October 3, 2019


New SCOTUS petition: CFPB enforcement must be undone if agency is unconstitutional

(Reuters) - The drama over the constitutionality of the Consumer Financial Protection Bureau took another surprise turn on Monday, when a Mississippi payday lender, All American Check Cashing, filed a petition asking the U.S. Supreme Court to grant review of its constitutional challenge to the CFPB before the 5th U.S. Circuit Court of Appeals issues an opinion in the case.

But All American's lawyers at Gibson Dunn & Crutcher are asking the Supreme Court for more than just a ruling that the CFPB's unusual structure is unconstitutional. Their petition also argues that the justices can only cure the bureau's constitutional defect with a drastic remedy: undoing CFPB enforcement actions or even striking down the law that created the bureau.

The Supreme Court, as I'll explain, seems likely to take up the question of whether the bureau's structure - in which a lone director who can only, by statute, be removed from office for good cause - violates separation of powers doctrine. The justices could opt to resolve the constitutional question without calling the CFPB's entire existence into doubt. All-American's petition challenges the Supreme Court to address both the purported constitutional defect and its remedy.
Read more at REUTERS

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Report examines consumer bankruptcy trends

The Consumer Financial Protection Bureau's latest quarterly consumer credit trends report probed the nuances of consumer bankruptcy trends and its wide-ranging impact.

The analysis describes how the volume and types of bankruptcy filings have changed throughout the period 2001 - 2018, including the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) and the Great Recession.

The breakdown noted the significance of how and by whom the bankruptcy system is being used, which is critical to review because of the role bankruptcy can play in helping consumers recover from financial shocks, the relationship between bankruptcy and debt collection and the impact the system can have on the cost and availability of credit.

The scope of work included data analysis from the Bureau's Consumer Credit Panel (CCP), which officials said is a longitudinal, nationally representative sample of approximately five million de-identified credit records maintained by one of the three nationwide credit reporting companies.
Read more at Financial Regulation News


ARIZONA: Ballot proposal would kill cap on interest rates

Calling it a "stand against socialism," a proposed constitutional amendment would give banks, finance companies and other lenders free rein to charge whatever interest rates they want to Arizona customers.

The initiative being pushed by the National Credit Alliance would overturn virtually all laws that now limit annual interest charges to 36 percent.

"I think that's a market decision," said Sean Noble, the campaign manager of the ballot measure. "If you can find somebody to give you a lower interest rate than somebody else, then that should be a competitive marketplace."

If approved at the 2020 election it also would override another ballot proposal to cap interest rates on title loans. Read more at Arizona Capitol Times


House committee advances financial system inclusion legislation

Legislation designed to promote greater inclusion in the nation's financial system has been advanced out of the Financial Services Committee for full House of Representatives consideration.

Reps. David Scott (D-GA) and Sean Duffy (R-WI) introduced the Financial Inclusion in Banking Act earlier this year to empower the Consumer Financial Protection Bureau's (CFPB) Office of Community Affairs lead coordination within the Bureau.

"When families and consumers are excluded from traditional avenues for accessing financial services, the impacts are far-reaching," Scott said. "Low-income consumers frequently pay more in fees and penalties, even for simple services like cashing a check. This simply is not workable. This bipartisan bill shines a light on the importance of financial inclusion, and I look forward to working with my colleagues in the House of Representatives to ensure that all Americans have access to safe and affordable banking services."
Read more at Financial Regulation News


Data-Driven Underwriting: Top 5 Myths.

Watch our expert panel discuss (and debunk!) the top 5 myths about data and underwriting.

Confused about what's actually possible with data and loan underwriting?
We know credit decisioning is challenging without current and up to date information on your borrowers. New ways to work with data are a solution, but there are a lot of myths out there. So we're helping you separate fact from fiction so you can make credit decisions that perform best for your business.

We debunk myths like:
  • You can only score once in your underwriting flow
  • The big bureaus are standing still in the data race
  • There's no value in social data or using it to predict loan repayment
Trust Science
Read more at TRUST SCIENCE


What is formjacking? New cyber security scam is on the rise

CHICAGO (WLS) -- Formjacking can make you a victim on any website, and even some of the most secure sites can be vulnerable. The worst part about this new scam is you don't even know you're a victim until it's too late.

You could be shopping, or filling out a job application or a government form on what you think is a secure website. But it isn't.

"The attacker figures out how to put malicious code on to their website and that malicious code will steal your information," said Andrew Hoog of Chicago-based cybersecurity company Now Secure.

As you're entering sensitive information in an online form, a thief or hacker could actually be lifting it. Experts call the practice formjacking.

"Formjacking is basically a digital version of a credit card skimmer that criminals might attach to a ATM to capture people's card information," explained Justin Martino, senior editor of Read more at ABC, Inc., WLS-TV


Consumer instant gratification can prove risky

It's easier than ever to access almost anything from the touch of your phone.
But advancements like accelerated pay, layaway loans and the increased availability of credit may be helping consumers spend beyond their means.

There are many benefits to being able to access almost anything from the touch of your phone. There is also a downside.

"This instant gratification in the financial world can be risky," said Shelle Santana, a professor of business administration at Harvard Business School.

The reality is that more than 75% of all full-time workers are living paycheck to paycheck, according to a report from CareerBuilder.

While household income has grown over the past decade, it has failed to keep up with the increased cost of living over the same period.

From payday advances to layaway loans, there are new ways to access money to bridge the gap, easier and cheaper than ever before. Read more at CNBC


Marketplace Lenders Navigate The Choppy Waters Of Compliance

Regulators the world over are beginning to take a closer look at the alternative and marketplace lending business model. An explosion of FinTechs looking to fill the gaps left across under-banked and under-financed populations, including, in many markets, small businesses, has watchdogs exploring how to promote financial inclusion and access to capital while maintaining borrower protection.

The current regulatory climate remains in its relative infancy for this industry, so marketplace lenders are not only tasked with maintaining compliance but diligently tracking the regulatory landscape to forecast new and changing rules.

In the U.S., the Financial Trade Commission opened an investigation into the merchant cash advance sector and other alternative financing products for SMBs as the government weighs broadening consumer borrower protections to include small firms.
Read more at PYMNTS.COM


Study: More People Fall Prey To Fraudsters Online Than By Phone

A recent study about how people respond to scammers shows that consumers are more likely to become victims on social media and online marketplaces than over the phone, The Wall Street Journal reported on Sunday (Sept. 28).

A joint study by the Better Business Bureau, the Financial Industry Regulatory Authority and the Stanford Center on Longevity interviewed 1,408 victims of fraud in 2018. Researchers found that the majority of consumers fell prey to scammers on legitimate websites and social media.

Craigslist and eBay are among the most profitable platforms for fraudsters, attracting people with authentic-looking ads for concert tickets, used cars and more, the article said. The average loss was $600.

On social media, 91 percent of people surveyed said they did not recognize fake advertisements and 53 percent said they lost money. On websites, 81 percent said they interacted with a fraudulent pitch and 50 percent lost money. Read more at PYMNTS.COM



Equifax & Alchemy Technology Team Up for FinTech Innovation

Equifax Inc. EFX shares have gained a massive 55.3% year to date, significantly outperforming the 38.9% rally of the industry it belongs to and 19.7% rise of the Zacks S&P 500 composite.

The company recently announced an innovation partnership with Alchemy Technology, a lending-as-a-service organization offering technology, algorithms and servicing required in launching FinTech products.

The duo will offer easily deployable white labeled solutions to banks, specialty financing firms and FinTech startups, to help them speed up their time to market. The offerings combine Equifax's data analytics, credit, identity and income verification solutions with Alchemy Lending Operating System.

"We have a dedicated focus on FinTechs and alternative lenders allowing access to data and the ability to provide more options to consumers looking for financial services, "said Sharla Godbehere, AltFi and FinTech leader at Equifax.
Read more at Zacks Equity Research


Is there a recession coming? Keep an eye on these key indicators

If I could devise a model that would accurately predict the onset of every recession or economic crisis, I'd probably be worth more than Warren Buffett, Bill Gates and Jeff Bezos combined.

But the truth is nobody can accurately forecast when a recession will hit, although there are some leading indicators investors and economists look out for when trying to predict economic activity the coming months.

While you may have heard chatter about the yield curve inverting recently, there are other indicators that are equally or more important. If you're interested in tracking where the economy could be headed, keep your eyes on these numbers.

Keep in mind, however, that no single indicator can give you a complete picture of the economy's health. Read more at CNBC

Dreher Tomkies LLP

Senate bill seeks to increase accountability of data brokers

Democratic Senators introduced a bill to increase accountability and enhance transparency on data brokers like Equifax that collect and sell personal information about consumers.

The Data Broker Accountability and Transparency Act would prohibit data brokers from engaging in discriminatory data use practices and give consumers the right to stop them from sharing their personal information for marketing purposes. It also requires data brokers to develop privacy and data security programs and procedures. Further, it empowers the Federal Trade Commission (FTC) to create a centralized website for consumers to view a list of data brokers and information regarding consumer rights.

"For too long, data brokers have profited off of our personal information at the expense of our privacy," Sen. Ed Markey (D-MA), one of the bill's sponsors, said. "Companies, which American consumers have never heard of, continue to play fast and loose with our data, and our laws have failed to keep pace with this industry's bad behavior. As the recent Equifax settlement made clear, we need strong, enforceable rules of the road to hold data brokers accountable and empower consumers. I thank Senator Blumenthal and Senator Smith for partnering with me on the Data Broker Accountability and Transparency Act."
Read more at Financial Regulation News


Fintech Lenders Could Hold the Keys to Recession Recovery

Fintech lenders must position themselves now to play a critical role in recovery from the next economic downturn.

After plenty of adaptation for survival over the last few years, it's been largely smooth sailing for fintech companies in 2019.

Global expansion is steadily increasing. Billions of dollars in venture capital funds are flowing into fintech startups. And bank-fintech partnerships continue to flourish as fintech providers and traditional financial services firms seek increased symbiotic collaboration.

General economic winds, however, are starting to blow in a different direction, as the stock market has taken some hits, the real estate market has tightened and despite the fed lowering interest rates, economic experts forewarn of a potential recession. No one has a crystal ball to predict the timing or the severity, but we know that economic cycles occur. And unfortunately, unlike recessions of the distant past, recent recessions are lasting longer and taking longer to recover from.
Read more at SALON


Millennials More likely to Report Losing Money to Fraud than Older Generations, New FTC Data Spotlight Reports

Millennials are 25 percent more likely to report that they have lost money to fraud than consumers aged 40 and over, according to a new Federal Trade Commission analysis of consumer complaint data.

The FTC's latest Consumer Protection Data Spotlight shows that millennials-those ages 20-39-are twice as likely to report losing money to online shopping fraud than those 40 and over. Online shopping fraud reports include complaints about items that are never delivered or are not as they were advertised. Millennials reported losing $71 million to online shopping fraud-out of the nearly $450 million they reported losing to all types of fraud-in the last two years.

Other categories where millennials are much more likely to report losing money to fraud than consumers 40 and over include fake check scams, offers that promise to help fix debt-related problems, or offers promising income through jobs, investments, or business opportunities. For tips on how to avoid scams, visit


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