October 29, 2019
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Most Americans Think They Know More about Money Than They Do

Have you ever met someone who doesn't want to start a CrossFit class until they get in shape, and found yourself wondering, isn't the point of the class to help you get in shape?

That mentality is not uncommon -- even for our personal finances. Americans lack savings, are increasingly in debt and face a looming retirement crisis. Yet many are reluctant to seek advice or increase their financial know-how. In fact, a Standard & Poor's survey ranked the U.S. No. 14 globally in terms of its citizens' financial literacy and rated just 57% of U.S. adults financially literate.

The Financial Literacy Gap: Real -- and Growing

Financial literacy -- defined as the knowledge and understanding of areas related to personal finance, money and investing -- is critical for navigating financial decisions ... and navigating life. But FINRA's Investor Education Foundation discovered a clear decline in financial literacy over the past nine years in its State of U.S. Financial Capability study. In 2009, 42% of respondents were able to answer four or more questions correctly in a five-question survey on fundamental concepts of economics and personal finance. By 2018 this dropped 8 percentage points to 34%. More alarming, less than one-third of adults understand three basic financial literacy topics by age 40, although many important financial decisions are made decades earlier. Read more at KIPLINGER


Fintech's fast pass to traditional banking is now cut off

  • A ruling by a federal judge this week pours cold water on some tech companies' plans to quickly become a bank.
  • The New York judge ruled that the Office of the Comptroller of the Currency, the regulator issuing the charters, didn't have the authority to do so.
  • "A ruling like this slams on the brakes," says Ryan Gilbert, partner at Propel Venture Partners.

 Tech start-ups trying to become banks will now have to take a slower, more traditional route.

Fintech companies had welcomed a special bank charter that cleared a quicker path for them to become a bank. But that was dealt a blow this week as a federal district court in New York decided that the Office of the Comptroller of the Currency, the regulator issuing the charters, didn't have the authority to do so.

The ruling highlights the sometimes murky nature of tech companies getting into banking. It also means that finance start-ups will have to go through the same drawn out process as everyone else. Read more at CNBC

CFSA Conference
CFSA Conference

What Is a Payroll Advance?

Unexpected expenses can leave you feeling stuck if you don't have funds available to pay for them. Some companies offer payroll advance services to help employees bridge the financial gap between paychecks and avoid higher-cost options. But they're not necessarily a good choice.

Can I Get An Advance From My Employer?

An employer-led payroll advance is when a company, either directly or through a third party, allows you to obtain part of your upcoming paycheck days or even a week or so ahead of time.

Traditionally, payroll advances have been rare requests by employees. But the digitization of the payroll process has made it easier for a company to make money available when employees need it.

Employees would most likely use this service if they had a bill they were scrambling to pay or last-minute expense, says Bill McCracken, president of Phoenix Synergistics, a marketing research company that serves the financial services industry.
Read more at U.S.News & World Report


Credit Unions & Fintech Firms: A Great Partnership Opportunity. by Kristen Hoyman

Is Your Credit Union Keeping Up with Modern Technology?

Seventy-nine percent of credit union members would leave their credit union for a financial technology (fintech) firm for convenience and easy access to services.

If you are a credit union, this figure should scare you. But don't jump to any hasty conclusions just yet - you don't have to invest a billion dollars in new technology. You can compete with larger financial institutions even if you don't have the same access to funds.

You do have options. At REPAY, we empower credit unions to enhance the member experience. Our real-time payment technology solutions enable credit unions to provide faster, more streamlined digital service offerings.
Read more at REPAY


CFPB to Host Symposium on November 6

WASHINGTON, D.C. - The Consumer Financial Protection Bureau (Bureau) announced today that it will hold a symposium on Section 1071 of the Dodd-Frank Act on November 6, 2019 at 9:30 a.m. The event will be webcast on the Bureau's website.

Section 1071 amended the Equal Credit Opportunity Act (ECOA) to require financial institutions to collect, report, and make public certain information concerning credit applications made by women-owned, minority-owned, and small businesses. The symposium will provide a public forum for the Bureau and the public to hear various perspectives on the small business lending marketplace and the Bureau's upcoming implementation of Section 1071.

The symposium is the third in a series announced earlier this year to explore consumer protections in today's dynamic financial services marketplace. The series is aimed at stimulating a proactive and transparent dialogue to assist the Bureau in its policy development process, including possible future rulemakings. The first symposium on June 25 covered the Dodd-Frank Act's prohibition on abusive acts or practices. The second symposium on September 19 covered behavioral law and economics. The Consumer Financial Protection Bureau


UK's largest payday lending firm to close

The UK's biggest remaining payday loan provider is to close, with thousands of complaints about its lending still unresolved.

QuickQuid's owner, US-based Enova, says it will leave the UK market "due to regulatory uncertainty".

Compensation claims have been made from customers who said they were given loans they could not afford to repay.

It is the latest firm offering short-term, high-interest loans to close after regulations were tightened.

QuickQuid has been the biggest payday lender in the UK for the past few years. It was bigger than household name Wonga even before the latter folded in August last year. The Money Shop closed earlier this year. Read more at BBC.COM


Bank lending slowed in third quarter, heightening recession fears

  • The nation's four largest banks reported their quarterly earnings this week, which were generally better than expected.
  • But lending by the big banks was down, providing another sign that economic activity in the U.S. is slowing.
  • The drop in lending comes as the Federal Reserve has been lowering interest rates to promote growth.

In another sign the U.S. economy may be headed for a recession, lending by the country's biggest banks slowed in the third quarter, according to financial information disclosed to investors this week.

At JPMorgan Chase, the nation's largest bank by assets, loans outstanding sank $12 billion between July and September, compared to the prior quarter. That was a drop of a little over 1%. Lending had risen $644 million in the second quarter.
Read more at CBS NEWS


SCOTUS decision in Seila Law holding CFPB structure unconstitutional would not impact OCC or HUD. by Alan S. Kaplinsky

The constitutional question that the U.S. Supreme Court has agreed to decide in Seila Law is whether the CFPB's single-director-removable-only-for-cause structure violates separation of powers. A ruling by the Supreme Court that separation of powers requires the President to be able to remove the CFPB Director without cause would not impact either the OCC or HUD.

The National Bank Act contains no "for cause" limit on the President's ability to remove the Comptroller of the Currency. 12 U.S.C. § 2 provides:

The Comptroller of the Currency shall be appointed by the President, by and with the advice and consent of the Senate, and shall hold his office for a term of five years unless sooner removed by the President, upon reasons to be communicated by him to the Senate.

The Department of Housing and Urban Development Act, which created HUD, does not address the President's authority to remove HUD's Secretary. 42 U.S.C. § 3532 provides only that:
Read more at Ballard Spahr L.L.P.


Supreme Court Appoints Former Solicitor General to Defend CFPB

The U.S. Supreme Court has appointed former U.S. Solicitor General Paul Clement to argue in support of the CFPB's structure in the case of Seila Law LLC V. Consumer Protection Bureau. The U.S. Supreme Court agreed to hear the appeal of the California law firm that argues the Consumer Financial Protection Bureau is unconstitutionally structured, positioning the justices to settle longstanding questions surrounding the legitimacy of the independent agency.

In a brief, the CFPB suggested that the Supreme Court might want to appoint a "friend of the court" to defend the ruling by the U.S. Court of Appeals for the 9th Circuit rejecting the challenge to the CFPB's structure.

Seila Law alleges that the structure of the agency grants too much power to its director. According to court papers, given the CFPB's broad law enforcement powers, the fact that the president may only remove the director of the CFPB "for inefficiency, neglect of duty, or malfeasance in office" is unconstitutional. In May, the CFPB beat Seila Law before a panel of the 9th U.S. Circuit Court of Appeals. Read more at


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Read more at LeadSherpa


The True Cost of Payday Loans-And Some Borrowing Alternatives

High interest rate loans made to high risk borrowers have a long history in the U.S. Back in the Civil War era, some borrowers paid rates in excess of 500 percent a year. The newspapers called that "loan sharking." Eventually, state and federal governments introduced laws and regulations aimed at limiting such abusive lending practices. But the crackdown wasn't very effective and high-risk, high-rate lending later contributed to the Wall Street crash of 1929, according to Loan Sharks: The Birth of Predatory Lending by Charles R. Geisst.

Today, the business of making very high-rate loans to high-risk individuals is dominated by payday loans--so called because these are short term loans supposedly designed to last only until the borrower gets their next paycheck and repays the money.

As many as 12 million Americans take a payday loan each year. Borrowers typically earn about $30,000 per year, and 58% of them have difficulty meeting basic monthly expenses such as rent and utility bills, according to the Center for Financial Services Innovation. (An even greater share of Americans-39% according to the latest Federal Reserve survey-would have trouble coming up with $400 to cover an emergency expense.
Read more at FORBES

Dreher Tomkies LLP

Consumer Handbook: Payday Loan Expenses Can Be Exorbitant, So Do Your Homework Before Borrowing

When cash runs short and bills are looming, some consumers look to payday loans, but they need to understand the risks before borrowing. If not approached with caution, these loans can snowball into a significant debt obligation of their own, with high interest rates and high-pressure collection tactics.

Payday loans, as the name suggests, involve borrowing money against your next paycheck. Borrowers write a check for the amount they wish to borrow, plus any finance charges, and receive cash. The average loan term is about two weeks, but loans can be renewed: Consumer Financial Protection Bureau research has found that 80% of such loans are rolled over or reborrowed within 30 days.

The expenses associated with payday loans can be exorbitant; a common finance charge is $15 or $30 per $100 borrowed, and annual interest rates can balloon into the hundreds. These high interest rates can force borrowers to renew the loan and pay new fees every two weeks until they can finally save enough to pay off the principal and get out of debt.
Read more at NPR


Dreher Tomkies LLP: Particular Areas of Expertise
  • Multistate Consumer Financing Programs
Dreher Tomkies LLP has developed a substantial body of knowledge and resource materials with
respect to consumer and retail financing programs offered nationwide. For example, our lawyers
routinely advise payment card issuers and personal loan lenders operating financing programs in all
states. We assist banks, finance companies, savings and loans, and mortgage bankers in offering
consumer loans, first and second mortgage loans, automobile and recreational vehicle loans, retail
installment financing, student loans, and other products to residents of states where the creditor is not
located, including programs designed for use in multiple jurisdictions.

Dreher Tomkies LLP can help clients save fees for legal services in several ways:


Mastercard On Repairing The Data Trust Deficit - With Decency

Can data be harvested ... with decency?

The California Consumer Privacy Act looms, taking effect at the beginning of 2020. Across the pond, the General Data Protection Regulation (GDPR) took effect in May of 2018.

The laws protecting consumer privacy are changing the ways businesses collect consumers' data, as they scramble to avoid the impacts and fines tied to breaches or non-authorized activities. Yet, the regulations are still evolving, and differ depending on where one looks.

Beyond the regulatory landscape, the principles governing how corporations gather and utilize consumer-specific information may be ripe for change.
Read more at PYMNTS.COM


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