April 11, 2019

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Reps. Lewis, Kelly introduce IRS reform measure

House Ways and Means Subcommittee on Oversight Chairman John Lewis (D-GA) and Ranking Member Mike Kelly (R-PA) introduced last week the Taxpayer First Act, which they said is designed to reform the Internal Revenue Service (IRS).

The goal of the legislation is to modernize the IRS, putting taxpayers first. Its provisions would protect low-income taxpayers, provide sensible enforcement reforms and ensure the IRS provides taxpayers and small businesses the assistance they deserve.

"The IRS is one of the few federal agencies that has a constant relationship with Americans throughout their lives," Kelly said. "Unfortunately, over the years that relationship has become one of fear and distrust. We can restore Americans' faith and trust in the IRS by ensuring that the agency is acting as an advocate and meeting the needs of taxpayers."

The IRS is in desperate need of a refocused mission and the proposed bill seeks to create a service-first agency while repairing the trust it has lost from the American people.
Read more at Financial Regulation News

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

Column | In defense of payday and small-dollar loans

Attorneys general from California and other liberal states - many of which already ban payday loans - sent a nasty letter to the Consumer Financial Protection Bureau Director Kathleen Kraninger last week opposing her proposal to relax the Obama-era rules that would severely restrict the availability of payday, vehicle title, and other small-dollar loans.

The liberal AGs promised to sue the CFPB over the issue, and they might even find a sympathetic judge who will find that Obama administration executive actions cannot be reversed by Trump appointees. But that would be an unfortunate outcome for millions of Americans who rely on small-dollar loans as a necessary last resort - and who would end up suffering serious consequences if the Obama rules came into effect.

Obama-appointed CFPB Director Richard Cordray, a protege of Elizabeth Warren, was still on the job in 2017 when the agency issued rules requiring mandatory underwriting for small-dollar loans. Underwriting is the process of looking at a borrower's overall financial obligations and ability to repay a loan. Mandatory underwriting for typical payday and other short-term loans would present an enormous administrative burden, add lengthy delays to products that are often used in urgent, emergency circumstances, and create a significant barrier for many borrowers when they lack any other options. Read more at Kingman Daily Miner

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INDIANA: Payday Lending Bill Passes Out Of House Committee With Some Changes

A controversial lending bill that narrowly passed out of the Senate is on its way to the House floor with a few changes. The amendments approved in committee Tuesday were not released until an hour prior to the meeting.

The House Financial Institutions Committee took no public comment on the bill, which changes rules for high-interest, short-term loans.

One of the amendments lowers the interest rate cap for loans of less than $3,000 to meet the state's 72 percent rule. And while the cap was lowered to 167 percent on loans requiring no collateral, that number is still well above what's outlined in existing law.

House sponsor Rep. Matt Lehman (R-Berne) contends these new loan options are needed.

"All this bill does is now to create a middle product," says Lehman. "To try to drive people out of that, if they feel payday lending is their only option, this moves them away from that."

Democrats and consumer advocates had hoped to lower the state's interest cap to 36 percent, but that effort failed earlier this session. Read more at Indiana Public Media

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CEO: It's time for corporations to recognize the financial fragility of their employees

The economy is good these days and many employers may believe their employees also are doing well financially, but this is not the case.

There are two economies prevalent in society, and oftentimes our daily routines and biased views on the rest of the world mean we are not aware of that.

The truth is that more employees than employers might imagine are living paycheck-to-paycheck. They are struggling financially and don't have viable credit options. Further, the stress associated with it is taking its toll - on their health and on their performance at work.

Corporations need to be more empathetic to the financial decisions that many of their employees have to make on a daily basis. Recognizing the importance of financially-healthy employees is critical, as is providing benefits that assist those employees to improve their financial situation.

The evidence of financially struggling employees is all around us, but it's easy to miss sometimes. We see employees who fail to save.
Read more at American City Business Journals


Bill targeting illegal robocalls moves to Senate

The Senate Commerce Committee Wednesday reported favorably a bill that would enhance the Federal Communications Commission's (FCC) enforcement authority over violations of the Telephone Consumer Protection Act (TCPA) and require voice service providers to authenticate and block illegal robocalls.

The Telephone Robocall Abuse Criminal Enforcement and Deterrence (TRACED) Act, S. 151, now moves to the full Senate for consideration.

Ahead of the markup, NAFCU Vice President of Legislative Affairs Brad Thaler stressed to the committee the importance of "protect[ing] credit unions' ability to freely communicate with their members on important issues related to their existing accounts." He also outlined additional changes credit unions would like to see in the bill related to the "intent" requirement for a TCPA violation, STIR/SHAKEN call authentication framework and correcting any unintended blocking by voice service providers.

NAFCU has actively worked with the FCC on efforts to modernize the TCPA for more than three years. The association has previously shared its concerns related to the definition of an autodialer and the need for clarity under the TCPA to ensure credit unions can contact their members without fear of breaking the law. Read more at NAFCU

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Collection Firms: Collect Faster with More Payment Options. by Kristen Hoyman

For your collections business, we're sure you'd agree that you need to collect faster on your portfolio to make more money.

When your agency is earning contingency fees from clients or tracking payments made when you buy or service a portfolio, speed is vital for good returns. The more calls you have to make, the more time you have to invest in collecting, the lower your returns. The more your staff has to work to collect the same amount of money, the lower your returns. You get the picture.

And we don't have to mention what happens when debtors impose call cap limits on you. What you need is simple, fast closing on as many debt accounts as possible.

How can you collect more in less time?

Payment technology enables faster payments, and we know that almost every collection agency out there has an online payment portal if it has near current software. But what about other ways to pay?

More payment processing options and intelligent payment technology give debtors more ways to pay faster, enhancing your returns. Let's see what other firms in the industry are doing.
Read more at REPAY

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Senators To Consumer Watchdog, CFPB: Prove You're Protecting Student Borrowers

Six Democratic senators, including two presidential candidates, sent a letter to the head of the Consumer Financial Protection Bureau on Wednesday demanding that the agency prove it is policing the companies, known as servicers, that the government pays to manage its trillion-dollar, federal student loan portfolio.

"We are concerned," the letter reads, "that CFPB leadership has abandoned its supervision and enforcement activities related to federal student loan servicers. This suggests a shocking disregard for the financial well-being of our nation's public servants, including teachers, first responders, and members of the military."

The letter, dated April 3, includes the signatures of Sens. Elizabeth Warren of Massachusetts and Kirsten Gillibrand of New York - both presidential contenders - as well as Dick Durbin of Illinois, Sherrod Brown of Ohio, Sheldon Whitehouse of Rhode Island and Bob Menendez of New Jersey.

Much of their concern focuses on one program - a decade-old loan forgiveness program that has infuriated borrowers and entangled the Department of Education and its servicers in a legal thicket. Read more at NATIONAL PUBLIC RADIO

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Workplace Stress Hits Women Harder than Men

The burden of workplace stress across several occupations is well established. However, only recently have studies shed light on who might be worst hit by stress at work - Women.

Stress is a response to excessive pressure or demands placed on an individual. This response manifests as physical, emotional, and psychological symptoms and signs. When the workplace demands exceed a worker's capacity to handle them, burnout results.

Experts have established that men and women respond to stress in different ways, the same way as their ability to manage stress and the hurdles they face in doing so differ in markedly different ways.

According to Emolument, a salary bench marking website, 57 percent of women reported feeling burnout out as a result of work stress, compared to 48 percent of men. The statistics are similar in other parts of the world: UK health and safety consultants Arinite reported that female workers in the UK are 1.5 times more likely than males to suffer burnout at the workplace.

Cigna conducted its fifth annual survey on well being, with 13,000 people from over 23 markets participating. The respondents were from various countries including the United States, Saudi Arabia, New Zealand, Turkey, India, and Canada.

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What Makes Auto Accounts Unique from other Receivables Portfolios?

Auto loan deficiencies are rising sharply in the United States. The rate of consumers defaulting on auto loans has steadily increased and is now at the highest rate they have ever been since this data has been recorded. Today, 7 million people are behind on their car payments by 90 days or more. Credit score also seems to make an impact, with delinquency increasing to 8% of persons with credit scores lower than 620 in the fourth quarter of 2018. With this steady incline of loan defaults, the recovery of auto accounts has become more intricate. So, what makes auto accounts different from other account receivables?

When a borrower becomes late on the payments of an auto lease or loan, lenders seek the fastest and most efficient way to contact borrowers and locate the vehicle. Skip tracing and location technology helps to locate consumers and yield maximum success. Using skip tracing and location data, lenders are faster and more accurate in the location and repossession of the asset. Auto receivables differ from unsecured accounts in that once the vehicle, or collateral, is located, it is repossessed (or surrendered) and sold by the lender to regain lost revenue. Because vehicles can be moved easily from one location to another, it is imperative to leverage the most efficient and accurate skip tracing methods to minimize risk for lenders when seizing a vehicular asset.

Repossession, or surrender and sale, of a vehicular asset may still leave the consumer with a debt. The laws and regulations governing repossession vary from state to state, making recovery of auto receivables tricky. . Read more at NATIONAL DEBT HOLDINGS

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Former Google exec's company gets caught in 'rent-a-tribe' class action lawsuits; Interest rates allegedly as high as 490%

LOS ANGELES (Legal Newsline) - While it awaits the results of an appeal, ZestFinance - a company founded by the former chief information officer of Google - is facing another claim over payday loans that allegedly featured triple-digit interest rates.

The most recent lawsuit was filed by a Houston woman in Los Angeles federal court against ZestFinance Inc.; its founder, former Google executive Douglas Merrill; and BlueChip Financial, claiming the defendants engaged in making so-called payday loans at excessive interest rates.

The Houston woman's lawsuit is similar to another woman's class action suit that was filed earlier in U.S. District Court for the Western District of Washington against the same defendants that claims she was charged excessive interest rates on payday loans involving a Native American tribe.

In the Washington case, U.S. District Judge Robert J. Bryan rejected motions by the defendants to require the woman, Teresa Titus, to go through arbitration, allowing the case to proceed in court. Read more at LEGAL NEWSLINE

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Small-dollar loans are available and highly regulated in 35 states

Approximately 12 million households use small-dollar loans each year

The average fee for a single payment small-dollar loan is $15 per $100 of the loan.

The monthly payment for an installment loan depends on the term of the loan.
We are a revolutionary merchant service and technology firm servicing the debt repayment industry.

Thoughts on the Future of Financial Services Regulation in the U.S.
Remarks to the George Mason University Law & Economics Center's Ninth Annual Financial Services Symposium (as prepared for delivery)

Thank you, Todd, for the kind introduction. And thank you to the staff of the Law and Economics Center for the invitation to speak today. I am honored to participate in an event organized by an institution recognized as having a rich and consequential intellectual tradition. I am also grateful to Chris Mufarrige for his invaluable assistance in helping prepare my remarks today.

Before I get started, my legal minders ask that I say the following: "While I am here today as a representative of the CFPB, my remarks do not constitute legal interpretation, guidance, or advice of the CFPB, and any personal opinions or views expressed are my own and may not represent the official views or position of the CFPB."

With that housekeeping out of the way, let's dive in. So the LEC has asked me to talk about "the future of financial services regulation in the United States." Now, I assume I was invited to speak because of the world-renowned ability of government bureaucrats to predict the future with uncanny accuracy. Todd, I thought you knew better! In all seriousness, financial regulation generally responds to market events rather than anticipates them. And since the future is fundamentally uncertain, a point astutely made by Alex Pollock in his most recent book1, it is tough to predict the future direction of financial regulation.

That's not to say that I could not venture a pretty good guess about what the CFPB will be doing for the next year or so. And my predictions about the activities of our sister financial regulatory agencies and the prospects for legislation in Congress might also be serviceable, but these predictions would have a short half-life, so their accuracy would undoubtedly degrade over the long-term.

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