June 18, 2019

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Senators urge CFPB director to reverse rule allowing unlimited debt collection calls

A group of U.S. Senators recently called on Consumer Financial Protection Bureau (CFPB) Director Kathy Kraninger to reverse a proposed rule that would allow debt collection companies to send unlimited texts and e-mails to consumers.

Abusive and threatening debt collection tactics led to some 82,000 consumer complaints to the CFPB and about 458,000 to the Federal Trade Commission in 2018.

"By allowing debt collectors to send consumers unlimited text messages and e-mails without first receiving affirmative consent for such a method of communication, the proposed rule permits collectors to overwhelm consumers with intrusive communications," the senators wrote in a letter to Kraninger. "Furthermore, since the CFPB is not requiring collectors to use free-to-end-user text messaging, the CFPB is placing the cost burden of these text messages on the consumer."

The senators also objected to the stipulation that would allow a debt collector to call a consumer seven times a week per debt. Read more at Financial Regulation News

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Senators Urge CFPB To Reconsider Debt Collection Overhaul

A group of senators is urging the Consumer Financial Protection Bureau to reconsider a recently proposed overhaul of debt collection practices that among other things let collectors send unlimited electronic communications to consumers spanning emails and texts.

As reported, a group of more than 20 senators had said in a letter to the CFPB - where the group was led by Democrats Bob Menendez of New Jersey and Sherrod Brown of Ohio - that the Fair Debt Collection Practices Act would incur costs to consumers who do not have unlimited data plans. In addition they could be harmed by scammers urging them to click on hyperlinks.

"By allowing debt collectors to send consumers unlimited text messages and emails without first receiving affirmative consent for such a method of communication, the proposed rule permits collectors to overwhelm consumers with intrusive communications," the senators wrote. "Furthermore, since the CFPB is not requiring collectors to use free-to-end-user text messaging, the CFPB is placing the cost burden of these text messages on the consumer."
Read more at PYMNTS.COM

* 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.

Third Circuit Interprets "Debt Collector" to Include Debt Buyer. by Tucker Arensberg, P.C.

Earlier this year, on February 22, 2019, a three-judge panel upheld a lower court ruling that debt-buying businesses could be liable for violations under the Fair Debt Collections Practices Act (the "FDCPA"). The FDCPA's purpose is to protect consumers from deceptive or unfair debt collection practices and applies to "debt collectors," which is defined as those engaged "in any business the principal purpose of which is the collection of any debts" and those "who regularly collect" debts "owed or due another." 15 U.S.C. § 1692(a). The underlying case involves Crown Asset Management, LLC ("Crown Asset"), which is a purchaser of charged-off consumer debt. After purchasing an account, if the consumer has not filed for bankruptcy, Crown Asset will refer the matter to a third-party service for collection or hires a debt collection law firm to file a lawsuit on its behalf. Barbato v. Greystone Alliance, LLC, 916 F.3d 260 (3d Cir. 2019). In 2014, Mary Barbato sued Crown Asset for violations under the FDCPA, due to Crown Asset's alleged failure to identify itself as a collection agency.

Crown Asset appealed a March 30, 2017 District Court's finding that Crown Asset was "acting as [a] 'debt collector'" because (1) it acquired debt when the debt was in default; and (2) Crown Asset's principal purpose was the "collection of 'any debts'" and, therefore, subject to FDCPA provisions, including identifying as a debt collector when communicating with consumers. Barbato v. Greysone All., LLC, No. 3:13-CV-2748, 2017 WL 1193731 (M.D.Pa. Mar 30, 2017).
Read more at JD SUPRA

Lending as a Service

FDIC's Consumer Compliance Supervisory Highlights
June 13, 2019

The Federal Deposit Insurance Corporation (FDIC) today issued the new Consumer Compliance Supervisory Highlights publication. The purpose of this publication is to enhance transparency regarding the FDIC's consumer compliance supervisory activities and includes a high-level overview of consumer compliance issues identified during 2018 through the FDIC's supervision of state non-member banks and thrifts.

This issue of Consumer Compliance Supervisory Highlights also includes a "Resources & Information for Financial Institutions" on page 6 and an appendix of "Most Frequently Cited Violations and Enforcement Actions" to support supervised institutions' efforts to manage consumer compliance responsibilities effectively.

This publication is available on the FDIC's website at View here

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Rep. Luetkemeyer backs bill to delay FASB's accounting standard

U.S. Rep. Blaine Luetkemeyer (R-MO) voiced his support for legislation that would delay the implementation of the Financial Accounting Standards Board's (FASB) Current Expected Credit Loss (CECL) standard.

Luetkemeyer supports the Continued Encouragement for Consumer Lending Act, introduced in May by Sen. Thom Tillis (R-NC), which would require the FASB to delay the implementation of CECL until a quantitative impact study can be completed that can assess the new accounting standard's economic impact.

The proposed CECL standard, which goes into effect Dec. 19, 2019, marks a shift in the way credit losses on loans and financial assets are recorded. It will impact financial institutions internal accounting policies and procedures and may affect how they manage capital.

"With the potential to drastically impact consumers across the nation, it is simply unacceptable to continue the implementation of CECL without understanding the broad economic implications," said Luetkemeyer Read more at Financial Regulation News

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Scott Tucker's Leawood house headed for estate sale after seizure by IRS

Imprisoned payday loan mogul Scott Tucker's residence in Leawood is going up for an estate sale later this month as part of an ongoing attempt by the government to recover assets he acquired through his illegal enterprises.

The furnishings in Tucker's house in the Hallbrook subdivision is the subject of an estate sale that starts June 28 and extends to June 30.

The estate sale will sell furnishings in the house

Internal Revenue Service agents took possession of the 4,500-square-foot house in March after Tucker's wife abandoned the property, leaving furnishings, an artwork collection and exercise equipment behind. The house itself will likely be sold in a separate transaction.

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FTC, states ratchet up auto retail regulation

With leadership changes in the White House and at the Consumer Financial Protection Bureau, some dealers may have assumed that auto retail and finance regulation would scale back. It hasn't, lawyers and compliance experts warn.

In fact, some experts say the Federal Trade Commission and state attorneys general have stepped up regulatory activity focusing on auto retail in the past two years, and dealers should stress adhering to compliance standards.

State-led consumer protection efforts were reinvigorated in late 2017 with the appointment of longtime CFPB critic Mick Mulvaney as the bureau's acting director. In response, 17 attorneys general wrote a letter to President Donald Trump supporting the bureau's mission and criticizing Mulvaney's appointment.

"If incoming CFPB leadership prevents the agency's professional staff from aggressively pursuing consumer abuse and financial misconduct, we will redouble our efforts at the state level to root out such misconduct and hold those responsible to account," the attorneys general wrote.

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Regulators Should Foster Financial Innovation

It is becoming increasingly apparent that financial technology, or "fintech," like other forms of technology, can drastically improve consumers' lives. Yet one of the most glaring failures of the Consumer Financial Protection Bureau has been its neglect of the role of financial innovation.

Fintech has the potential to provide consumers with cheaper, easier, and diverse financial products that are more closely tailored to an individual's needs. Indeed, fintech, in one form or another, has been doing this for centuries. In his treatise, "Money Changes Everything," the economic historian William Goetzmann writes, "financial technology allowed for more complex political institutions, enhanced social mobility, and greater economic growth-in short, all the major indicators of complex society we call civilization."

Importantly for the bureau, innovation can solve many of the consumer protection problems that regulators have historically been concerned with. Take the example of small dollar lending and a new fintech product called "Dave." Dave is a mobile application that synchronizes with customers' financial accounts and analyzes their spending habits. Dave then builds the customer a budget in order to better predict when they are at risk of overdrawing their account.
Read more at Competitive Enterprise Institute

Alternative Credit Reporting

Lingering Obama-era Move at CFPB Now Threatens Credit Markets

As college graduates have their commencement celebrations, they certainly hope their hard work will pay off. After all, in the booming Trump economy and with record low unemployment, there are countless opportunities for entrepreneurship and success.

Sadly, there is one reason why those dreams may never get off the ground: crushing school debt. As too many students and parents are painfully aware, there are more than 44 million borrowers in America who collectively owe $1.5 trillion. Because of these obligations, young adults are putting off essential milestones in life - such as buying a home and getting married - while not accumulating savings.

They have been saddled with debt by a higher education industrial complex thanks to the assistance of the Federal Government. Now, thanks to some Obama administration decisions, the problem might become even worse! Read more at TOWNHALL

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Those Living 'Unbanked' and What That Means for Financial Inequality

Inequality is a major issue around the world. However, it is even worse amongst those who have no access to banking.

The World Bank estimates that about three-quarters of the world's poorest are unbanked.

If the world is to solve the problem of financial inequality on a global scale, there is a need to ensure that there is basic access to banking services.

What does it mean to be unbanked?
An unbanked person is one who does not hold an account at a formal financial institution.

As a result, such a person cannot access basic global financial services such as a savings account, credit, money transfers, and much more. To access these services they use informal means.

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Bipartisan group of Congressional members ask SBA administrator to hold off on loan rule

A bipartisan group of legislators recently urged the acting administrator of the U.S. Small Business Administration (SBA) to delay the implementation of the proposed rule titled, "Express Loan Programs; Affiliation Standards" until the agency has a permanent administrator in place.

The proposed rule, issued on Sept. 28, 2018, elicited significant concerns from small business stakeholders during the comment period. If made final, the rule would lead to changes for many small businesses who participate in SBA's lending programs, the group noted.

Sens. Marco Rubio (R-FL) and Ben Cardin (D-MD), along with Reps. Nydia Velazquez (D-NY) and Steve Chabot (R-OH), wrote a letter to Acting Administrator Chris Pilkerton, recommending that action be delayed until the Senate has confirmed a new SBA administrator.
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.

CFPB Should Acknowledge Its Unconstitutional Structure

The Consumer Financial Protection Bureau's structure is unconstitutional. The agency's leadership should recognize it as such.
First, the bureau does not receive its funding through congressional appropriations, but via a guaranteed fund from the Federal Reserve. This violates Article I, Section 9 of the United States Constitution which states that "No money shall be drawn from the treasury, but in consequence of appropriations made by law."

Second, its sole director cannot be removed by the president other than for "cause," such as dereliction of duty or malfeasance. This violates Article II, Section 3 of the Constitution; in particular, that the president "shall take care that the laws be faithfully executed."

Lastly, the bureau is afforded judicial deference in its interpretation of statutes, at 12 U.S. Code § 5512 (b)(4)(B), similar to that of the Chevron doctrine. This violates Article III of the constitution, which, as the Supreme Court wrote in Marbury v. Madison, places the power to say what the law is solely in the hands of the judicial department.
Read more at Competitive Enterprise Institute

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America's Economy Must Better Serve Black and Latino Consumers

Anyone who works for a living knows that their money goes a lot quicker than the time it takes to earn it. And for low-to-moderate income workers, the costs of everyday living creep higher and quicker than pay raises or cost-of-living adjustments.

These and other kitchen table finance concerns are part of why so many consumers turned to the Consumer Financial Protection Bureau (CFPB) for help. Since 2011, CFPB returned $12 billion to more than 25 million consumers, remediating the harmful effects of unfair and deceptive practices, as well as discrimination in the financial services sector.

But with a change of administration and key personnel in 2017, CFPB's monetary relief to consumers plummeted 96 percent. In real numbers, and according to the Consumer Federation of America (CFA), the leadership change went from an average restitution of $59.6 million per class action to $2.4 million on average per case. CFA also found that in 2018, the number of CFPB enforcement actions declined to only 11, compared to 55 in 2015.
Read more at Los Angeles Sentinel

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Senators applaud CFTC for addressing climate-related financial risks

"Climate change impacts are likely to exacerbate market volatility, erode investor confidence, and increase the risk of financial crashes," the senators wrote in their letter to CFTC Commissioner Rostin Behnam. "We strongly support your decision to assess climate-related risks to our financial markets and the impact on the stability of the global financial system. We encourage you to reach out to other financial regulatory agencies to urge them to follow your lead. We also encourage you to engage with the group of 36 international central banks and bank supervisors working together to develop analytic tools to assess climate-related financial risks."

The letter was signed by U.S. Sens. Brian Schatz (D-HI), Sherrod Brown (D-OH), and members of the Senate Banking Committee.

"Climate change is increasing the frequency and severity of episodic severe weather events like droughts, floods, and wildfires; it is also changing long-term climate patterns in ways that will lower productivity, devalue and destroy fixed assets, stress agricultural yields, and ultimately affect every sector of our economy. The markets and market participants that the CFTC regulates will not be immune to these risks. Climate change impacts are likely to exacerbate market volatility, erode investor confidence, and increase the risk of financial crashes," the senators wrote.
Read more at Financial Regulation News


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