June 13, 2019

Interest Rate Caps Don't Protect Borrowers, They Just Make Borrowing Difficult

From Sacramento to Congress, there is an aggressive push afoot across the country to regulate a wide range of consumer loans through an arbitrary rate cap. While proponents of this effort claim it is to protect consumers from so-called "predatory" lenders, there is interesting evidence to suggest that something a bit more sinister might be going on to explain some of the motivation behind this reckless, populist crusade.

Rate caps are price controls, which reduce access to credit for millions of financially underserved Americans. You don't have to look any further than the Consumer Financial Protection Bureau's (CFPB) own analysis of their original rule regulating payday loans. While the rule doesn't impose rate caps, the goal was to achieve similar ends; to rein in the payday industry in an effort to protect financially vulnerable consumers. The Bureau's analysis of their rule found that" payday loan volumes will decrease by 62 percent to 68 percent, with a corresponding decrease in revenue." Additionally, the CFPB said "this decline may limit some physical access to credit for consumers, and this limit may be felt more acutely by consumers in rural areas."

Thankfully, the Bureau is currently reconsidering this disastrous regulation. As for actual rate caps, not only would consumers lose access to safe and reliable credit options, there is also evidence to suggest that some lenders would stand to benefit substantially at the expense of financially vulnerable consumers. Read more at Real Clear Markets




WASHINGTON, D.C. - June 11th marks the first six months of Director Kathleen L. Kraninger leading the Consumer Financial Protection Bureau.

"It is an honor and privilege to serve American consumers. As Director, my focus is to prevent harm to consumers by using all the tools Congress gave us, including education, regulation, supervision and enforcement. I look forward to building on the efforts and progress of these first six months," said Director Kraninger.

Under Director Kraninger's leadership, the Bureau:

Educated consumers about financial products and money management
  • Launched an initiative, Start Small, Save Up, to increase emergency savings among consumers;
  • Expanded the Misadventures in Money Management financial education tool for active-duty servicemembers;
  • Educated consumers about mortgage closing scams;
  • Educated consumers on debt collection, including steps they can take to resolve a debt, telling the difference between a legitimate debt collector and scammer, and top debt collection questions answered;
  • Performed an extensive analysis and report on what suspicious activity reports reveal about elder financial exploitation;
  • Provided technical assistance to VITA (Volunteers in Tax Assistance) sites in how to support the people who they serve in making choices about saving part of the tax refund;
  • Issued a set of reports for use by state and local leaders working to set up child savings programs;
  • Released an education page on financial preparedness for a disaster;
  • Received and handled 170,000 consumer complaints;
Read more at CFPB

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Amazon launches a credit card for the 'underbanked' with b   a  d credit

Amazon is finding a way to get its rewards credit card in the hands of more people.

The e-commerce giant partnered with publicly traded bank Synchrony Financial to launch "Amazon Credit Builder" - a program that lends to shoppers without credit history or b  a   d credit, who would otherwise be exempt from Amazon's loyalty cards.

"There's always going to be people that we can't give credit to - this is a large population that we weren't able to reach," Tom Quindlen, Synchrony executive vice president and CEO of the bank's retail card operation, told CNBC in a phone interview. "It's a new segment of the market."

The card has the same perks, like 5% cash back on purchases, that come with the popular Amazon Store card, which Synchrony also powers. These rewards cards incentivize shoppers to use Amazon instead of an alternative and helps drive loyalty within its customer base, Quindlen said. Banks such as J.P. Morgan have also bet on rewards cards that would theoretically make customers spend more and in turn bring in more interest and returns.

This new Amazon card could open the door to a huge segment of U.S. buyers. According to a 2018 FICO survey, more than 11% of the population has a score below 550.
Read more at CNBC

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CFPB To Hold First Symposium On June 25

WASHINGTON, D.C. - The Consumer Financial Protection Bureau announced today that its first symposium will be held on June 25 at 9 a.m. The symposium, part of a series announced earlier this year, will focus on the Dodd-Frank Act's prohibition on abusive acts or practices. The symposium will be webcast on the Bureau's website.

The Dodd-Frank Act authorizes the Bureau to take enforcement, supervision, and rulemaking actions concerning unfair, deceptive, or abusive acts and practices (UDAAP). The meaning of abusiveness is less developed than the meaning of unfair or deceptive, which have been defined substantially by the Federal Trade Commission Act. The symposium will provide a public forum for the Bureau and the public to hear various perspectives on the meaning of abusiveness.

This first symposium will have two panels of UDAAP experts. The symposium will also include remarks by CFPB Director Kathleen L. Kraninger and CFPB Deputy Director Brian Johnson. The first panel will include a discussion with leading academic experts in the area of Consumer Protection on various policy issues relating to the abusive standard under Dodd-Frank. The panel will be moderated by Tom Pahl, CFPB's Policy Associate Director, Research, Markets and Regulation. The experts on the panel will include: Read more at CFPB

Redefining how financial service businesses measure risk and process payments.

How Lenders Can Leverage Push Payments. by Kristen Hoyman

Merchant processing makes collecting on-time payments from borrowers easier and faster for consumer lenders. Consumer installment loans, typically provided by both the traditional storefront lenders and the newer online lending fintech companies, are attractive to borrowers for many reasons. An installment loan is fast, simple, can be inexpensive with a fixed term, and is a great option for debt consolidation, home improvement, or an unexpected expense. In the last year, 34% of Americans have taken out a personal loan, according to a PureProfile survey.

How can lenders effectively leverage payment processing options to fund loans and make it easy for borrowers to repay?

Traditional Payment Practices
The largest marketplace lender, Lending Club, accepts credit and debit card payments online and through pay by phone features. Avant accepts card payments from borrowers through a call into a live operator. SoFi, whose primary loan product is student loan refinancing, does not offer a card payment option at all as most loan servicers in the student loan market require a direct debit from a bank account. With credit and debit card payments so ubiquitous, you would think any public-facing business, including consumer lenders, would offer multiple card payment options.

And you'd be wrong.

Lenders have a huge opportunity to implement payment processing to not only make repayment easier, but to provide a fast and seamless funding experience. Let's check out the newest opportunity for lenders - push payments. Read more at REPAY

Payliance: Powerful Payment Processing Technology

Ballard Spahr critiques CFPB payday loan rule's payment provisions

Last month, Ballard Spahr submitted two letters to the CFPB, critiquing the payment provisions of the CFPB's final payday/auto title/high-rate installment loan rule (the "Payment Provisions"). Last Friday, the Bureau delayed the implementation date of the rule's mandatory underwriting provisions by 15 months, to November 19, 2020. However, the Payment Provisions are scheduled to go into effect on August 19, 2019 or the date the current judicial stay of the rule is lifted, whichever comes later.

One Ballard Spahr letter focused on the unwarranted treatment of card payments under the Payment Provisions. Our other letter argues that the Payment Provisions are deeply flawed. It asserts that, in large part, the Payment Provisions are not justified by the UDAAP concerns identified by the Bureau as their source. The Payment Provisions impose substantial unwarranted burdens on the industry and straightjacket covered lenders from taking actions beneficial to their customers. And, despite their complexity and detail, the Payment Provisions fail to provide clear guidance on fundamental issues. Read more at JD Supra, LLC

Lending as a Service

New Survey Reveals America's Most Financially Stressed Cities and States

Financial stress affects 48 percent of the US workforce, according to a recent survey of more than 10,000 Americans by Salary Finance, the leading global provider of financial education and salary-linked savings and loans for employees. This stress is particularly concentrated in the West Coast, Appalachia and the Great Plains, where more than half of American workers experience financial stress.

According to the survey, money worries have a devastating impact on Americans' mental health; employees under financial stress are over three times more likely to suffer from anxiety and panic attacks and four times more likely to suffer from depression and suicidal thoughts. Women particularly suffer; 56 percent of working women are stressed about their finances and 63 percent feel they do not earn enough to save.

It is conventional wisdom that only those with low incomes live paycheck to paycheck. While lower average incomes in some of the worst-impacted regions might seem like a ready culprit for financial stress, the survey indicated that income is not an indicator of financial wellness; 40 percent of Americans earning more than $100,000 per year are financially unstable, with less than three months' savings. This study reveals that one in four Americans living paycheck to paycheck with no savings earns over $160,000. Read more at YAHOO FINANCE

National Debt Holdings is a professional Receivables Management Company that partners with creditors to purchase and/or manage receivables at all stages of the account life cycle.

Phone companies must adopt robocall-blocking tech by year end: FCC

The FCC has voted to give phone companies permission to block obvious robocalls before they reach phones.

The new rules, announced last month, were approved by the commission Thursday, give safe harbor to phone companies to block the calls, so long as they have "reasonable call analytics" showing that a robocall is happening and that consumers are told what's going on - and can opt out if they so choose. USTelecom, a large trade group for the phone companies, expressed approval.

Today many phone companies provide call-blocking services, but the services have been opt-in for the most part, so customers who did not take action would still get robocalls, though certain calls could be blocked.

The rules also allow carriers to offer their customers white lists - a limited list of numbers that are permitted to go through, such as a person's list of contacts on their phone.
Read more at YAHOO FINANCE

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Having trouble hiring? Make the process easier

The job Opens a New Window. market Opens a New Window. , at least in some professions, has gotten very competitive. Workers in in-demand fields Opens a New Window. can afford to be picky. Even entry-level positions in retail have become harder to fill, as the number of job openings has exceeded the number of people looking for work.

That creates some major challenges for small-business owners. It can be hard not just to attract the people you need, but sometimes it's difficult to even bring in candidates.

To be competitive and land the people you need, it's important to remove pain points in the hiring process. That might mean making some small sacrifices, but it should make it easier to land the staff required to operate your business.

Fix a broken process

Someone close to me got a new job last year. It's a wonderful position with better pay, increased benefits, and all sorts of other processes, but the hiring process was a challenge.
Read more at FOX BUSINESS

Compete in the data-driven lending era

Don't Let Weather-Related Disasters Dampen Your Financial Future

According to the Fourth National Climate Assessment (Volume 2), hurricanes have increased in intensity and frequency over the last few decades, as have winter storms. Extreme weather such as regional floods and droughts are predicted to become more extreme with the continued patterns in regional climate changes. When disaster strikes, are you among those who are financially prepared to deal with the possibility of significant damage, the loss of primary residence, or worse ­- the sudden absence of income? The unfortunate reality is that many Americans are unprepared for the devastation and long-term effects that a major financial emergency can bring.

National Impact of Extreme Weather
The National Bureau of Economic Research compiled nationwide data from more than 5,000 natural disasters in the United States during a 90 year span (beginning in 1919). This data was used to determine how declared disasters affected the population in each region. The data indicated that a typical county experienced approximately 1.97 declared disasters in a decade, three out of ten counties experienced a severe disaster, and one out of ten counties experienced a super-disaster.

This long-term data analysis reinforces that no region of the United States is immune from the persistent threat of weather-related disasters. In the last year alone, the US has suffered under the tremendous damage and loss associated with flooding, drought, wildfires, hurricanes, tornadoes, snow storms, volcanic eruptions, and more. Mother Nature does not discriminate with regards to when, where, and who is affected. Read more at National Debt Holdings

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

ValidiFi Aims To Redefine How Financial Service Businesses Measure Risk And Process Payments

Q: You've recently changed your name to ValidiFi; could you tell us something more?

A: We have relaunched as ValidiFI, in order to better reflect our company's growth and vision, including our expanded capabilities in delivering data solutions and payment technologies for the financial services industry. ValidiFI embodies what we are trying to do, support and enhance the abilities of financial institutions with proven technology.

Q: Can you give us insights into your products?

A: ValidiFl solutions create better ways for our clients to meet compliance requirements, obtain customer insights, measure risk, decrease fraud, expand their ability to accept new customers, successfully process payments and more. Our proprietary technology combines machine learning algorithms, live Payment Instrument data, processing history, income verification and other real-time data to help financial institutions make smarter credit and payment decisions.

Q: What is the difference between Payment Instrument and payment history data?

A: Payment history is simply the customer's account of transactions. Payment Instrument data is derived from the transactions and attributes associated with debit cards, pre-paid cards, credit cards, bank accounts, and payment processors, it encompasses information such as ownership data (name, address), income history, expenses, and balances.
Read more at SUPERBCREW

Alternative Credit Reporting

CFPB Pushes Pause On Payday Rule

The Bureau of Consumer Financial Protection (CFPB) has delayed the Aug. 19, 2019 compliance date for the mandatory underwriting provisions for its short-term, small-dollar (payday) rule, according to various reports.

Compliance is being delayed 15 months, to Nov. 19, 2020. The CFPB is also correcting several errors in the rule.

The Consumer Bankers Association (CBA) commended the delay.

"CBA commends the Bureau for reexamining the small-dollar credit marketplace and how lenders in this market meet consumers' need for credit. We believe it is important that consumers receive the products they want and need at fair prices and on transparent terms. We believe it is equally important to rid the market of bad actors that engage in fraudulent transactions or violate federal laws and fashion rules that deter such conduct," the CBA said.

"As a policy matter, we support the Bureau's goal of ending abusive payday lending practices by nonbank lenders. Unlike some nonbanks, depository institutions have long had their consumer lending products and practices examined against consumer protection and safety and soundness standards by various state and federal supervisory agencies, including the CFPB."
Read more at PYMNTS.COM

We are a revolutionary merchant service and technology firm servicing the debt repayment industry.

Federal Trade Commission Provides 2018 Annual Financial Acts Enforcement Report to the CFPB

The staff of the Federal Trade Commission has provided its 2018 Annual Financial Acts Enforcement Report to the Consumer Financial Protection Bureau on its enforcement and related activities regarding Regulation Z (Truth in Lending Act), Regulation M (Consumer Leasing Act), and Regulation E (Electronic Fund Transfer Act).

The report on TILA, CLA, and EFTA highlights, among other things, the FTC's enforcement actions related to automobile purchases and financing, payday lending, and consumer electronics financing; leasing; and negative options and other practices involving electronic fund transfers. It also addresses the FTC's research and policy efforts related to truth in lending, leasing, and electronic fund transfer issues, including a qualitative study of consumers' experiences in buying and financing automobiles at dealerships. The report also highlights the agency's Military Task Force, which comprises a cross-section of FTC representatives and focuses on various initiatives to assist military consumers. The report also outlines the FTC's consumer and business education efforts on truth in lending, leasing, and electronic fund transfer issues.

A copy of the report also has been provided to the Federal Reserve Board.
Read more at Federal Trade Commission

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