May 5, 2020
AFSPA Partner


CFPB and trade groups file status report in lawsuit challenging CFPB payday loan rule. by Ballard Spahr LLP

A new joint status report was filed this past Friday with the Texas federal district court hearing the lawsuit filed by two trade groups challenging the CFPB's final payday/auto title/high-rate installment loan rule (Payday Rule).

The report states that the Bureau "is continuing to make progress" on its proposed rulemaking to rescind the Payday Rule's ability-to-repay (ATR) provisions and references the Bureau's statement in its Fall 2019 rulemaking agenda that it expected to take final action on the proposal in April 2020. The report also states that "the parties are not requesting that the Court lift the stay of the litigation or lift the stay of the compliance date at this time."

The court's most recent order continuing the stay of the lawsuit and the August 19, 2019 compliance date for both the Payday Rule's and its payment provisions was entered on December 6, 2019. That order directed the parties to file another joint status report by April 24, 2020 "informing the court about proceedings related to the Rule and this litigation as the parties deem appropriate." We expect the court to soon enter a new order continuing the stays.
Read more at JDSUPRA

AFSPA Partner


CFPB critics moving swiftly to challenge payday lending rule

The Consumer Financial Protection Bureau is poised to deliver a big victory for payday lenders, following through on a three-year effort to gut underwriting requirements for high-cost loans.

Yet the CFPB's final payday rule, which was expected as early as this week, has already spurred critics of the agency to prepare legal challenges to the plan even before Director Kathy Kraninger releases it.

Analysts widely expect consumer groups to sue the CFPB claiming it did not follow correct procedures in reversing underwriting standards established by former Director Richard Cordray. Kraninger also faces a likely backlash from House Democratic leaders, who could try to repeal the rule under the Congressional Review Act.


In The News: Interest Loan Caps Have a Record of Failure. by D. Lynn DeVault

The Journal Gazette's Jan. 14 editorial ("Lending change/Cap rates, end impasse on payday loans") erroneously asserts that an arbitrary 36% interest rate cap on short-term loans will protect consumers when, in fact, the opposite is true. The move would restrict access to credit for Indiana consumers and potentially force them to seek dangerous alternatives.

History has proven that arbitrary caps do not work. Dozens of financial institutions have tried to introduce cheaper substitutes for loans considered high cost, only to eliminate the products from their portfolios. The Federal Deposit Insurance Corp. also experimented with a 36% interest rate cap, but the loans simply weren't profitable enough for banks to continue offering the product.
The editorial fails to mention that consumers in South Dakota, which instituted a rate cap in 2016, have been worse off in recent years, according to several key financial indicators.

A National Financial Capability Study conducted by the Financial Industry Regulatory Authority found that more South Dakotans reported having medical bills overdue and only paying the minimum on their credit cards in 2018 than in 2015, before the rate cap was in effect.
Read more at CFSA


Pawn shops are busy, but it's not what you think

WILMINGTON, N.C. (WECT) - Pawn shops remain open as financial institutions during the coronavirus pandemic, but owners have been surprised by the way business has changed. At this point, few people are pawning items for loans.

Both presidents of National Pawn and LDPM Inc., which is the parent company of Picasso Pawn, have over thirty years experience in the industry, but they've never seen anything quite like this pandemic.

"Shockingly, there's less people looking to sell and get loans because they have the stimulus money and they're stuck at home not spending money. My prediction is in August maybe July and August we will see a return and then a big demand on it as people either get back to work or their unemployment runs out and so we think will see a big uptick in loans at that point," said Bob Moulton, president of National Pawn. Read more at FOX Wilmington


National Debt Holdings

Compliance and Integrity are the Keystones of Success at National Debt Holdings

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.
Read more at National Debt Holdings


Mastercard's plan to connect 1 billion more people and 50 million small businesses to digital economy by 2025

Small businesses and individuals having a hard time entering the digital economy are getting a boost from Mastercard as the need to receive funds electronically and make digital and contactless payments has been underscored by the COVID-19 pandemic.

The payment processing company is pledging to connect 1 billion people and 50 million small businesses to the digital economy by 2025. This commitment is an extension of its 2015 promise to bring 500 million people who don't have ready digital access to financial products into the system.

Nationally, 6.5% of households in 2017 did not have bank accounts, and 18.7% had accounts but also used financial services outside of insured institutions, according to the FDIC. Households with no bank accounts are considered "unbanked" while households with bank accounts who use products such as payday loans, check cashing and money orders are referred to as "underbanked." Read more at USA TODAY


Credit Card Processing Primary Benefits

By partnering with several providers, we ensure acceptance of all major credit cards and access to all major processors.

Our partnerships enable credit card processing services across a diverse range of low and high risk MCC's.

All credit card processing is provided through partnerships protecting reseller relationships.



More than half of US consumers paying contactless, Mastercard finds

The coronavirus pandemic may be pushing contactless payments to a tipping point in the U.S. More than half (51%) of the 1,000 U.S. consumers surveyed by Mastercard this month now use some form of contactless payment. The survey, published Wednesday, was emailed to Banking Dive.
Concern over the potential transmission of germs at the point of sale is driving the change. Half of respondents said they worry about the cleanliness of signature touchpads, and 72% said they prefer to skip signatures altogether.

About 51% of those surveyed say they're using cash less often or not at all since the outbreak began. And nearly one-third have swapped out their top-of-wallet card for a contactless option. That percentage is even higher (43%) for Americans under age 35, Mastercard found.

Banks worldwide have ramped up their efforts to issue contactless cards over the past several years, but they've been a harder sell in the U.S. Perhaps the coronavirus will prove the catalyst for behavioral change. About 56% of respondents to the Mastercard survey said they'd continue using contactless cards after the pandemic is over.
Read more at BANKING DIVE

Dreher Tomkies LLP

In The News: Not All Small-Dollar Lenders Are The Same. by D. Lynn DeVault

As we enter 2020, we have an important opportunity to reflect on the financial wants and needs of American consumers in the new year and beyond. Small-dollar lenders work to meet these wants and needs in communities across the United States; however, bad actors committing fraudulent acts and scamming consumers in Utah or elsewhere paint our entire industry in a negative light. Contrary to what critics claim and what the media reports, these lenders are the exception, not the norm. Regulated, responsible lenders offer safe, reliable products that serve as an important source of credit for millions of Americans, many of whom are not served by traditional banks.

Consumers deserve access to a variety of financial products, including small-dollar loans, that support a wide range of credit needs. According to the Federal Deposit Insurance Corporation, or FDIC, more than 1 in 5 Americans were unbanked or underbanked in 2018, and in 2017 the Board of Governors of the Federal Reserve found that 40% of Americans either could not cover or would struggle to cover an unexpected expense of $400.

One of the many reasons millions of Americans choose to use small-dollar loans every year is to bridge financial gaps such as these. Small-dollar loans are often the least expensive option for consumers, particularly compared to bank fees - including overdraft protection and bounced checks - or unregulated offshore internet loans and penalties for late bill payments.
Read more at CFSA


The importance of fair and equitable access to credit for minority and women-owned businesses

Small businesses, including minority and women-owned businesses, are the cornerstone of the American economy and have been hit particularly hard during the COVID-19 pandemic.

Congress passed and amended the Coronavirus Aid, Relief, and Economic Security (CARES) Act to minimize the impact of the pandemic. The CARES Act includes the Small Business Administration's Paycheck Protection Program (PPP), which provides loans and debt relief options to small businesses. The funds also allow small businesses to pay their employees and meet other short-term expenses including mortgage interest, rent and utility costs. In the amendment to the CARES Act, Congress appropriated additional funds of $321 billion to the PPP, with at least $60 billion of the PPP subsidy to guarantee loans made by smaller depository institutions, credit unions, and community financial institutions. The Bureau is working with the Small Business Administration (SBA) to advance access to credit for minority, women-owned, and small businesses. Learn more about the Small Business Administration's COVID-19 response resources.
Read more at CFPB


Coronavirus Bankruptcy Tracker: These Major Companies Are Failing Amid The Shutdown

Some of the biggest names in corporate America are in danger of going the way of Sears, Blockbuster and RadioShack.

The coronavirus pandemic has accelerated the demise of companies that were already in trouble as Americans (and their dollars) stay home amid lockdowns and economic shutdowns. Oil and gas drillers like Whiting Petroleum and Diamond Offshore filed for bankruptcy last week, and J.Crew became the first major U.S. retailer to do the same on Monday morning. More are on the way.

"It has been a poorly-kept secret that a number of the big-box retailers were struggling," says Scott Williams, a bankruptcy attorney at RumbergerKirk. "There has not been a dramatic uptick in the last 45 days. What I think you've seen is lots of people being forced into, 'I'm going to get there at some point.'" Read more at FORBES



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