August 20, 2019

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Bank Regulators Set to Make Big Decisions About Small Loans

Path they choose to manage this type of credit could save-or cost-Americans billions

The nation's three federal bank regulators-the Federal Deposit Insurance Corp. (FDIC), Federal Reserve Board, and Office of the Comptroller of the Currency (OCC)-have agreed to pursue joint action on small-dollar lending, according to FDIC Chairman Jelena McWilliams. To date, most banks have not offered small installment loans because of regulatory uncertainty, but an announcement from these agencies clarifying their expectations could substantially boost the market for alternatives to payday and similar high-cost loans.

Depending on the choices that regulators make in the next few months, borrowers could see a return to costly single-payment deposit advances, payday loans that had been offered by some banks, or they could gain access to much more affordable small installment loans, which are repayable over multiple paychecks and generally have terms of more than 45 days. Their deliberations probably will lead to one of three broad outcomes:

Banks again would offer harmful deposit advances, which are loans with three-digit annual percentage rates (APRs) that have to be repaid on the borrower's next payday.
Banks would maintain the status quo and provide few small loans to customers, and borrowers would continue to take out payday and other costly nonbank loans.
Banks would issue affordable small installment loans-with prices about six times lower than payday loans.     Read more at Pew Charitable Trusts


REPAY Announces the Acquisition of TriSource Solutions

ATLANTA--(BUSINESS WIRE)--Repay Holdings Corporation (NASDAQ: RPAY) ("REPAY") ("the Company"), a leading provider of vertically-integrated payment solutions, today announced the acquisition of TriSource Solutions ("TriSource"), for up to $65 million, which includes a performance based earn out. The acquisition was financed with a combination of cash on hand and proceeds from borrowings under REPAY's existing credit facility.

TriSource, founded in 2007, provides back-end transaction processing services to independent sales organizations ("ISO's") and operates as a direct ISO on behalf of its owned portfolios and external sales agents. TriSource is headquartered in Bettendorf, IA with an additional office in East Moline, IL. Since 2012, TriSource has been REPAY's primary third-party processor for back-end settlement solutions and a valuable partner that has supported the Company's growth.

Will the Supreme Court Rule on CFPB Constitutionality? by Native American Financial Services Association

Seven amicus briefs have been sent to the U.S. Supreme Court supporting a review of Seila Law's petition for a writ of certiorari, according to Alan S. Kaplinsky, partner with Ballard Spahr LLP. The amicus briefs were filed by several trade associations, a think-tank, and twelve Attorneys General.

More specifically, the briefs were filed by the following entities:
  • U.S. Chamber of Commerce
  • Attorney Generals of Texas, Arkansas, Georgia, Indiana, Kansas, Louisiana, Nebraska, Oklahoma, South Carolina, Tennessee, Utah, and West Virginia
  • Separation of Powers Scholars
  • Pacific Legal Foundation
  • Landmark Legal Foundation
  • Cato Institute
  • Southeastern Legal Foundation and National Federation of Independent Small Business Legal Center
According to Kaplinsky, "All of the briefs argue that the CFPB's structure is unconstitutional under relevant Supreme Court precedent but do not take a position on what the appropriate remedy should be (i.e. striking all of Title X of Dodd-Frank or only severing the for-cause removal provision)."
Read more at Native American Financial Services Association


Alternative Data: The Great Equalizer To Lending Inequalities?

Alternative data has come into the spotlight in financial services, and it presages a significant shift in credit availability for unbanked and underbanked consumers. There are about 50 million credit-invisible consumers in the United States who lack sufficient traditional credit data. Alternative data is the future of financial inclusion, enabling lenders to extend credit to consumers who have been credit-invisible using next-generation data sources to power both traditional and alternative credit models.

What is alternative data? It includes payment history for electricity, gas and telecom bills, rent payments, repayments to payday lenders, and information such as employment history and educational background. Although alternative data has proved to be valuable and insightful for making lending decisions, until recently, it has not been possible for it to play a meaningful role in credit scoring.

Slow adoption of alternative credit in the lending process has not been due to lack of proof in its value or even consumer willingness to share such information. Utility bill payment history has been shown to provide a 60% lift in credit approvals for near-prime consumers by the Center for Financial Services Innovation. And 70% of Americans say they would share more personal data if it would lead to fairer credit decisions. Read more at FORBES

Dreher Tomkies LLP

Here is the largest company in your state

Do you know what the largest company in your state is? 24/7 Wall Street looked at SEC filings and private company estimates to calculate a full list.

Billionaire investor Warren Buffett owns the largest company in both the state of Nebraska and the state of Iowa: Berkshire Hathaway (BRK-A, BRK-B) and Berkshire Hathaway Energy. BHE saw an operating revenue of $19.78 billion in 2018, while its parent company, Berkshire Hathaway's, was a whopping $247.84 billion.

And it's no surprise that the biggest company in California is Apple (AAPL) - the Cupertino-based company had 132,000 full-time employees and an operating revenue of $265.6 billion in 2018. That's the most out of any company in the 50 states.

Largest companies in each state include a few surprises
Other big names like Ford (F), General Electric (GE), Nike (NKE), DowDuPont (DWDP), Walmart (WMT), and Home Depot (HD) came are the largest companies in their respective states. Combined, these companies earned $1.26 trillion last year in operating revenue with over 3.8 million employees.
Read more at YAHOO


Consumers Need Digital Banks To Be Better, Not Just Cheaper

Not having enough money can be a very expensive - a genuine problem for the more than two-thirds of all American workers who report living paycheck to paycheck.

Having a simple bank checking account costs an average a monthly maintenance fee of $13.58 or $163 a year. ATM fees, on the other hand, average around $4.66. Average overdraft fees are at $32.53, a slight decline year-on-year between 2017 and 2018, but still objectively high - and, statistically, more likely to affect low-income earners than higher-income earners.

In the general U.S. population, 18 percent report having an overdraft at least once in the last year, according to a Pew study. Consumers making less than $30,000 a year are twice as likely to incur an overdraft penalty fee than those who make more. Low-income households are also more likely to be "high frequency overdrafters" who run to a negative balance 14 or more times in a year, according to a different Pew study. High frequency overdrafters not only pay overdraft fees more often, they also pay more per overdraft event, an average of $95 when they have a negative balance, as opposed to the $51 faced by low frequency overdrafters. Read more at PYMNTS.COM


The Feds May Be Loosening Up, But State Banking Regulators Are The New Sheriffs In Town

Nearly three years into the Trump Administration, you may think the pendulum for banking regulations - Dodd-Frank rules created after the 2008 crisis - has swung to a more permissive position. President Trump campaigned promising to dial back regulations, and legislators from both parties promised some "recalibration."

Certainly, some changes have happened. Following the 2018 midterms, Democrats in the House shifted focus to protecting consumers and overseeing fintech. The Republican-led Senate Banking Committee is simplifying rules that weren't tackled in 2018's deregulatory bill. Additionally, regulatory agencies overseeing implementation of Dodd-Frank are all led by Trump appointees with authority to limit enforcement.

Although the federal pendulum swung one way, there's a countervailing force: state authorities regulating lenders inside their borders. Our firm sees this in our market of Maryland, Virginia and D.C., and most states across the country. Currently states focus on payday loans, auto finance and fintech, but we expect them to eventually turn their attention to hard money lenders.
Read more at FORBES


CFPB Appoints Private Education Loan Ombudsman

Washington, D.C. - The Consumer Financial Protection Bureau (Bureau) announced the appointment of Robert G. Cameron to serve as the Bureau's private education loan ombudsman. Mr. Cameron is a Colonel and Staff Judge Advocate for the Pennsylvania Army National Guard. He has served in the United States Army for 29 years. Mr. Cameron also joins the Bureau from the Pennsylvania Higher Education Assistance Agency where he was a high-ranking official responsible for litigation, compliance, and risk mitigation efforts.

The Dodd-Frank Act created a private education loan ombudsman position within the Bureau. The Dodd-Frank Act gave the Treasury Secretary, in consultation with the CFPB Director, the authority to designate the ombudsman. The ombudsman is responsible for receiving, reviewing, and attempting to resolve complaints from private student loan borrowers. The ombudsman is also responsible for compiling and analyzing complaint data on private education loans and making appropriate recommendations to the Secretary of the Treasury, the Bureau Director, the Secretary of Education, and Congress. Read more at CFPB

CFSA Conference

Utah is finally eliminating debtors' prisons - when will the rest of the country?

Are debtors' prisons a thing of the past?

Congress banned them in 1833. The Supreme Court also held, in 1983, that incarcerating indigent individuals for failure to pay a fine is indeed unconstitutional. But these actions haven't been enough to stop the government from locking up people for not paying their fines.

Not everyone has the resources to cover an unexpected fine. And the longer they take to pay, the more late fees the government can impose, further exacerbating the problem and perpetuating a cycle of debt to the state. In July, Utah implemented a new law to stop this cycle of abuse for good. Other states should do the same.

The Utah law prohibits government entities from charging endless late fees and interest on unpaid fines. Now, an agency can only impose fees up to 25% of the initial fine amount.
Read more at Washington Examiner


How Quickly We Forget: Financial Regulations Continue To Fall Behind The Times

The U.S. public was up in arms a decade ago with the financial industry. As the economic crisis of 2008 unfolded, it became clear that the then current financial regulations - or lack thereof -- designed to protect consumers had failed to do their job.

Nine years to the month after lawmakers enacted the Dodd-Frank Act in an attempt to shore up those weaknesses, conditions are forming again that could negatively impact our economy. You can debate whether Dodd-Frank is effective or not; it's a moot point now as many of its rules are ineffective in correcting the largest failure - too big to fail.

The more troubling takeaway is that we haven't learned from past mistakes. We continue to take actions after the fact to fix problems rather than look ahead to prevent the next series of financial challenges and threats. Read more at FORBES


Yet another festering regulatory problem growing in Washington

Most observers of regulatory behavior would agree that before an agency takes an enforcement action against a firm it should lay down a rule that defines the conduct it is seeking to prevent and the punishment for violation of the new standard. In agencies, the new interpretation of an existing statute or rule should be embodied in notice and comment rulemaking under the Administrative Procedure Act, which gives the industry an opportunity to comment and conform to the new standard.

But agencies occasionally skirt this process. Instead, the staff adopt a new interpretation with little notice, and then charge violations for activity that occurred prior to that interpretation. The Securities and Exchange Commission enforcement division recently used the latter practice in its initiative charging financial advisors with failing to uphold their disclosure obligations under the Investment Advisers Act with respect to 12b-1 fees.

Rule 12b-1 under the Investment Company Act permits mutual funds to cover distribution and marketing expenses otherwise borne by the fund adviser. Because advisers have an inherent conflict of interest in collecting these fees from funds that they manage, the Securities and Exchange Commission required that advisers disclose to fund investors the conflict of interest associated with these fees. In 2010, the Securities and Exchange Commission began to consider changes to Rule 12b-1, but backed off because of public criticism and internal disagreement.
Read more at THE HILL


Compliance and integrity are the keystones of National Debt Holdings.
We are dedicated to delivering the highest-quality service with honesty and accuracy to maximize performance for our clients while assisting consumers in their return to financial wellness.

National Debt Holdings is an official Certified Receivables Company (CRB) through Receivables Management Association International (RMAI). We have pledged to uphold the code of ethics which governs the professional conduct and behavior that is expected of members. Before certification, RMAI requires companies to pass a background check and demonstrate compliance with uniform and rigorous industry standards of best practice. The RMAI standards address principles that include account documentation, chain of title, consumer complaint & dispute resolution, statute of limitation compliance, vendor management, credit bureau reporting, and many other relevant operational procedures. Our RMAI Certification proves our dedication to professional growth and building compliant partnerships within the industry.

Digital Tax on Google, Amazon, Facebook, others will gut consumers and small businesses

Google Opens a New Window. , Facebook Opens a New Window. , and Amazon Opens a New Window. and several other major tech companies argued the digital services tax by France will hurt small business and consumers during a U.S. hearing Opens a New Window. Monday.

U.S. Trade Representative Robert Lighthizer described the precedent-setting tax as "unreasonable," yet several other countries are considering similar unilateral levies.

Digital service providers argue government regulation of marketplace services needs modernization, but the current taxes pressure companies unfairly and will hurt small business that trade on their platforms, ultimately transferring costs to consumers.

The French Senate approved a 3 percent levy in July that would apply to digital services revenue earned in France by companies with more than 25 million euros in French revenue and 750 million euros ($838 million) worldwide. Read more at FOX BUSINESS


One size doesn't fit all: Strict regulations meant for big banks holding back fintech in Canada

Opinion: Governments need to modernize our financial regulations to better encourage innovation in the Canadian marketplace

Imagine the owner of a small but successful café in Prince George. She is seeking capital to finance a second location but is unable to access a loan from a bank. She is not sufficiently well-connected to seek out her own investors and doesn't have a wealthy family to lend her the money. How can she access the capital she needs to open that second location?

Now imagine there was a safe online service for finding would-be capital investors. Our café owner could connect with a private individual who holds investable capital. The two parties could enter into a contract on their own terms, mediated by the service provider. This peer-to-peer (P2P) approach to lending would match ventures with investors who might not meet each other but for the online platform. Read more at Financial Post


Column: Payday lenders faced tough new rules protecting consumers. Then Trump took office

Something very important, affecting millions of consumers, won't happen Monday.

That's when new protections from abusive payday and car-title lenders were set to take effect, requiring the firms to make sure borrowers can pay back their obligations in a reasonable amount of time and don't become mired in debt .

However, the Trump administration is delaying this perfectly reasonable safeguard for another 15 months, and already has declared its intention to do away with the rules entirely amid concern they're too troublesome for lenders.

This is the latest example of Trump undermining or eliminating consumer-friendly policies initiated by his predecessor, former President Obama, for no better reason than because industry players demanded a lighter touch.

"Despite years of evidence about the harms of payday and car-title loans, the new leadership at the Consumer Financial Protection Bureau has decided to favor the lenders," said Lauren Saunders, associate director of the National Consumer Law Center.

Timothy Li
Elevate Credit's 3 Powerful Weapons. by Timothy Li

Elevate Credit (ELVT) is one of the largest subprime FinTech lending companies around the world. With operations in the U.S and U.K, their product spans from personal loans to line of credit products. With their recent partnerships with banks, Elevate Credit is testing new subprime credit products to further graduate their customers from loan products to transactional products such as a credit card.

Elevate Credit went public in late 2017. The stock has not performed to expectations; however, it is one of the most misunderstood publicly-traded FinTech companies around. Leveraging their decades of credit risk modeling experience as well as their banking partnerships. Elevate Credit is poised to grow in the next 3-5 years.

In this article, I will detail three main areas where Elevate Credit has an unfair advantage over all of its competitions to give our readers a different perspective on how to evaluate this company beyond their quarterly earnings. Read more at SEEKING ALPHA


Hyperlinks Do Not Count as Debt Disclosures under FDCPA. by Native American Financial Services Association

The Seventh Circuit Court of Appeals recently ruled that a debt collector violated the Fair Debt Collections Practices Act (FDCPA) when it informed a consumer about her debt obligations via an email that did not "imply the existence of a debt."

In 2015, Med-1, a debt collector, sent several emails to Beth Lavallee, the defendant, who owed medical debt. The emails contained only the company's name, email address, and hyperlinks leading to the company's server. From there, Lavallee had to click through several web pages and hyperlinks to open up a PDF document containing the disclosures required under FDCPA.

The court ruled that Med-1's email did not meet the definition of "communication" because "the emails say nothing at all about a debt," said the Seventh Circuit. "A debt collector's message must at least imply the existence of a debt to meet the act's definition of 'communication."

When the defendant compared their email notice to a letter being sent but never read by the consumer, the presiding judges pushed back. "The proper analogue is a letter that provides nothing more than the address of a location where the message can be obtained. That hypothetical letter, like the emails here, doesn't 'contain' the relevant information."
Read more at Native American Financial Services Association


Alternative Financial Service Providers Association

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