September 20, 2018
2018 edition: 75/104
Compete in the data-driven lending era.

Banks, you've been warned.

Two-thirds of Amazon Prime members would try banking with the retailer, according to Bain study

*Bain surveyed 6,000 U.S. consumers recently with a simple question: If Amazon launched a free online bank account that came with 2 percent cash back on all purchases, would you sign up to try it?
*Amazon Prime members show the highest likelihood of signing up for a potential checking account from the e-commerce giant.
*Amazon crushes national and regional banks in the so-called net promoter score measuring consumer loyalty, according to report.

Banks, you've been warned.

About two-thirds of Amazon Prime members would try a free online bank account from the e-commerce giant, according to a report from consultant Bain & Co. That's considerably higher than the percentage of regular Amazon customers (43 percent) or non-Amazon customers (37 percent) who would try an account, indicating strong loyalty to the Prime bundle of services.

Expectations have been high since it was reported in March that Amazon is in talks with banks including J.P. Morgan Chase and Capital One to create a checking-account-like product for its customers. Since then, big U.S. lenders including Chase and Citigroup have announced or rolled out digital-only accounts targeting some of the same millennial customers that the Amazon product may appeal to. Read more at CNBC 

The voice for the small-dollar, short-term lending industry.

New Research Report on the Geography of CREDIT INVISIBILITY. (CFPB 9/19/2018)

Creditworthy consumers can face difficulties accessing credit if they lack a cred__ record that is treated as "scorable" by widely used cred__ scoring models. These consumers include those who are "cred__ invisible," meaning that they do not have a cred__ record maintained by one of the nationwide consumer reporting agencies (NCRAs). They also include those who have a credit record that contains either too little information or information that is deemed too old to be reliable. The Bureau published two previous Data Points about consumers with limited credit histories. The first, Credit Invisibles, estimated the number and demographic characteristics of consumers who were credit invisible or had an unscorable cred__ record. The second, Becoming Credit Visible, explored the ways in which consumers establish cred__ records.

According to these Data Points, consumers who are Black, Hispanic, or living in low-income neighborhoods are more likely to have trouble accessing credit due to an unscorable credit record or no record at all. A long-standing concern relating to credit access for the Bureau and other policymakers is the importance of geography in accessing credit. This concern goes at least as far back as early efforts to combat redlining and other forms of unlawful discrimination. Redlining is a term used for an illegal practice under which people living in a certain area or neighborhood are not given the same access to credit as people in other areas or neighborhoods on the basis of race, color, or another prohibited characteristic. Identifying cases of redlining has been a priority for the Bureau and other agencies.  

We are transforming lending with innovative payment instrument data and technology, increasing credit access to the financially underserved, and reducing fees for borrowers and creditors.

COLORADO: Payday loan interest rate cap on November ballot

Currently in Colorado, when anyone wants to get a payday loan- they could face interest rates of about 200 percent on the high end.

'Being caught up in something like this is a continual thing and I almost want to say perpetual because the loan lasts for such a long time,' said Frank Lytle, the NAACP State Economic Justice Co Chair and a supporter of Proposition 111.

Which is why the group organizing this ballot initiative wants to cap interest rates at 36 percent.

15 states and the District of Columbia have enacted similar laws.

'You're taking advantage of people, it should be up front you know for a reasonable payment,' said Lytle.

There's not a registered opposition for the question in Colorado, but on the federal level there are lobbyists working with payday lender groups. Read more at KOAA NEWS 5

Come Visit us at Lend 360, 2018 in Chicago, Il. October 8-11 at Booth #801

Trade groups challenging CFPB's payday loan rule file preliminary injunction motion. by Ballard Spahr LLP

The two trade groups that unsuccessfully attempted to obtain a stay of the August 19, 2019 compliance date for the CFPB's final payday/auto title/high-rate installment loan rule (Payday Rule) have now filed a Motion for Preliminary Injunction to enjoin the CFPB from enforcing the Payday Rule. While the Texas federal district court had denied a stay of the compliance date, it had granted the trade groups' request for a stay of the April 2018 lawsuit they had filed challenging the Payday Rule. According, concurrently with filing the preliminary injunction motion, the trade groups also filed an Unopposed Motion to Lift the Stay of Litigation.

Early this year, the CFPB announced that it intended to engage in a rulemaking process to reconsider the Payday Rule pursuant to the Administrative Procedure Act (APA) and in its Spring 2018 rulemaking agenda, it indicated that it expects to issue a Notice of Proposed Rulemaking to revisit the Payday Rule in February 2019. In their Unopposed Motion to Lift the Stay of Litigation, the trade groups state that the CFPB "has noted that it does not expect that rulemaking to be complete before the compliance date. Moreover, it is impossible to know what the result of that rulemaking will be." They assert that because the compliance date has not been stayed, they "now have no choice but to pursue a preliminary injunction" to avoid the irreparable injuries the trade groups' members will suffer in preparing for compliance with the Payday Rule's requirements. They indicate that they have conferred with the CFPB about the motion and that the CFPB has stated that it does not oppose the motion provided the trade groups agree that the CFPB does not have to file an answer in the case pending further court order." The trade groups agreed to the CFPB's request.
Read more at JDSUPRA

Analytics is your competitive advantage!

CFPB seeks extension to respond to trade groups' preliminary injunction motion in lawsuit challenging payday loan rule. by Ballard Spahr LLP

The CFPB is asking the Texas federal district court to give it a 45-day extension to respond to the preliminary injunction motion filed by two trade groups in their lawsuit challenging the CFPB's final payday/auto title/high-rate installment loan rule (Payday Rule). The motion seeks a preliminary injunction to block the CFPB from enforcing the Payday Rule and asks the court to act on the motion by November 1. The trade groups also filed a motion to lift the stay of their lawsuit that the district court had granted despite denying their request for a stay of the Payday Rule's August 19, 2019 compliance date.

In its motion to extend the response deadline, the CFPB states that, if the stay of the lawsuit were not in effect, its response would be due by September 21. The 45-day extension is sought if the court grants the trade groups' motion to lift the stay. In support of its request, the CFPB states the following: Read more at JDSUPRA

  National Debt Holdings
National Debt Holdings is a professional Receivables Management Company that partners with creditors to purchase and/or manage receivables at all stages of the account life cycle.

'Fintech' Firms Fueling Rise of Personal Loans, Experian Says

Personal loans are the "fastest-growing type of consumer debt" in the past year, according to data from Experian.

Personal loan debt reached $273 million in the second quarter, an 11 percent increase, compared to the same quarter in 2017. That percentage growth is bigger than auto, credit cards, mortgages, and student loan debt, Experian says.

Another factor in the soaring popularity of personal loans is the rise of online lenders, known as "fintech." Startups such as SoFi, Marcus, Prosper, Best Egg, Avant, and Upstart have contributed to the growth of personal loans, says Experian. They now account for more than 30 percent of all new personal loans.

Their market share will likely continue to grow as a U.S. bank regulator recently announced fintech companies, if approved, will be allowed to operate independently across the country under a single federal license.

Personal loans usually come with lower interest rates than credit cards, so they often can be used to consolidate debts into a single, more affordable monthly payment. But interest rates depend much on your credit profile and consumers should shop around since personal loans can carry a range of fees. Read more at eCreditDaily
Come Visit us at Lend 360, 2018 in Chicago, Il. October 8-11 at Booth #713

TransUnion Healthcare Announces Support of RIP Medical Debt to Help Consumers Avoid Bankruptcies

Medical debt is the number one cause of bankruptcy in the U.S. To help consumers faced with mounting medical bills avoid bankruptcy, TransUnion Healthcare announced today that it is supporting the efforts of RIP Medical Debt, a 501(c)(3) nonprofit located in metropolitan New York, but working nationally. RIP, founded in 2014, has a single mission to help relieve deserving Americans and veterans of medical expenses they are unable to pay.

"Our nonprofit uses donor funds to locate and then purchase unpaid and unpayable medical debt," said Craig Antico, CEO and co-founder of RIP Medical Debt. "With TransUnion's support, we can further address the difficult problem of identifying those individuals who are truly charity-worthy and take the next step of actually removing that debt burden."

RIP Medical Debt will be using TransUnion Healthcare's financial assessment solution to both evaluate portfolios of debt they own and to locate new medical debt. The nonprofit utilizes credit data for the purpose of purchase and forgiveness of medical debt that meets specific criteria of the donors.

Earlier this year, TransUnion published findings from an analysis that found patients experienced an 11% increase in average out-of-pocket costs during 2017. These costs increased to $1,813 at the conclusion of 2017, compared to $1,630 one year earlier. TransUnion also found that more than half (51%) of patient out-of-pocket costs per healthcare visit in 2017 were $501 or higher.
Read more at TRANSUNION

Dreher Tomkies LLP Dreher Tomkies LLP is a law firm concentrating in the areas of Banking and Financial Services law.

A Decade On, Lending Transformed By Crisis And Innovation

Necessity is the mother of invention.

Invention can become necessity. And in lending, with the financial crisis in the rearview mirror, a decade on, invention - okay, innovation - has become a hallmark, at least in some corners.

Any number of musings have graced any number of websites these past few days about what it all meant and means. The trigger for the look back has of course has been the Sept. 15, 2008 fall of Lehman, which filed for bankruptcy that day.

The rise of FinTech offers a bit of a prism through which to view those events. The traditional banking model may be disrupted, or about to be disrupted, depending on where you look. But a standstill in the credit markets created a vacuum for a bit, at least along traditional lending conduits. Yes, the government(s) stepped in around the world, and here in the United States, $1.5 trillion in stimulus came across to all sorts of financial institutions over the ensuing five years, helping to open some spigots. Read more at PYMNTS.COM

Better predictive scoring for you.
Better credit control for your customers.


Bureau of Consumer Financial Protection Issues Updated FCRA (Fair Credit Reporting Act) Model Disclosures. (CFPB 9/12/2018)

The Bureau of Consumer Financial Protection (Bureau) today issued an interim final rule updating two model disclosures to reflect changes made to the Fair Credit Reporting Act (FCRA) by recent legislation.

In May 2018, Congress passed the Economic Growth, Regulatory Relief, and Consumer Protection Act, which requires nationwide consumer reporting agencies to provide "national security freezes" free of charge to consumers. The "national security freeze" restricts prospective lenders from obtaining access to a consumer's credit report, which makes it harder for identity thieves to open accounts in the consumer's name.

The Economic Growth, Regulatory Relief, and Consumer Protection Act mandates that whenever the FCRA requires a consumer to receive either the Summary of Consumer Rights or the Summary of Consumer Identity Theft Rights, a notice regarding the new security freeze right also must be included. The Summary of Consumer Rights is a summary of rights to obtain and dispute information in consumer reports and to obtain credit scores. The Summary of Consumer Identity Theft Rights is a summary of rights of identity theft victims. The FCRA requires the Bureau to write model forms of these documents. Consumer reporting agencies and other entities can use the Bureau's model forms or their own substantially similar forms.

We Provide lenders with an end-to-end cloud SaaS lending solution fully customized and white labeled for each lending client.

More than 1-in-5 consumers had telecommunications-related collections on their consumer report in the past 5 years. (CFPB 8/22/2018)

Today the Bureau of Consumer Financial Protection (Bureau) released its latest quarterly consumer credit trends report, which focuses on telecommunications-debt collection items.

This report explores reporting of telecommunications-debt collections (telecom collections) to nationwide consumer reporting agencies. It documents the prevalence and dollar value of telecom collections and, in doing so, illustrates industry practices in collection and reporting of telecommunications debts.

Key findings include:
About 22 percent of consumer reports contained a telecom-related item at some point between mid-2013 and early 2018. Although consumers often pay for their telecom services on a monthly basis, most telecommunications providers do not report to credit reporting agencies unless an account is in collections. Nearly 95 percent of the telecom-related items were telecom collections items.
The median telecom collection balance is $408, and 17 percent of telecom collection balances exceed $1,000. Read more at CONSUMER FINANCIAL PROTECTION BUREAU (CFPB)

 Members own over 64,000 locations and online operations

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

315 Tuscarora St., Lewiston, NY 14092