ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
November 11, 2021
Paving the Payments Future
IRS releases new standard deductions and tax brackets as inflation soars

The IRS makes inflation adjustments yearly, but this year they coincided with hot October inflation data

Tax season is months away, but it’s never too soon to know what to expect when it comes to potential refunds — especially when inflation is gnawing at household budgets.

Hours after data came out showing the rate of inflation hit a 31-year high in October, the Internal Revenue Service announced how much certain inflation-indexed tax provisions would be adjusted for returns filed in 2023.

The IRS already announced the inflation adjustments for provisions, like the standard deduction, that will apply for returns filed in 2022. Those routine adjustments were made last October.

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CFPB Takes Action to Stop False Identification by Background Screeners

Mistaken identity matching undermines housing and labor market recoveries

WASHINGTON, D.C. — The CFPB today issued an advisory opinion affirming that consumer reporting companies, including tenant and employment screening companies, are violating the law if they engage in shoddy name-matching procedures. Regulators are concerned about the significant harms caused by false identity matching, where an applicant is disqualified from rental housing or a job based on having the same name as another individual with negative information in their credit history. Specifically, the CFPB affirmed that the practice of matching consumer records solely through the matching of names is illegal under the Fair Credit Reporting Act.

For Black and Hispanic communities, who were disproportionately affected by the pandemic, the need for accuracy is even more acute. The risk of mistaken identities from name-only matching is likely to be greater among Hispanic, Black, and Asian communities because there is less surname diversity in those populations compared to the white population. With families across the country seeking affordable rental units and new employment, careless background screening practices can unnecessarily contribute to housing instability and unemployment.

The Taxpayer Advocate Service is an independent organization within the IRS that helps taxpayers and protects taxpayers’ rights and may be able to help taxpayers if they:

  • Are experiencing financial hardship
  • Have experienced a delay of more than 30 days to resolve a tax account problem
  • Have not received a response or resolution to the problem or inquiry by the date promised by the IRS
  • Taxpayers can also find out if TAS can help them with their tax issue using the TAS Qualifier Tool.

Total Household Debt Climbs to Over $15 Trillion in Q3 2021, Driven by New Extensions of Credit

Credit card balances increase again by $17 billion in the third quarter of 2021
November 09, 2021

NEW YORK – The Federal Reserve Bank of New York's Center for Microeconomic Data today issued its Quarterly Report on Household Debt and Credit. The Report shows that total household debt increased by $286 billion (1.9%) to $15.24 trillion in the third quarter of 2021. The total debt balance is now $1.1 trillion higher than at the end of 2019. It is also $890 billion higher than in Q3 2020, and $2.57 trillion higher, in nominal terms, than the $12.68 trillion peak seen in 2008. The Report is based on data from the New York Fed's Consumer Credit Panel, a nationally representative random sample of individual- and household-level debt and credit records drawn from anonymized Equifax credit data.

Mortgage balances—the largest component of household debt—rose by $230 billion and stood at $10.67 trillion at the end of September. Credit card balances increased by $17 billion, the same size increase as in the second quarter. Despite the increase, credit card balances remain $123 billion lower than they had been at the end of 2019. Auto loan balances increased by $28 billion in the third quarter. Student loan balances grew by $14 billion, coinciding with the academic borrowing year. In total, non-housing balances grew by $61 billion, with gains across all debt types.

National Bank of Arizona no-overdraft-fee bank account earns accolades

Overdraft protection is designed to help consumers cover a charge when their bank account dips below zero — saving them the inconvenience and embarrassment of a rejected payment. A 2020 Morning Consult survey found that 89% of adults find the service valuable. But for low-income households, overdraft fees can be a major hurdle to having a bank account.

National Bank of Arizona is among a growing number of financial institutions working to address the needs of consumers who may find themselves priced out of traditional banking products. Today, National Bank of Arizona announced that it has received Bank On certification for its no-overdraft-fee bank account from the Cities for Financial Empowerment Fund.

The product, called OnBudget Banking, helps keep customers aligned with their financial goals with a predictable monthly service fee of $5, mobile banking and no overdraft fees. The checkless account offers a Visa® debit card for making payments and accessing funds.

Wells Fargo warns investors that the bank is likely to face more regulatory setbacks

Wells Fargo said it is “likely to experience issues or delays” in satisfying demands from multiple U.S. regulators — a subtle but meaningful shift in language from earlier filings in which the bank said it “may” experience delays.

The development means that the most significant regulatory constraint on Wells Fargo — a Federal Reserve edict forcing the bank to keep its balance sheet frozen at 2017 levels — could take even longer to resolve, JPMorgan analyst Vivek Juneja said.

Wells Fargo isn’t out of the woods yet when it comes to its regulatory mess.

That’s the message the bank sent in its most recent filing with the Securities and Exchange Commission this week. Wells Fargo said it is “likely to experience issues or delays” in satisfying demands from multiple U.S. regulators — a subtle, but meaningful shift in language from earlier filings where the bank said it “may” experience delays.

Disputes on Consumer Credit Reports

Because of the importance of credit reporting to the consumer finance system, the accuracy of credit reports is a perennial policy concern. Studies have found that a substantial minority of consumers have errors on their credit reports with the three nationwide consumer reporting agencies (CRAs), including errors substantial enough to meaningfully affect consumers’ credit scores. Since the start of the COVID-19 pandemic, complaints to the CFPB about credit reporting issues have spiked, with credit reporting complaints increasing year-to-year by 129 percent in 2020 and becoming the most common complaint topic. This report uses data on auto loan, student loan, general purpose credit card, and retail card accounts opened between 2012 and 2019, and looks at the demographic characteristics of disputers and the outcomes for accounts with dispute flags.

How neobanks are cashing in on the Gen Z market

While parents' banking habits influence their children, researchers found, the difference in those habits is getting progressively wider.

Cash App became the latest fintech to aim its services at the Gen Z demographic when it announced last week that it would open the app to 13- to 17-year-olds. 

The platform — owned by Twitter CEO Jack Dorsey, who also runs the digital payments company Square — now allows teens to send peer-to-peer payments through the app and use a customized Cash Card, with the proper consent of a parent or guardian.

Cash App’s decision to open its platform to a younger demographic follows a growing trend of fintechs designing products for the Gen Z crowd. 

How to Attract and Retain Talent by Focusing on Financial Wellness

Hiring managers are telling us that recruiting and retaining talent has been very difficult in the ongoing pandemic economy. Workers have plenty of options and many of them are reevaluating their career goals. For employers who are under pressure to find and keep the best people, the key may come from going beyond a competitive paycheck and offering a diversified benefits package that helps employees comprehensively improve their financial picture.

Clearly, this is one of the most unusual labor markets in a long time. Job openings continue to come at a historically high rate. Human resources managers are watching eye-popping turnover that has led some to tab this period as The Great Resignation or simply the Big Quit. I hear plenty of stories about employees leaving for raises of 50 cents per hour.

So it’s no surprise to hear HR professionals say that attraction and retention is a top priority right now. Some employers are turning to financial incentives, but the true differentiator could actually come in the form of benefits instead of just a slightly larger paycheck.

CFPB and the Use of Abusiveness – Ten Years In. Mayer Brown

A little over 10 years ago, the US Consumer Financial Protection Bureau (“CFPB” or “Bureau”) gained authority to enforce a prohibition against abusive acts and practices in connection with the provision of consumer financial products or services. This new authority raised a host of questions about what 
conduct was abusive and how the CFPB would use this new tool. Five years ago, we reviewed the CFPB’s use of abusiveness in its first four-plus years of existence. This Legal Update summarizes our prior findings and examines the CFPB’s use of abusiveness in the exercise of its enforcement, supervisory and rulemaking authorities over the subsequent five-plus years. 

Some patterns from the early years still hold true—abusiveness is more likely to be alleged in contested litigation than in settled enforcement matters; most abusiveness claims are either paired with, or could be paired with, unfairness or deception claims; and the agency relies on certain kinds of abusiveness claims more than others. Yet other patterns changed over the past five years—the CFPB substantially increased its reliance on claims that companies “materially interfered” with consumers’ understanding, and the CFPB relied on abusiveness in a rulemaking for the first time.

ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
Alternative Financial Service Providers Association
757.737.4088
315 Tuscarora St., Lewiston, NY 14092