May 28, 2019

Rep. Tlaib Targets Payday Lenders With Amendment to CFPB Reform Bill

Rep. Rashida Tlaib (D., Mich.) introduced a bill amendment on Wednesday targeting payday and car-title lenders by requiring the Consumer Financial Protection Bureau to provide quarterly reports to Congress with information about these lenders.

Tlaib's amendment would be attached to the Consumers First Act, a bill that would reverse policies instituted by former CFPB acting director Mick Mulvaney and which passed the House Financial Services Committee in March.

The amendment would "add a quarterly reporting requirement that CFPB provide Congress with the number of investigations opened and closed relating to payday/car-title lenders, how many enforcement actions taken, an estimate of how much in fees payday/car-title customers paid, how many times in the previous 12 months a payday customer rolled over their loan, and how many car title loan borrowers lost their car in the previous 12 months."

Small-dollar loans amount to only 0.7 percent of complaints made to the CFPB, according to a March report.

Tlaib is not the first Democrat to target payday loans. During the Obama administration, the CFPB instituted new rules to govern payday lenders, although the Trump administration has since rolled back some of those regulations.

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FDIC Settlement with Payday Lenders Drives (One More) Nail into the Choke Point Coffin. Morgan Lewis

The latest nail in the coffin for Operation Choke Point was added on May 22 by the Federal Deposit Insurance Corporation (FDIC) when it issued a press release announcing its resolution of a lawsuit against it by several payday lenders. Plaintiff payday lenders, echoing the generalized complaint regarding Operation Choke Point, had alleged that coordinated efforts by FDIC and US Department of Justice (DOJ) officials forced them out of the financial system by having their banking relationships terminated and, in some cases, having their bank accounts shut down.

Choke Point was a concerted informal effort by DOJ and a number of federal banking agencies, including the FDIC, during the prior administration to create operating difficulties for payday lenders. In particular, the Choke Point campaign included the use of subtle warnings to banks providing clearing services to payday lenders that the banks faced increased risk of regulatory action and scrutiny as the result of their association with the payday lenders. In turn, these sub rosa warnings caused some banks to sever ties with the lenders or increase risk premiums. The breadth of the effort ultimately affected a number of other politically "disfavored" industries, including the firearms and tobacco industries, which had business, legal, or policy relationships to payday lending.

Pursuant to the settlement, the FDIC released a statement (the Policy Statement) that summarizes certain FDIC policies, most notably those related to FDIC recommendations to close a customer's 
Read more at JDSUPRA

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"Misadventures in Money Management" Expands to Wider Audience

WASHINGTON, D.C. - Today the Consumer Financial Protection Bureau (CFPB) significantly expanded its Misadventures in Money Management financial education tool to active-duty servicemembers. Misadventures in Money Management ( was initially developed for future servicemembers who signed a contract to enlist in the armed forces, but had not yet shipped off to basic military training. Today the CFPB is expanding the program to be available for all servicemembers on active duty, including in the Reserve or the National Guard.

"Misadventures in Money Management is a valuable resource for servicemembers and their families that will help them understand their options in the financial marketplace so they can avoid the most common mistakes," said CFPB Director Kathleen L. Kraninger. "Improving the financial readiness of our military servicemembers is important so they can focus on the mission at hand."

The CFPB first launched Misadventures in Money Management three years ago, then customized a second iteration for future leaders to support high school and college students enrolled in the Army Reserve Officers' Training Corps program. The program covers topics including consumer financial decision-making, choosing a financial institution, understanding protections under the Servicemembers Civil Relief Act, and understanding how debt can affect a military career.
Read more at CFPB

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Seven Tips to Leverage Employment Verification Data

Is more data better, or is better data really, better? Whatever your philosophy, employment verification data is already, or should be in your mix of sources. And know this, employment data is not just for verifying employment anymore, it has the potential to move the needle for you in several ways.

Employment data attributes optimize multiple steps of a customer's lifecycle and experience with your lending business. Incorporate employment data into your workflow to create a more efficient, seamless, and expedited process for the consumer. Here are seven tips to help you leverage employment data and improve your customer's lifecycle:

1. Verify Identity: You can validate identity in real-time with employer reported data. This is more authoritative and accurate than self-reported, or information gathered from third parties. The employers gather ID information from an employee during the Form I9 or eVerify process, which require physical verification of documents. Knowing this is great because you can use employment data for mitigating fraud.
2. Identify More Risk: During underwriting, an attribute simply indicating if an applicant is employed,
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NORTH CAROLINA: Attorney General Josh Stein Gets Temporary Restraining Order Against Out-Of-State Payday Lender

RALEIGH, NC (May 21, 2019) - Attorney General Josh Stein was granted a temporary restraining order against the Miami, Fla.-based online payday lender Approved Financial, Inc. in a case he filed on May 15, 2019. The case alleges illegal, unlicensed lending practices, usury, unlawful debt collection, and unfair and deceptive practices. The temporary restraining order, entered by Superior Court Judge Stephen R. Futrell, prevents Approved Financial from soliciting, making, or collecting on loans to North Carolina consumers, and repossessing or selling their vehicles for the next 35 days until a preliminary injunction hearing.

"North Carolina drove out payday lenders so they couldn't take advantage of hardworking North Carolinians," said Attorney General Josh Stein. "We won't allow them to try to operate in our state again by sidestepping the law and using online channels."

The lawsuit alleges that Approved Financial, which is not licensed to operate in North Carolina, has offered illegal online payday loans to financially distressed North Carolina consumers at interest rates ranging between 120 to 200 percent, which far exceeds the interest rate limits allowed by North Carolina law. According to the complaint, the lender communicates with consumers via email and phone, but has attempted to evade North Carolina's consumer protection laws by requesting borrowers to drive across state lines to South Carolina to pick up their funds. Approved Financial has made more than 380 loans to consumers in North Carolina, ranging in amount from $500 to $5,000. Read more at CALDWELL JOURNAL

Lending as a Service

Spring 2019 rulemaking agenda of the CFPB

The Bureau is publishing its Spring 2019 Agenda as part of the Spring 2019 Unified Agenda of Federal Regulatory and Deregulatory Actions, which is coordinated by the Office of Management and Budget. As an independent regulatory agency, the Bureau voluntarily participates in the Unified Agenda. The agenda lists the regulatory matters that the Bureau reasonably anticipates having under consideration during the period from May 1, 2019, to April 30, 2020, as described further below

A permanent director of the Bureau took office in December 2018. The Director recently completed a listening tour to engage with Bureau stakeholders, employees, and outside experts, building on feedback submitted through more than 88,000 public comments in response to the Bureau's 2018 "Call for Evidence" initiative. The Bureau expects to communicate further information about future planning and priorities in the coming months. In the meantime, this Spring 2019 Agenda reflects ongoing rulemaking activities, including initiatives to implement statutory requirements and to address the potential sunset of statutory and regulatory provisions.

The Bureau is engaged in a number of rulemakings to implement directives mandated in the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 (EGRRCPA) , the Dodd-Frank Act, and other statutes. As part of these rulemakings, the Bureau is working to achieve the consumer protection objectives of the statutes while minimizing regulatory burden on financial services providers, including facilitating industry compliance with rules.
Read more at CFPB

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Tesla rolls out employee loan benefit as factory workers cope with unpredictable hours

Tesla has rolled out a new benefit for its workers: employee loans, facilitated through the London-based financial tech start-up Salary Finance, and funded via its partner Axos Bank.

In correspondence distributed to Tesla employees and seen by CNBC, the companies said that workers could use the new benefit to borrow money at relatively affordable rates and pay it back directly out of their paychecks.

Typically, Salary Finance lets workers borrow up to 20% of their salary and pay it back at rates under 5%. The company spun out of Blenheim Chalcot in London, and is venture backed by that firm along with insurance giants Legal & General.

By offering a "financial well-being" benefit, Tesla gives active employees a way to handle their debt and expenses without turning to higher-cost alternatives like a 401(k) loan, credit cards with a high annual percentage rate, or traditional payday loans. That takes some pressure off those who would leave the company in search of higher wages, and could potentially stem attrition.

The electric vehicle maker does not make money when employees take loans through the service, according to the Salary Finance website for Tesla employees.
Read more at CNBC

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TEXAS: AG Paxton Joins Coali­tion Urg­ing CFPB to Restore States' Author­i­ty to Pro­tect Consumers

Attorney General Ken Paxton today joined a 12-state coalition - led by Indiana and Arkansas - in support of a proposal by the Consumer Financial Protection Bureau (CFPB) to rescind a 2017 CFPB rule and replace it with a new one governing small, short-term loans. The existing rule ignores the states' traditional role as the lead consumer protection authorities, and it harms consumers' freedom to make decisions about the types of financial products that best serve them.

In a letter to CFPB Director Kathleen Kraninger, Attorney General Paxton and his counterparts stated that "the proposed rule respects the states' role in maximizing consumers' welfare by ensuring both that consumers are protected from illegal practices and that they have access to credit."

"Texas and other states have designed a variety of regulatory approaches to small-dollar lending that are best-suited to the unique needs of their residents, rather than a one-size-fit-all directive from Washington," Attorney General Paxton said. "No CFPB rule should intrude on the states' responsibility to ensure that their residents can obtain credit on fair terms."

Indiana, Arkansas and Texas are joined in the letter to the CFPB by Alabama, Georgia, Kansas, Louisiana, Oklahoma, South Carolina, South Dakota, Utah and West Virginia.
Read more at Attorney General Paxton

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Is the Point-of-Sale Trend Putting Pressure on Plastic?

Q1 2019 TransUnion Industry Insights Report explores latest consumer credit trends

The latest entrant to the credit market, point-of-sale loans, may be shaking up how consumers finance large purchases. According to the TransUnion (NYSE: TRU) Q1 2019 Industry Insights Report, this phenomenon, combined with the popularity of credit card reward programs, may be particularly taxing for the private label card category.

Point-of-sale loans provide consumers with an instant offer of credit in the form of an unsecured personal loan at checkout. During the transaction, consumers receive the payment amount and loan term, and the loan is paid back in monthly installments. Consumers who may have previously financed either small or large purchases such as clothing, furniture, electronics or home improvement projects with a private label card are opting for point-of-sale financing or leveraging their bank-issued credit cards. As a result, the private label card market-those cards provided on behalf of specific retailers-is shrinking.

Newly issued private label cards experienced a decline of 5.5% between Q4 2017 and Q4 2018, the ninth straight quarter of yearly decreases (originations are analyzed one quarter in arrears to account for reporting lag). Online shopping has contributed to a decline in the retail brick-and-mortar footprint for some years now, Read more at TRANSUNION

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Underemployment for recent grads worse today than in early 2000s

The underemployment rate for recent college graduates is higher today than it was in the early 2000s. More people are working in jobs they're overqualified for in order to make ends meet, taking jobs that don't require a college degree. That's despite a decade of low unemployment and economic growth and stock market highs.

As of March, the underemployment rate for workers aged 22 to 27 stands at 41.3%, according to the Federal Reserve Bank of New York.

The fact that there are millions of recent graduates opting for jobs that don't require a bachelor's degree is often masked by rosy job market figures - the U.S. unemployment rate fell to 3.6% in April. In the early 2000s - during the height of the dot-com bust and ensuing bear market - the underemployment rate for recent college graduates was 38.5% (in November 2002), while the unemployment rate was 5.9% that same month.

Underemployed for higher pay
A major reason why recent college grads take jobs that don't require a college degree is because they're seeking higher pay. Glassdoor chief economist Andrew Chamberlain says research has shown that these recent graduates are going after jobs in the skilled trades and e-commerce because those jobs pay more.  Read more at YAHOO FINANCE

Alternative Credit Reporting

Ransomware Not Gone but More Targeted, Report Says

Cyber-criminals continue to grow more sophisticated, developing advanced attack methods, including tailored ransomware, according to the Q1 Global Threat Landscape Report, published today by Fortinet. In addition to targeted attacks, criminals are also using custom coding, living-off-the-land (LotL) and sharing infrastructure to maximize their opportunities, the report said.

Despite a decline in previous high rates of ransomware, ransomware itself is far from gone. Instead, cyber-criminals are using more targeted attacks. Ransomware "is being customized for high-value targets and to give the attacker privileged access to the network. LockerGoga is an example of a targeted ransomware conducted in a multi-stage attack. There is little about LockerGoga that sets it apart from other ransomware in terms of functional sophistication, but while most ransomware tools use some level of obfuscation to avoid detection, there was little of it used when analyzed," the report said.

Researchers also detected an uptick in malicious actors leveraging dual-use tools, preinstalled on targeted systems to carry out cyber-attacks.

The report noted the trend of shared infrastructure. Researchers detected a rise in the total malware and botnet communication activity, as well as the number of domains shared between threats at each stage of the kill chain. Read more at INFOSECURITY

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Commerce Gets More Visual As Retailers Embrace 3D

As brick-and-mortar retailers work to survive in this digital age, they are looking to another digital tool in that ongoing effort: 3D mapping. It's among the latest ways that spatially focused technology promises to improve the retail experience.

According to a recent report from AdWeek, this "technology is so new that publicly explained use cases are hard to find, even though 3D mapping's potential is huge. Going forward, here are a handful of ways retailers can apply the technology to increase sales." Among them? Using the technology to "rethink store designs," and determining "how shoppers move around a store at a granular level (in order to) conceptualize how spaces can be optimized. These ideas will create better-located product displays and situate fitting rooms where people can easily find them."

Interactive Store Maps
The technology can also enable retailers to "use their 3D modeling to offer interactive store maps for customers and employees to use. These maps can be on a touchscreen in the store or on a brand's mobile app. Store reps will aid customers more efficiently, and the 3D map-powered app can help train employees about the ins and outs of a store and the location of its products."
Read more at PYMNTS.COM

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