April 23, 2019
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Here is the FDIC Small Business Lending Report All Fintech Lenders are Reading

Recently, the Federal Deposit Insurance Corporation (FDIC) published its Small Business Lending Survey for 2018. Included within the report was an ongoing discussion of "non-bank lenders" or online lending platforms including direct and marketplace lenders.

First, the FDIC acknowledges the profound importance of small business and their survival being tied to access to capital. IF SMEs cannot access credit they do not grow or survive. Small businesses are the foundation of the US economy driving the majority of job creation and wealth.

Bank lenders are most frequently the source for external credit (IE not founders credit cards). Yet banks, mainly small banks, continue to consolidate and the number of banks are in decline. This fact "may have significant negative effects on U.S. small businesses."

Enter the Fintechs
The FDIC report states that Fintechs (as well as credit unions) are emerging as small bank competitors. But these same Fintechs are considered as "competitors only for large banks, but only as frequent competitors, not as top competitors."

The Survey posits that if large banks and Fintechs increase their decision speed for providing access to credit, small banks may suffer adversely from the competition.

So what is the solution? Perhaps, small banks should embrace innovation and partner with more Fintechs. This is the same theme that was addressed by Fed Governor Michelle Bowman in a recent speech. Read more at CROWDFUND INSIDER




CFPB Notice of Proposed Rulemaking (NPRM) on "Payday, Vehicle Title, and Certain High-Cost Installment Loans"

Deadline to submit comments is May 15

In 2017, the CFPB issued a rule on on "Payday, Vehicle Title, and Certain High-Cost Installment Loans" that was needlessly complex and overbroad. It would have caused irreparable harm to industry businesses and eliminated an important form of credit to consumers.

Last month, the CFPB proposed a rule to rescind portions of the 2017 rule, including the Mandatory Underwriting Provisions. The Community Financial Services Association and others support this rule and are pleased the CFPB has taken steps to rescind the mandatory underwriting provisions of its 2017 Final Rule for small-dollar lending. Rescinding these requirements is warranted to avoid unnecessary industry burdens and harm to consumers. If the CFPB's 2017 Final Rule for small-dollar lending were to take effect, it would decimate the entire small-dollar lending industry. It is for these reasons, the CFPB should also delay the payment provisions of the 2017 Rule and begin a new rulemaking for payments.


Comments can be submitted now through May 15, and can be sent electronically, via email or through regular mail.
1) Submit electronically via at

2) Submit via email to
Include Docket No. CFPB-2019-0006 in the subject line of the message.

3) Submit via regular mail or hand deliver to: Comment Intake
Bureau of Consumer Financial Protection, 
1700 G Street, NW, 
Washington, DC 20552 
 Include Docket No. CFPB-2019-0006 in the letter. 
Must be mailed by Friday, May 10, to ensure arrival by deadline.

If you have questions or would like additional information, please email


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

CFPB head, charged with protecting consumers, says people need 'to help themselves'

After becoming head of the Consumer Financial Protection Bureau - a job for which she had little if any relevant experience - Kathleen Kraninger went on what she called a three-month "listening tour" to learn how best to safeguard the public from greedy banks, credit-card companies and lenders.

This week she revealed what she'd learned.

Consumers don't need much protection from banks, credit-card companies and lenders, it turns out.

They just need a little schooling.

"Empowering consumers to help themselves, protect their own interests, and choose the financial products and services that best fit their needs is vital to preventing consumer harm and building financial well-being," Kraninger said in a speech to the Bipartisan Policy Center, a Washington think tank.

"Today's consumers need these skills more than ever," she said. "For example, fewer than half of Americans set aside money for their children's college education. More and more people reach retirement with incomes and savings that simply won't meet their needs.

Alternative Credit Reporting

Democratic senators introduce bill to let states impose interest rate caps

U.S. Sens. Sheldon Whitehouse (D-RI), Elizabeth Warren (D-MA), Jeff Merkley (D-OR), and Jack Reed (D-RI) introduced legislation to curb high interest rates for credit cards and loans.

The Empowering States' Rights to Protect Consumers Act would amend the Truth in Lending Act to clarify that consumer lenders - regardless of their location or legal structure-must abide by the interest rate limits of the states in which their customers reside.

"Right now, Wall Street banks and their credit card subsidiaries can saddle consumers with outrageous interest rates, contributing to a cycle of debt that is tough to break out of," Whitehouse said. "This bill will restore the power of individual states to rein in abusive credit card rates."

Previously, each state had the ability to enforce usury laws against any lender doing business with its citizens. That changed in 1978 when the Supreme Court in Marquette National Bank of Minneapolis v. First of Omaha Service Corporation decided that a national bank is bound only by the lending laws of the state in which the bank is based. This rendered states powerless to impose lending restrictions against lenders headquartered in other states.

The legislation would allow states to re-instate a cap.
Read more at Financial Regulation News

Compete in the data-driven lending era

Why a 'cashless' society wouldn't work in the US: Readers sound off

I am pleased to see news coverage of Amazon's reported decision to accept cash at its Go stores. Accepting cash ensures that all consumers can buy from any business. In fact, retailers that ban cash are excluding approximately 25% of people in the U.S. who are either totally "unbanked" or "underbanked," with little or no access to other payment methods. Instead of excluding people, retailers should be making it easier for everyone to participate in our economy.

The Federal Reserve cites cash as the most frequently used form of payment, accounting for 30% of U.S. consumer transactions, ahead of all other payment methods. Unlike alternative forms payment, cash requires no fees, no passwords, it can't be hacked and it's not vulnerable to identity theft, crashing IT systems and power outages. Cash safeguards our personal information, so each of us can decide whether or not to share the details of our spending habits. Digital payment technology makes it too easy to surrender our privacy.

Cash also makes good business sense for both retailers and consumers. Fees charged by card issuers cost merchants as much as 2.5% per transaction, easily outpacing the cost of handling and processing cash, especially when you consider the fraud-related costs that come with cards and digital payments. These costs are passed on to consumers, driving prices higher for everyone.
Read more at USA TODAY

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MaxDecisions, inc. launches Enterprise A.I. & Machine Learning Services

MaxDecicisons Inc., a leader in direct mail marketing, analytics, and predictive modeling, today announces the official launch of Artificial Intelligence and Machine Learning as a service for the entire financial sector. "MaxDecisions, A.I." is now in general release for all our clients.

After 2 years of intense development in MaxDecisions, Inc's R&D Lab led by Stephanie Ma, MaxDecisions has rolled out the long-awaited Artificial Intelligence and Machine Learning models, model development processes and automation. This enables our clients to take advantage of the latest technology, technique, and algorithms to compete in today's market.

We have developed, redeveloped several generations of artificial neural network and machine learning models in our R&D Lab in the past two years to perfect not only the accuracy and robustness of our models but also independently developed a new process of A.I. model development and training process.

As the financial industry including banks, special financing companies such as patient financing, home improvement, and private student loans matures. The technology and methods much evolve as well to take advantage of the datasets made available to the financial sector. MaxDecisions, Inc. deep domain knowledge in banking and lending underlines our research and development efforts. These new algorithm and techniques are finally made ready for our clients to improve their fraud detection, credit risk management, and direct response marketing.
Read more at MaxDecisions

We are a revolutionary merchant service and technology firm servicing the debt repayment industry

VIRGINIA: Some online lenders charge 900% interest and ignore Virginia law. So borrowers are suing.

A loose-knit group of Virginians, stung by triple-digit interest rates on payday and other loans, is trying to do what the General Assembly won't - make sure all lenders, including online ones, follow Virginia laws.

In a series of federal lawsuits, they've alleged lenders are hiding behind Native American tribal governments in order to get around a Virginia law banning usury and a federal anti-racketeering law that targets loan sharks' debt collection practices.

The lawsuits challenge recent mergers or purchases of online lending operations by several tribes, arguing they were meant to get around a crackdown by New York State financial regulators on the Internet lenders. New York had challenged deals in which the online lenders contracted with a shell company owned by a member of a tribe to claim immunity from state consumer protection law.

The latest lawsuit, filed last week, alleges that four web sites - Golden Valley Lending, Silver Cloud Financial, Mountain Summit Financial and Majestic Lake Financial - set up in the name of the Habematolel Pomo of Upper Lake tribe in northern California were actually operated by non-tribal members in a Kansas City suburb, including the son of a payday loan executive convicted of fraud and racketeering. Read more at THE DAILY PRESS

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.

Seven Tips to Leverage Employment Verification Data

Is more data better, or is better data really, better? Whatever your philosophy, employment data is already, or should be in your mix of sources. And know this, employment data is not just for verifying employment anymore, it has the potential to move the needle for you in several ways.

Employment data attributes are now optimizing multiple steps of a customer's lifecycle and experience with your lending business. Incorporating employment data into your workflow can create a more efficient, seamless, and expedited process for the consumer. Here are seven tips to help you leverage employment data and improve your customer's lifecycle:

1. Verify Identity: You can validate identity in real-time with employer reported data. This is more authoritative and accurate than self-reported, or information gathered from third parties. The employers gather ID information from an employee during the Form I9 or eVerify process, which require physical verification of documents. Knowing this is great because you can use employment data for mitigating fraud.

2. Identify More Risk: During underwriting, an attribute simply indicating if an applicant is employed, regardless of position or income, has proven to be extremely predictive in assessing risk. By knowing whether a consumer is employed at the onset of the    Read more at VALIDIFI

Introducing AI Lift, the AI-powered credit risk web service that leverages uncorrelated alternative data to identify the 20-30% of today's thin-file and no-file borrowers ready to be creditworthy customers.

Study: Health care industry worst at protecting consumer data, federal government is best

The federal government is best at protecting consumer data and the health care sector is the worst, according to a new study by the not-for-profit Internet Society's Online Trust Alliance.

The 10th annual Online Trust Audit and Honor Roll analyzed more than 1,200 consumer-facing websites to determine which industry values security and privacy the most.

Here's how the seven industries the Online Trust Alliance examined ranked:

U.S. government - 91% of audited U.S. federal government sites made the Honor Roll)
consumer services (everything from social media to travel-booking websites to tax-prep services) - 85%
news and media - 78%
banks - 73%
internet retailers - 65%
internet service providers, carriers, hosters and e-mail providers - 63%
health care - 57%

Read more at USA TODAY

Payliance: Powerful Payment Processing Technology

Least Cost Routing: How to Minimize the Cost of Debit Payment Processing

Controlling costs and operating efficiently are critical to success in business. One method of reducing operating costs in the lending space is to leverage payment solutions that incorporate least cost routing. With least cost routing, a processor uses a proprietary algorithm in combination with identifying information embedded within the card number to process debit card transactions through the lowest cost network available.

The Cost of Debit Card Processing for Lenders
In 2010, the Durbin amendment to the Dodd-Frank law was passed, limiting interchange charges with the intent of passing savings from merchant to consumer. It also disallowed exclusive deals between network and a single card issuer, requiring that at least two networks be available for transaction routing.

The Federal Reserve found that the average cost per debit card transaction was 1.15 percent of the total transaction value in 2017. However, the interchange fee makes up 85-90 percent of the total fee. These interchange rates are set by the networks and are formulated based on several different factors, including the merchant industry, type of card, and compliance standards. Those rates are also reviewed two times each year. Read more at PAYLIANCE

Lending as a Service

"Text me $$$": Debt collectors may soon be able to text and email consumers

Debt collecting is an age-old business but it may soon receive a 21st-century revamp when the Consumer Financial Protection Bureau, an agency created in the wake of the financial crisis to protect consumers, proposes new rules for the industry. Among the changes may be whether debt collectors can text and email borrowers as they pursue overdue funds.

The idea of debt collectors adding new methods of communication to their arsenal may stir annoyance, if not fear, among some consumers. After all, the debt-collection industry isn't exactly beloved among consumers, with the CFPB recording 84,500 complaints about debt collection in 2017, making it one of the most complained-about financial services.

Debt collection is a big business in the U.S., a $10.9 billion industry that employs almost 120,000 workers who help track down overdue payments. Since the financial crisis, American consumers have taken on more debt, and some delinquencies, such as for auto loans, have been increasing. Against this backdrop is a CFPB that critics say has lost its appetite for going after financial abuses by corporations under Trump administration appointees who favor less regulation.
Read more at CBS NEWS

Trust Science
Say "yes" to thin-file and no-hit borrowers with REAL alternative data and a fully compliant, AI-powered score, customized for your business.

Point of Sale FinTech Startup Exceeds $1mm in Lending Volume Running On Alchemy Lending Operating System

Pleasant Grove, UT (April 18th, 2019) - For Immediate Release - Alchemy Technology, Inc., industry-leading lending as a service organization offering lending operating system, high-end analytics and call center servicing announce the launch and collaboration of a "FinTech 3.0" financing company specializes in patient financing vertical.

In a short amount of time, our client has exceeded 1 million dollars in funding. Onboarded 20+ networks and have received thousands of applicants. There haven't been any payment defaults to date.

Bits and Parts
Our client used our entire lending platform from website to loan management system to our payment gateway. Our data scientists also helped in designing the underwriting rules and algorithms to ensure the greatest approval rate and a great in office experience.

FinTech 3.0
We are working with several point-of-sale fintech startups that are in the process of disintermediating the old guards of FinTech. With technology partners such as Plaid, Marqeta, Prime and New-To-Credit credit bureaus, these new crops of FinTech startups are finding themselves on the verge of disrupting the market again. Read more at ALCHEMY

Redefining how financial service businesses measure risk and process payments.

CFPB to focus on protecting consumers, not enforcing laws on financial institutions

In her first public speech as director of the Consumer Financial Protection Bureau, Kathy Kraninger said the agency would focus on supervising and working with financial institutions on protecting consumers, rather than enforcing laws against them.

Kraninger announced Wednesday that the CFPB would soon propose rules to update one of the nation's older consumer protection statutes, which prohibits abusive practices from debt collectors. One proposal would be a clear limit on the number of phone calls per week debt collectors could make.

The CFPB director also said the agency would launch a symposia series to engage stakeholders on issues at the bureau, starting with one on clarifying the meaning of "abusive acts or practices" under the 2010 Dodd-Frank Act.

Speaking at the Bipartisan Policy Center, Kraninger highlighted her time working with Democrats - as an intern for Sen. Sherrod Brown, D-Ohio, when he served in the House, and at the Department of Transportation under Norman Mineta, a Democrat who served as George W. Bush's Transportation secretary. Read more at ROLLCALL

We are a revolutionary merchant service and technology firm servicing the debt repayment industry.

Alternative Financial Service Providers Association

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