December 5, 2019


Federal Regulators Issue Joint Statement on the Use of Alternative Data in Credit Underwriting

WASHINGTON, D.C. - Five Federal financial regulatory agencies today issued a joint statement on the use of alternative data in underwriting by banks, credit unions, and non-bank financial firms.

The statement from the Federal Reserve Board (Federal Reserve), the Consumer Financial Protection Bureau (CFPB), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the National Credit Union Administration (NCUA) notes the benefits that using alternative data may provide to consumers, such as expanding access to credit and enabling consumers to obtain additional products and more favorable pricing and terms. The statement explains that a well-designed compliance management program provides for a thorough analysis of relevant consumer protection laws and regulations to ensure firms understand the opportunities, risks, and compliance requirements before using alternative data.

Alternative data includes information not typically found in consumers' credit reports or customarily provided by consumers when applying for credit. Alternative data include cash flow data derived from consumers' bank account records. The agencies recognize that use of alternative data in a manner consistent with applicable consumer protection laws may improve the speed and accuracy of credit decisions and may help firms evaluate the creditworthiness of consumers who currently may not obtain credit in the mainstream credit system.
Read at Consumer Financial Protection Bureau

InsideCredit GOLF

Regulators Support Alternatives To Assess Creditworthiness

Federal banking regulators support using alternative methods to assess creditworthiness to help high-risk people get loans, The Wall Street Journal (WSJ) reported on Tuesday (Dec. 3).

Instead of using traditional credit scores, lenders can look at alternative data like borrowers' cash flow. This approach "may help firms evaluate the creditworthiness of consumers who currently may not obtain credit in the mainstream credit system," the regulators said in a joint statement.

The regulators added that agencies choosing to tap into alternative data should do so judiciously.

According to the nonprofit research firm FinRegLab, approximately 45-60 million people lack the payments history to generate reliable credit scores. Using income and spending data can open up access to credit, a September FinRegLab study indicated. The study analyzed information from FinTechs like LendUp Global and Petal Card that extend loans based on alternative data.
Read more at PYMNTS.COM


U.S. consumer watchdog proposes exemptions for banks, credit unions on remittances

WASHINGTON, Dec 3 (Reuters) - The U.S. consumer watchdog on Tuesday proposed making permanent an exemption that allows certain banks and credit unions to estimate the international remittance fees they charge consumers in instances when it may be too expensive for the firms to provide exact figures.

The Consumer Financial Protection Bureau (CFPB) also proposed raising the transaction threshold at which companies may be entirely exempted from the rule from 100 to 500 or fewer remittances annually, reducing the burden on over 400 banks and almost 250 credit unions, the CFPB said.

The proposal is subject to public consultation.

International regulators have voiced concerns in the past that U.S. banks may be stepping back from offering overseas remittances due to the regulatory burden, including strict anti-money laundering provisions. Read more at REUTERS


Federal Trade Commission

Free vulnerability scanning for your business by the Federal Trade Commission

You know the importance of strong cybersecurity, but have you heard about free vulnerability testing? As part of its mission to protect the nation's cyber infrastructure, the Department of Homeland Security's Cyber-Infrastructure Security Agency (CISA) offers free vulnerability scanning to government, critical infrastructure, and private businesses.

What does this mean for you? You may be eligible for no-cost vulnerability scanning that will continuously check your internet-facing assets. The testing checks for known vulnerabilities and weak configuration, then recommends ways to improve your security. Using commercial vulnerability scanners, each host is evaluated against a library of vulnerabilities.


Top Pre-Employment Screening Trends Going into 2020

As a new year approaches, all eyes are on regulations winding their way through city, state, and federal courts related to pre-employment screening processes, tools, and trends. This has many companies scrambling to find effective screening options for the pre-employment process that will help them find the right employees without operating outside the scope of rapidly evolving laws. Below are a few pre-employment screening trends companies are considering as 2020 approaches and new rules go into play.

Compliance is More Important than Ever
With increasing litigation related to employment practices in the hiring process and new regulations going into effect related to:
  • Ban the Box Legislation (aimed at removing criminal histories from the employment screening process completely).
  • Equal Employment Opportunity Commission regulations which are constantly evolving.
  • Fair Credit Reporting Act which serves to protect job seekers in certain situations from discrimination due to information on their credit reports.
The cost of failure can be hefty fines in addition to potential litigation from candidates unlawfully eliminated from consideration based on the information contained in these reports.


Southern states most burdened by credit card debt: Study

The occasional splurging that comes with southern hospitality might just be responsible for credit card debt in key states, according to a study conducted by personal finance resource

The data released on Wednesday found that out of the top 10 states with the highest amount of credit card debt, nine were southern states. The only geographical outlier on the list was New Mexico, which also turned out to rack up the most debt when compared to its median household income.

According to the study's findings, a typical household in New Mexico carries $8,356 in credit card debt and earns a median income of $47,169.

To illustrate how long it would take New Mexican households to pay off the four-figure amount, calculated that it would take 17 months to eradicate the debt if 15 percent of earnings were put aside. Total interest paid within that time frame would be $1,339.
Read more at FOXBusiness


OCC and FDIC issue proposed rules to undo Madden. by Jeremy T. Rosenblum

The OCC and FDIC issued proposed rules this week intended to eliminate the uncertainty created by the Second Circuit's decision in Madden v. Midland Funding. In that decision, the Second Circuit held that a nonbank that purchased charged-off loans from a national bank could not charge the same rate of interest on the loan that Section 85 of the National Bank Act (NBA) allowed the national bank to charge. The proposals would codify each agency's interpretation that a bank loan assignee can charge the same interest rate that the bank is authorized to charge under federal law. Comments on the OCC's proposal must be submitted by January 21, 2020. Comments on the FDIC's proposal must be submitted no later than 60 days after the date the proposal is published in the Federal Register.

The rules rely on the power of national banks, federal savings associations, and state banks to make loans, assign loans to third parties, and charge interest on such loans.
Read at Ballard Spahr LLP



Consumer Financial Protection Bureau Issues Notice of Proposed Rulemaking on Remittance Rule

WASHINGTON, D.C. -The Consumer Financial Protection Bureau (Bureau) issued today a Notice of Proposed Rulemaking (NPRM) relating to the Remittance Rule (Rule).

The Rule generally requires companies that provide remittance transfers in the normal course of business disclose to consumers certain fees and the exchange rates that apply to transfers. The Rule also includes an exception that allows certain banks and credit unions to estimate certain fee and exchange rate information instead of disclosing exact amounts in certain circumstances, but this exception expires by statute in July 2020.

The NPRM proposes to allow certain banks and credit unions to continue to provide estimates under certain conditions where it could be economically infeasible for these institutions to provide exact disclosures. This could preserve consumers' ability to send remittances from their bank accounts to certain destinations and reduce the compliance burden for banks and credit unions.
Read more at Consumer Financial Protection Bureau



Behind The Apply Button - Episode 4 by Tim Li
"SaaS on SaaS on SaaS" - Alchemy Technologies

My name is Timothy Li, founder of Alchemy and a fan of all things FinTech. I grew up in banking, lending, and financial services. I've been in technology, analytics, and product management most of my life. I worked at large banks such as JPMorgan Chase as well scale ups like RealtyMogul.

Four years ago, I began a venture to create a FinTech infrastructure company to let FinTech startups, banks and financial services to launch their product efficiently and completely remove the barrier to entry for anyone that wants to try their hands in lending and payments.

I believe in delivering best in class FinTech infrastructure to all corners of the world and to lower the cost of financing for everyone.

Episode 4 - "SaaS on SaaS on SaaS"
View Here: ALCHEMY


Compliance and Integrity are the Keystones of Success at National Debt Holdings

We are dedicated to delivering the highest-quality service with honesty and accuracy to maximize performance for our clients while assisting consumers in their return to financial wellness.

National Debt Holdings is an official Certified Receivables Company (CRB) through Receivables Management Association International (RMAI). We have pledged to uphold the code of ethics which governs the professional conduct and behavior that is expected of members. Before certification, RMAI requires companies to pass a background check and demonstrate compliance with uniform and rigorous industry standards of best practice. The RMAI standards address principles that include account documentation, chain of title, consumer complaint & dispute resolution, statute of limitation compliance, vendor management, credit bureau reporting, and many other relevant operational procedures. Our RMAI Certification proves our dedication to professional growth and building compliant partnerships within the industry.

Both our RMAI and ACA International memberships provide continuous access to education, training, and information. National Debt Holdings regularly takes part in industry events and conferences to remain at the forefront of technological advancements and changes in policies and regulations. We participate in webinars to receive timely and relevant information that helps us maintain our competitive edge. Our association memberships provide valuable access to industry leaders and experts, allowing us to make important connections and grow our networks.


For banks, data on your spending habits could be a gold mine

NEW YORK (AP) - There's a powerful new player watching what you buy so it can tailor product offerings for you: the bank behind your credit or debit card.

For years, Google and Facebook have been showing ads based on your online behavior. Retailers from Amazon to Walgreens also regularly suction up your transaction history to steer future spending and hold your loyalty.

Now banks, too, want to turn data they already have on your spending habits into extra revenue by identifying likely customers for retailers. Banks are increasingly aware that they could be sitting on a gold mine of information that can be used to predict - or sway - where you spend. Historically, such data has been used mostly for fraud protection.

Suppose you were to treat yourself to lunch on Cyber Monday, the busiest online shopping day of the year. If you order ahead at Chipotle - paying, of course, with your credit card - you might soon find your bank dangling 10% off lunch at Little Caesars. The bank would earn fees from the pizza joint, both for showing the offer and processing the payment.


The Future of the CFPB: the Executive Branch and Separation of Powers

On October 18, 2019 the Supreme Court granted certiorari in Seila Law v. Consumer Financial Protection Bureau (CFPB). SCOTUS will answer the question of "whether the substantial executive authority yielded by the CFPB, an independent agency led by a single director, violates the separation of powers," and the Justices requested that the parties brief and argue an additional issue: "If the Consumer Financial Protection Bureau is found unconstitutional on the basis of the separation of powers, can 12 U.S.C. § 5491(c)(3) [the for-cause removal provision] be severed from the Dodd-Frank Act?"

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) established the CFPB as an independent bureau within the Federal Reserve System designed to protect consumers from abusive financial services practices. The structure and constitutionality of the CFPB has been addressed before. In 2018, the D.C. Circuit held in PHH Corp. v. CFPB, No. 15-1177 (D.C. Cir. 2018) (PHH) that the current structure of the CFPB, which features a single director that cannot be removed by the president except for cause, "is consistent with Article II" of the Constitution.
Read more at The National Law Review


Mobile payments undermine banks' battle for credit card dominance
  • The holiday shopping season is when consumers rack up the most debt, and banks want that to happen on their credit cards.
  • But as Americans increasingly pay on mobile phones, analysts say it's becoming harder for banks to stay "top of wallet."
  • Google Pay, PayPal Checkout and Apple Pay let you pick a default card to store on file. As people increasingly pay on mobile phones, they're less likely to stop and think about which card has the most rewards. Some say they'll go with what's easiest.

Banks are battling to get consumers using their credit cards for holiday shopping. But faster mobile payment options are making that more difficult.

As consumers shop on their phones, analysts say they may end up using whichever card is automatically stored instead instead of considering rewards.
Read more at CNBC

Dreher Tomkies LLP

For Consumers, Control (Over Transactions) Is Key

Black Friday and Cyber Monday have come and gone. With eCommerce now surging into the holidays, consumers may be mindful of the state of their (digital) wallets, eyeing balances. The time is ripe, too, for fraudsters to strike.

To that end, and as found in a recent edition of the Consumer-Centric Authentication Playbook, a significant number of consumers want control over their banking apps, especially when they transact with merchants. The data shows the divide between the desire to add layers of security and the actual ability to do so.

  • 89.1%: Share of people who use banking apps who want to set additional login requirements.
  • 70.2%: Portion of consumers who want authentication controls for added security.
  • 39.9%: Share of consumers who use apps that offer transaction-specific authentication controls.
  • 64.5%: Portion of users who would like to have authentication controls in place for merchant or contractor payments.
Read more at PYMNTS.COM


Alternative Financial Service Providers Association

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