,000 four years earlier, the study found.

The loans are also smaller, according to the study. The average fintech loan was $5,548 in 2019, less than half the average amount of a fintech loan in 2016, when it was nearly $12,000. It's also smaller than the $7,383 traditional bank loans are averaging this year.
Read more at BANKING DIVE


Collaboration, Not Competition, Is Key for Fintech Companies

Fintech providers and traditional financial institutions can both benefit from partnerships.

For a number of years, fintech companies have been considered a threat to traditional financial institutions. So far, however, this has not been the case, and customer migration to digital-only solutions has remained low.

An evolution is taking place in both the new and traditional financial services models, as companies begin to collaborate rather than compete for greater market share. The opportunity is now: A recent survey by PwC found that 82 percent of banks, insurers and asset managers intend to increase the number of partnerships they have with fintech firms over the next three to five years. Before taking the leap on any partnerships, fintech companies and financial institutions have some things to consider. Differing cultures and infrastructures, as well as a variety of regulatory and compliance issues in both traditional financial services and fintech spheres, mean that due diligence must be undertaken if proposed partnerships are not to be derailed.

Here are three key elements to think about:
Consider the cultural fit.
Read more at Entrepreneur Media


BBB Tips: Payday loans come with risks

When cash runs short and bills are looming, some consumers look to payday loans, but they need to understand the risks before borrowing.

When cash runs short and bills are looming, some consumers look to payday loans, but they need to understand the risks before borrowing. If not approached with caution, these loans can snowball into a significant debt obligation of their own, with high interest rates and high-pressure collection tactics.

Payday loans, as the name suggests, involve borrowing money against your next paycheck. Borrowers write a check for the amount they wish to borrow, plus any finance charges, and receive cash. The average loan term is about two weeks, but loans can be renewed, and Consumer Financial Protection Bureau research has found 80 percent of such loans are rolled over or reborrowed within 30 days.

The expenses associated with payday loans can be exorbitant; a common finance charge is $15 or $30 per $100 borrowed, and annual interest rates can balloon into the hundreds. These high interest rates can force these borrowers to renew the loan and pay new fees every two weeks until they can finally save enough to pay off the principal and get out of debt.
Read more at News Tribune Publishing


Measuring the Effects of Loan Forgiveness

Borrowers whose private student loans were discharged in court earned more, paid off other debt and were more likely to move for work, new research shows.

The impact of student loan forgiveness goes far beyond a reduced debt balance for borrowers, according to a new study.

Researchers from Harvard Business School, Indiana University and Georgia State University examined the effects of debt cancellation for borrowers whose private student loans were tossed out in court after their creditor, National Collegiate Student Loan Trusts, couldn't prove the chain of title. In recent years, judges have tossed out numerous lawsuits against student borrowers because National Collegiate couldn't establish in documents that the company actually owned the debt.

The study found that the borrowers saw a boost in income, were more likely to move and lowered their debt balance outside of student loans. Private student loans typically are taken out by students at private institutions, and the researchers focused on borrowers in default.


Office of Financial Research Picks Up Hiring After Trump Cuts, Director Says

An agency designed to warn policymakers of risks to the U.S. economy is, once again, hiring.

The Office of Financial Research - beset by budget cuts and staff reductions under the Trump administration - is now looking to expand to about 150 employees, Director Dino Falaschetti said Wednesday during a House Financial Services subcommittee hearing on financial stability. Staff is now "in the neighborhood of 100 employees," down from a peak of nearly 220 in 2017, he said.

The hiring push comes at a crucial time for the agency, which has published just two working papers in 2019. Lawmakers created the OFR under the Dodd-Frank Act, tasking a group of economists with pulling together data and researching financial risk with the goal of avoiding the kind of recession seen after the 2008 financial crisis.

"I'm really concerned about OFR having the ability to have the personnel to do the job you were charged to do," Rep. Gregory Meeks (D-N.Y.), chairman of the House Financial Services Subcommittee on Consumer Protection and Financial Institutions, said during the hearing.


U.S. House Committee on Financial Services


Protect Consumers and Small Business Owners from Abusive Debt Collection Practices," on Thursday, September 26, 2019, at 10:00 a.m. in room 2128 of the Rayburn House Office Building. This single-panel hearing will have the following witnesses:
  • * The Honorable Rohit Chopra, Commissioner, Federal Trade Commission
  • * Rev. Dr. Cassandra Gould, Pastor, Quinn Chapel A.M.E. Church (Jefferson City, MO) and
  • Executive Director, Missouri Faith Voices
  • * Ms. Bhairavi Desai, Executive Director, New York Taxi Workers Alliance
  • * Ms. April Kuehnhoff, Staff Attorney, National Consumer Law Center
  • * Professor Dalié Jiménez, Professor of Law, University of California, Irvine School of Law
  • * Ms. Sarah Auchterlonie, Shareholder, Brownstein Hyatt Farber Schreck
  • * Mr. John H. Bedard, Jr., Owner, Bedard Law Group, P.C.
Read more at U.S. House Committee on Financial Services



Quarterly Consumer Credit Trends: Consumer Bankruptcy, BAPCPA, and the Great Recession

This is part of a series of quarterly reports of consumer credit trends produced by the Consumer Financial Protection Bureau using a longitudinal, nationally-representative sample of approximately five million de-identified credit records maintained by one of the three nationwide credit reporting companies. This eighth report explores how the volume and types of bankruptcy filings have changed throughout the period 2001-2018, which includes the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) and the Great Recession. The report considers changes in the attributes of bankruptcy filers by analyzing credit scores and the amount of debt consumers hold prior to bankruptcy.


Dreher Tomkies LLP

3 Trends Happening to Fintech That You Should Know About

This year is going to end up being a great one for B2B payments and lending companies, and for bank-fintech partnership -- all benefiting business.

We are now over a decade into the third era of finTtech innovation, which grew out of the fallout from the 2008 global financial crisis and the advent of the smartphone.

With record amounts of investment flowing into the sector again in 2018, this innovation train shows no signs of slowing. However, in the past couple of years, it has rounded a curve and started to branch off in some interesting new directions.

The curve? Consumers reaped most of the benefits of the early part of this wave, with more efficient payment and lending products leading the way. However, investment in B2B fintech startups has been ramping up for the past couple of years, and by year's end we can expect to start to see businesses reap the benefits of the fintech wave in three major ways:
Read more at Entrepreneur Media

CFPB and FTC to Host December Workshop on Accuracy in Consumer Reporting

The Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC). will host a public workshop on December 10, 2019 to discuss issues affecting the accuracy of both traditional credit reports and employment and tenant background screening reports.

Since the FTC released its 2012 study on accuracy in credit reporting, there have been several changes in the landscape that impact the accuracy of consumer reports. In 2012, the CFPB began conducting supervisory reviews over large credit reporting agencies (CRAs), as well as various providers of consumer financial products or services that furnish information about consumers to CRAs. In addition, in 2015, following state investigations regarding various credit reporting issues, the nationwide CRAs agreed to a multi-state settlement that requires stricter standards for matching records, removal of certain public record information, and restrictions on medical debt reporting. Also, new developments, such as the use of machine learning and alternative data in making eligibility determinations, present both opportunities and challenges for the consumer reporting industry.

The December workshop seeks to bring together stakeholders - including industry representatives, consumer advocates, and regulators - for a wide-ranging public discussion on the many issues impacting the accuracy of consumer reports. The agencies invite interested individuals to submit comments recommending topics that should be addressed or specific information on the following potential topics for discussion:
Read more at Consumer Financial Protection Bureau


As Facebook and Apple encroach on finance, top banks are teaming up with younger rivals

Fintech partnerships give banks the chance to experiment without creating costly in-house projects.
They're having to move fast as tech giants like Facebook and Apple push into financial services.
Apple recently launched a credit card while Facebook announced its libra digital currency.

Big banks know they need to change with the times. And to do that, many are striking partnership deals or buying into nimble start-up competitors as an alternative to building out costly internal technology projects.

That was the message from bank executives at the Sibos financial services conference in London this week. For the banks, the logic behind partnerships is simple: it gives them a way to unlock the technical capability of a company like Facebook or Apple without necessarily requiring the technical know-how. Read more at CNBC


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