ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
August 12, 2021
The Gateway For Payroll Data
New PYMNTS Data Show Half Of Consumers Can Now Cover Unexpected $400 Medical Bill Without Tapping Credit

Good news for recovery watchers: the average consumer is exiting the pandemic period demonstrably more financially stable than when it started a little over a year and a half ago. According to forthcoming PYMNTS data, 50 percent of consumers would be able to pay an unexpected expense of $400 directly with funds from their checking/savings account or in cash.

That major milestone has been building for the last five months — the share of consumers able to pay an unexpected expense has been pushing up from a starting point of 45 percent in March. The data also demonstrates that people are able to pay their bills in cash, which isn’t the only sign of an improving situation in consumer’s pocketbooks. The share of consumers reporting they simply couldn’t pay an unexpected $400 expense dropped sharply from 11 percent in March to 4 percent as of July. And the share of consumers using credit cards with the intention to pay the balance off at the next statement increased from 16 percent in March to 19 percent by July.

It’s an encouraging trend — and one that might have been expected given the proliferation of reports this spring about consumers advanced savings practices during the pandemic and reports of the $5.4 trillion stockpiled by consumers globally.

Paving the Payments Future
Back to Basics, Continued—The CFPB has accelerated the adoption of changes to the Fair Debt Collection Practices Act Regulation F, now effective November 30, 2021. 

We have been waiting for the CFPB’s final adoption and implementation of its new debt collection Rule. Well, the wait is over. See 12 CFR Part 1006 - Fair Debt Collection Practices Act (Regulation F) | Consumer Financial Protection Bureau (consumerfinance.gov).

The adopted Rule, to be known as Regulation F, is really in two parts: First, the Rule focuses on debt collection communications and clarifies the Fair Debt Collection Practices Act’s (FDCPA) prohibitions on harassment and abuse, false or misleading representations, and unfair practices by debt collectors. This part of the Rule closely follows the FDCPA language itself.

The second part of the Rule clarifies certain disclosures that third-party debt collectors must provide to consumers at the beginning of collection communications.

So, what does all of this mean for original creditors, not third-party debt collectors? Several things.

Child Tax Credit Update Portal: The IRS upgraded the Child Tax Credit Update Portal to enable families to update their bank account information so they can receive their monthly Child Tax Credit payment.

Tax relief for employer leave-based donation programs due to COVID-19 pandemic: The IRS extended the tax relief provided in Notice 2020-46 for calendar year 2021 for employers whose employees forgo sick, vacation or personal leave because of the COVID-19 pandemic.
July’s jobs report shows Black teens struggling with the highest unemployment rate

The Bureau of Labor Statistics jobs report for July, released last week, showed a continuation of the steady economic recovery from the COVID-19 pandemic for most demographic groups in the U.S.—but not Black teenagers, for whom the unemployment rate increased from 9.3% in June to 13.3% in July.

Nationally, 943,000 jobs were added last month, and the unemployment rate declined by 0.5 percentage points, to 5.4%. While July’s job increase is promising, the number of people who are not in the labor force but who currently want a job is at 6.5 million—up from 6.4 million in June and 1.5 million higher than in February 2020. These people are not counted in the unemployment rate because they had not actively looked for work within the last four weeks or were unavailable to take a job. As the recovery continues, we would expect the labor force participation rate to increase.

Maine amends Consumer Credit Code to target loans made using bank partnership model. Ballard Spahr

Maine has amended its Consumer Credit Code to target loans made using a bank partnership model. The amendments include an anti-evasion provision under which a purported agent or service provider is deemed a “lender” subject to Title 9-A, Article 2 of Maine Revised Statutes. Article 2 contains a licensing requirement and rate and fee limits for consumer loans.

SP 205/LD 522 added a new Part 7 to Article 2. Part 7 contains the following key provisions:

Any entity covered by Article 2 (i.e. entities making or servicing consumer loans) “may not engage in any device, subterfuge or pretense to evade the requirements of this Article, including, but not limited to…making, offering, assisting, or arranging a debtor to obtain a loan with a greater rate of interest, consideration or charge than is permitted by this Article through any method. A loan made in violation of this Part is void and uncollectible as to any principal, fee, interest or charge.”

CFPB and trade groups file briefs on compliance date for payment provisions in payday loan rule. Ballard Spahr LLP

The CFPB and the two trade groups challenging the CFPB’s 2017 final payday/auto title/high-rate installment loan rule (2017 Rule) have filed briefs with the Texas federal court regarding a compliance date for the 2017 Rule’s payment provisions. The briefs were filed in response to the court’s order that requested additional briefing “concerning what would be the appropriate compliance date if the court were to deny Plaintiffs’ motion for summary judgment and grant Defendants’ motion for summary judgment.”

In its brief, the CFPB argues that the stay of the compliance date should remain in place for no more than 30 days after the court’s decision on summary judgment. According to the Bureau, a 30-day extension would be consistent with the Administrative Procedure Act requirement of only 30 days’ notice before a rule can take effect. The CFPB further argues that compliance with the payment provisions is not onerous because neither of the two basic requirements imposed by the payment provisions (i.e. new authorization for withdrawals after two failed attempts and new notices) “requires any major overhaul of lenders’ operations.” Other factors given by the CFPB in support of its position are that (1) the trade group have had ample time to comply, (2) the trade groups could not have reasonably relied on the stay of the compliance date continuing beyond final judgment, and (3) a further extension of the stay is particularly unwarranted because the only basis for the stay (i.e. the unconstitutional removal provision) vanished when the U.S. Supreme Court decided Seila Law and former Director Kraninger ratified the payment provisions.

OCC conducting review of overdraft policies, acting comptroller says

Acting Comptroller Michael Hsu's remarks come as more banks are revamping their overdraft policies and as Democrats are calling for legislation that would rein in the practice.

The head of the Office of the Comptroller of the Currency (OCC) said the bank regulator is conducting a review of bank overdraft policies during testimony in front of the Senate Banking Committee on Tuesday.

OCC Acting Comptroller Michael Hsu, who testified alongside Federal Deposit Insurance Corp. Chair Jelena McWilliams and National Credit Union Administration Chair Todd Harper, told senators his agency is "looking very closely at overdrafts."

"Excessive fees on overdrafts, predatory lending, high-cost debt traps — these things shouldn't have a place in the federal banking system," Hsu said, responding to Sen. Chris Van Hollen, D-MD, who brought up several small banks that derive a large portion of their revenue from overdraft fees. "We have a review going on, these particular institutions have been identified, as well as other practices. We're going to use the full range, within our supervisory toolkit, to address it."

Digital-only credit union latest institution to scrap overdraft fees

Alliant's move follows a similar one made by Ally Bank, and comes as a growing number of financial institutions are revamping their overdraft policies amid pushback from Democratic lawmakers.

Alliant Credit Union, a digital-only credit union with a national reach, said it will stop charging customers fees when they overdraw their accounts.

The Chicago-based credit union’s announcement follows a similar one made by Detroit-based lender Ally Bank in June, and comes as a growing number of financial institutions are revamping their overdraft policies amid pushback from Democratic lawmakers.

Qualified members can still overdraw their accounts, said Dennis Devine, president and CEO of Alliant, but the credit union will simply stop charging customers the overdraft fee.

Suze Orman’s Top 26 Tips That Will Save You From Financial Disaster

Suze Orman was working as a waitress and making $400 a month at 29 years old. She then decided to take a chance on a major career change and landed a job as a broker for Merrill Lynch.

Having been on both ends of the financial spectrum, Orman knows what it takes to make the leap from broke to wealthy, and is now one of the most respected voices in personal finance -- as well as a New York Times bestselling author with more than 25 million books in circulation. According to Celebrity Net Worth, she is worth some $75 million, indicating that she’s followed her own financial advice for saving, investing and preparing for retirement.

ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
Alternative Financial Service Providers Association
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