February 7, 2019
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CFPB Cripples New Rules for Payday Lenders

Payday lenders won a major victory on Wednesday after the Consumer Financial Protection Bureau moved to gut tougher restrictions that were to take effect later this year.

The industry has spent years trying to fend off the new rules, which were conceived during the Obama administration. The regulations were intended to prevent spiraling debt obligations by limiting the number of consecutive loans that could be made and requiring lenders to verify that borrowers could pay back their loans on time while still covering basic living expenses.

In her first major policy move, the bureau's new director, Kathleen Kraninger, proposed eliminating nearly all of the regulation's substantive requirements, including the "ability to repay" mandate. There was "insufficient evidence and legal support" for the provision, the bureau said. It also sought to drop a limit that would have prevented lenders from making more than three short-term loans without a 30-day "cooling off" period.

A payday loan customer who borrows $500 would typically owe about $575 two weeks later - an annual percentage rate of nearly 400 percent. If borrowers cannot repay their loans on time, they often borrow more and deepen their debt. It is a hard cycle to break: Half of all payday loans are part of a sequence that stretches at least 10 consecutive loans, according to the consumer bureau's data. Read more at NEW YORK TIMES

Dreher Tomkies LLP
Dreher Tomkies LLP is a law firm concentrating in the areas of Banking and Financial Services law.
Consumer Financial Protection Bureau Releases Notices of Proposed Rulemaking on Payday Lending

Washington, D.C. - The Consumer Financial Protection Bureau today is proposing to rescind certain provisions of its 2017 final rule governing "Payday, Vehicle Title, and Certain High-Cost Installment Loans." Specifically, the Bureau is proposing to rescind the rule's requirements that lenders make certain underwriting determinations before issuing payday, single-payment vehicle title, and longer-term balloon payment loans. The Bureau is preliminarily finding that rescinding this requirement would increase consumer access to credit.

In October 2018, under the leadership of then-Acting Director Mulvaney, the Bureau announced that it would issue Notice of Proposed Rulemakings (NPRMs) to reconsider the rule's mandatory underwriting requirements and to address the rule's compliance date. The proposals the Bureau is releasing today fulfill that commitment.

The Bureau's proposal suggests there was insufficient evidence and legal support for the mandatory underwriting provisions in the 2017 final rule. Additionally, the Bureau is concerned that these provisions would reduce access to credit and competition in states that have determined that it is in their residents' interests to be able to use such products, subject to state-law limitations. The NPRM proposing to rescind the mandatory underwriting requirement is open to public comment for 90 days.

In a separate notice issued today, the Bureau is also proposing to delay the August 19, 2019 compliance date for the mandatory underwriting provisions of the 2017 final rule to November 19, 2020. The NPRM proposing the delay is open to public comment for 30 days.
Read at The Consumer Financial Protection Bureau

CFSA Conference _ Expo
CFSA Conference _ Expo

The Industry Responds to FDIC Small Dollar Lending Rule Request

The FDIC put out a Request for Information in November on small dollar lending, here is how the industry responded

Small dollar loans can be quite profitable. Just look at the number of payday loan stores in the US, there are more than 20,000 of them. The reason they can be so profitable is that four out of five payday loans are rolled over or renewed according to the CFPB. For the most part banks have stayed away from actively promoting a small dollar loan product and the FDIC wanted to know why and what conditions might lead to them to offer them.

So, back in November the FDIC issued a Request for Information on Small Dollar Lending. They received more than 60 responses from banks, industry associations, non-profit groups, fintech companies and individuals. While each group had a slightly different perspective there was an acknowledgement of the challenge of making small dollar loans both affordable for consumers and profitable. While the FDIC did not define exactly what they meant by a small dollar loan the respondents, for the most part, took it to mean loans of less than $5,000.

There are many mainstream online lenders offering personal loans down to $1,000 and there are also many fintech companies offering loans under $1,000. Companies like Oportun, Insikt, LendUp, Elevate, Opploans and many others offer these sub-$1,000 loans using the latest technology tools to make this process more efficient. Often these companies partner with banks to facilitate these loans to underserved consumers. But there are few banks offering online sub-$1,000 loans directly with a notable exception being US Bank. Interestingly, they did not respond to the FDIC request.
Read more at LEND ACADEMY

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NEVADA: Legislators attempt, yet again, to curb payday loan industry

Nevada lawmakers introduced legislation Wednesday to cap interest for payday loans at an annual percentage rate of 36 percent, a rate cap that national advocates contend has all but eliminated exorbitant and abusive lending practices in several other states.

Assemblywomen Heidi Swank and Leslie Cohen are the primary sponsors of Assembly Bill 118, the latest attempt to reign in the lending industry. Annual percentage interest rates for loans in Nevada are among the nation's highest, and can be upwards of 600 percent. Another half-dozen members of the Assembly, all Democrats, have signed on as co-sponsors.

Swank, who has unsuccessfully introduced bills to reign in the industry before, said the proposed interest rate change is the same as the Military Lending Act, which caps loans for active-duty military.

"Thirty-six percent balances both the risk worn by the business, but also doesn't overcharge (higher-risk borrowers) and create that cycle of poverty that happens if people get stuck in these payday loans," Swank said. "We'll see where we get with the number, but I think 36 is where we start and we have conversations." Read more at NEVADA CURRENT

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Survey examines banking advice

The J.D. Power 2019 U.S. Retail Banking Advice Study maintains big banks are outpacing regional banks concerning financial advice.

The survey, which is now in its second year, measures retail banking customer satisfaction with retail bank-provided advice and account-opening processes of six big U.S. banks and 17 regional banks.

"Retail banks that get the financial advice formula right are scoring major points with their customers in the current marketplace," Paul McAdam, senior director of the Banking Practice at J.D. Power, said. "Overall, we're seeing both the consumer desire for financial advice and the satisfaction levels with the advice provided increase. Successful banks are moving from a sales focus to an advice culture. When that happens, there's a considerable increase in new account openings, trust, and advocacy."

McAdam said that, with a wide variance in customer satisfaction scores between top and bottom performers, there is still a great deal of room for banks to enhance advice efforts.

The survey determined among the most common types of advice retail bank customers seek are investment-related advice; quick tips to help improve their financial situation; retirement-related advice; advice to help keep track of spending and household budgets; and saving for a large purchase. Read more at Financial Regulation News

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CFPB moves to water down tough pending rules on payday loans

The nation's new consumer financial watchdog proposed Wednesday to significantly water down tough pending rules on payday and other short-term loans designed to prevent lenders from taking advantage of cash-strapped Americans.

The proposal by Kathy Kraninger, who became director of the Consumer Financial Protection Bureau in December after being nominated by President Trump, would eliminate key provisions requiring lenders to determine whether borrowers can repay the short-term loans.

Financial industry officials have pushed to change the rules and cheered the announcement. Consumer advocates blasted it as a "gift to the payday loan sharks."

The bureau's proposal to revise the rules "suggests there was insufficient evidence and legal support for the mandatory underwriting provisions" enacted in 2017 under Obama nominee Richard Cordray, according to a bureau news release. They would be the first federal rules on payday loans.

Kraninger also wants to delay the effective date of the ability-to-repay provisions, set for August, until November 2020. However, the bureau has decided to move ahead in August with implementing the rest of the 2017 rules pending a Texas court ruling that had delayed the entire set of regulations. The other rules set new limits on lenders withdrawing payments from customers' bank accounts.

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An early look at the 2020 electorate. Pew Research Center

The 2020 U.S. presidential election is rapidly coming into view - and so is the electorate that will determine its outcome.

While demographic changes unfold slowly, it's already clear that the 2020 electorate will be unique in several ways. Nonwhites will account for a third of eligible voters - their largest share ever - driven by long-term increases among certain groups, especially Hispanics. At the same time, one-in-ten eligible voters will be members of Generation Z, the Americans who will be between the ages 18 and 23 next year. That will occur as Millennials and all other older generations account for a smaller share of eligible voters than they did in 2016.

What might these demographic shifts mean politically? In 2016, nonwhite voters were more likely to back Democrat Hillary Clinton, while white voters were more likely to back Republican Donald Trump. Younger generations, meanwhile, differ notably from older generations in their views on key social and political issues. It remains unclear how these patterns might factor into the 2020 election and, as always, a great deal will depend on who turns out to vote.

We project that the 2020 election will mark the first time that Hispanics will be the largest racial or ethnic minority group in the electorate, accounting for just over 13% of eligible voters - slightly more than blacks. Read more at Pew Research Center

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Individual Owners of Debt Collector Companies Personally Liable for Companies' FDCPA and FTCA Violations. by Weiner Brodsky Kider PC

The Second Circuit recently held that it was proper to find two individual co-owners and co-directors of several corporate debt collector entities personally liable for $10,852,396 after such entities violated the Federal Trade Commission Act (FTCA) and the Federal Fair Debt Collection Practices Act (FDCPA).

In FTC v. Federal Check Processing, Inc., the FTC brought suit against thirteen corporate debt collector entities and the two co-owners and co-directors of such entities, alleging that the defendants' combined debt collection practices violated the FDCPA and FTCA. The corporate defendants' business consisted primarily of collecting payday loan debts, which they bought from consumer-debt creditors and compiled into debt portfolios. On summary judgement, the U.S. District Court for the Western District of New York found that the corporate defendants directed nearly all of their approximately twenty-five employee-debt collectors to routinely contact debtors by telephone and falsely identify themselves as "processors," "officers," or "investigators" from a "fraud unit" or "fraud division," then accuse debtors of check fraud or a related crime and threaten them with criminal prosecution if they did not pay their debts.   Read more at JD SUPRA

CFSA Conference _ Expo
Dan McCabe
"See you at the CFSA Conference & Expo in Miami"
Dan McCabe, President at AFSPA

Technology has opened up access to banking but can it stop the unbanked from falling through the cracks? by Natalie Cartwright

Those of us who work in finance can't imagine life without a bank account. But for the world's 1.7 billion unbanked adults, this is a reality. In the U.S., 33.5 million households are either unbanked or underbanked and lack the ability, criteria, or financial literacy to access banking services. Without access to savings and credit, these people often live - and remain - in a cycle of poverty.

In traditional banking models, the unbanked and underbanked were considered unprofitable and risky: many have credit ratings, were unlikely to generate meaningful deposits or incur sufficient banking fees. But, as more banking services go digital, the un- and underbanked present a profitable business opportunity. Thus, it's no wonder that it's not just banks who are clamoring for this revenue; so too are technology companies and retailers, creating an open playing field for a now much-coveted underbanked dollar.

While some non-traditional banking products, such as GoBank, have been productive in providing a solution to an otherwise unserved consumer, and likely cut the use of expensive alternative financial services products from this population, most are not altruistic: they don't offer interest, they charge for deposits, overdrafts and other monthly fees. These customer are likely paying more out of their pocket for banking and reaping fewer rewards. More importantly, they don't solve the problems of the unbanked. The fees are so high and unpredictable that it's a struggle to stay banked.
Read more at TEARSHEET

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Amscot Financial Contributes Mini-Grants to 15 Non-Profit Service Groups

Amscot Financial, a leading provider of convenient, consumer-oriented financial services, recently awarded mini-grants of $150 to $2,500 to support 15 different non-profit service organizations located in the Florida communities where the company serves several million consumers. Read more

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Trump administration will roll back Obama-era restrictions on payday lenders

A federal banking agency announced Wednesday that it plans to roll back Obama-era restrictions on payday and vehicle title loans - a lending practice that many experts consider to be predatory.

The Consumer Financial Protection Bureau proposed rescinding the rule that required lenders who provided "Payday, Vehicle Title, and Certain High-Cost Installment Loans" to make an effort to find out whether borrowers could afford to pay back the loan.

The Trump administration's effort to rescind the rule came after the director appointed by President Barack Obama, Richard Cordray, departed the agency and was replaced by Mick Mulvaney, who now serves as Acting White House Chief of Staff.

The CFPB argued in a statement that the agency believed rescinding the rule and not requiring lenders to underwrite their loans would increase consumers' access to credit.

"The Bureau is concerned that these provisions would reduce access to credit and competition in states that have determined that it is in their residents' interests to be able to use such products, subject to state-law limitations," the agency said in its statement. Read more at NBC NEWS

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.

Cybercriminals Have Your Business In Their Crosshairs And Your Employees Are In Cahoots With Them.

"Hello friend! I have some bad news for you. Your files have been encrypted!"

Thus begins the ransomware email that could spell utter doom for your business. Think it can't happen to you? You may want to think again.

Cybercrime is big business. According to Cybersecurity Ventures, t's projected to cost the world $6 trillion by 2021. Moreover, cybercriminals have found a sweet spot-small businesses.

According to the 2018 Verizon Data Breach Investigations Report, 58% of cyber attack victims were small businesses (organizations with fewer than 250 employees). This may seem counterintuitive for two reasons. First, the big payoff would seem to be had by going after large organizations. Second, the news is filled with headlines about cyber attacks on big companies, not small ones. One example of this is the Target hack during which the credit card details of tens of millions of people were stolen. But here's the thing about that hack that most people don't know-the hackers gained access to Target's network by infiltrating a small HVAC company and stealing that company's access credentials to Target's network. Read more at FORBES

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