November 29, 2018
2018 edition: 95 / 104
Direct Marketing Solutions

Did you know......

* 81% of consumers say their financial situation has remained stable or improved since last year

* 45.5% of consumers who live paycheck to paycheck said they were extremely satisfied with instant payments.
* 34%
of consumers do not have bank accounts because they do not trust banks
* Main Street USA now boasts 3.4 million store fronts, a projected 2.1% growth since Q3 2016.
* Paper checks
saw a dissatisfaction rate of 14.1%, the highest among all payment types.
* 41%
of consumers were contacted about credit card debt in Q2 2018
* 81%
of consumers say their financial situation has remained stable or improved since last year


March 18-21, 2019 / DORAL MIAMI
CFSA Conference
Plug-in to top-notch networking with key industry players and gain 
insight  and value from exceptional educational sessions.

Non-bank lenders like Quicken Loans are 'the biggest risk to the system' right now, Jim Cramer warns

Federal Reserve Chairman Jerome Powell may have "blinked" in his Wednesday speech, saying that the Fed had "no preset policy path" for interest rates, but his work is far from over, CNBC's Jim Cramer warned as stocks popped on Powell's speech.

"What's the biggest risk to the system right now? After listening to Fed Chief Jay Powell, who made a lot of sense today, I'd say it's non-bank lending," Cramer said Wednesday on "Mad Money."

In the speech, Powell characterized non-bank lenders as imprudent and a potential problem for the credit markets and the broader financial system. Still, he noted that after the 2008 financial crisis, federal regulators took measures that "have reduced the risk that key non-bank parts of the system would freeze up in the face of market stress."

Even so, Cramer thought the rapid-fire rise of institutions like Quicken Loans, PennyMac and LoanDepot, three of the largest non-bank lenders, posed a near-term threat.

"There are many non-bank institutions making home loans that could collapse in value," Cramer warned. "These companies came out of nowhere. They now control about half of the current mortgage market - that's a trillion dollars' worth of mortgages a year." Read more at CNBC


Five ways banks and lenders work with people who speak or understand limited English

More than one out of every 12 people over the age of five in the U.S. are limited English proficient (LEP), meaning that they speak English less than very well, according to the U.S. Census Bureau's 2016 American Community Survey One-Year Estimates. LEP consumers may find it difficult to access financial products and services.

Today, we are releasing a report to share some current practices and raise awareness about issues that many LEP consumers face when participating in the financial marketplace.

The CFPB's prior work has indicated that many of the challenges LEP consumers encounter are often related to language access and financial literacy. Financial disclosures and written documents may not be available in languages other than English. These documents can be technical and difficult to understand, even for proficient English speakers.

LEP consumers may also face challenges with completing key financial documents, managing bank accounts, resolving problems with financial products, and accessing financial education.

Identifying ways to improve how services are provided to LEP consumers can benefit both consumers and entities providing financial products and services.
Read more at Consumer Financial Protection Bureau


Would CFPB nominee Kraninger mirror Mulvaney or go her own way?

As she moves closer to Senate approval as head of the Consumer Financial Protection Bureau, Kathy Kraninger is still somewhat of a mystery to the agency and industry she would oversee.

Now a senior official at the Office of Management and Budget, Kraninger has signaled that she favors a pro-free-market, limited government approach to regulation and will hew closely to the vision of her boss Mick Mulvaney, the acting CFPB director who also heads the OMB.

But unlike Mulvaney - who before running the CFPB referred to the bureau as a "sick, sad joke" - Kraninger is not linked with such rhetoric, making her views about the agency uncertain.

Her lack of experience on consumer protection issues raises questions about where she would come down on key policy initiatives, such as pending changes to the CFPB's payday lending rule and a program initiated by Mulvaney to review and revamp the agency's processes.

"She's a black box," said Ori Lev, a partner at Mayer Brown and former CFPB deputy enforcement director. "We all assume she will be like Mulvaney because she is his deputy, but there is no expectation that she is going to be more extreme than Mulvaney in reorienting the bureau." Read more at CREDIT UNION JOURNAL


Dow surges 600 points, biggest rally in eight months, after Fed Chair Powell signals rates are near neutral

Stocks ripped higher on Wednesday after Federal Reserve Chairman Jerome Powell said interest rates are close to neutral, a change in tone from remarks the central bank chief made nearly two months ago.

The Dow Jones Industrial Average climbed 617.70 points, or 2.5 percent, to 25,366.43, posting its biggest one-day gain since March 26. The 30-stock index also notched its second-best day of the year and is up more than 1,000 points for the week.

The S&P 500 jumped 2.3 percent to 2,743.82 as traders took the comments to mean fewer rate hikes were coming in 2019 that could derail the bull market. The Nasdaq Composite advanced 2.95 percent to close at 7,291.59 and post its best day since Oct. 25. The Dow and S&P are now positive for November after Wednesday's comeback.

"Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy - that is, neither speeding up nor slowing down growth," Powell said in a speech at the Economic Club of New York on Wednesday.

Robert Pavlik, chief investment strategist at SlateStone Wealth, said Powell's comments were "exactly what the market was expecting to hear." He added: "Obviously it has to do with the market reaction to his previous comments. He had to walk that back." Read more at CNBC


The 'CFPB's' "Disclosure Sandbox" is Shovel Ready - Who Will be the First!

I find it interesting that the Bureau of Consumer Financial Protection (BCFP) which was formerly known the Consumer Financial Protection Bureau (CFPB) is offering up a "Disclosure Sandbox" to assist in developing disclosures that consumers find understandable. Yet, on April 1, 2019, the prepaid industry will be required to disclose fees using a specific format and methodology; similar to the Schumer Box for credit cards.

Prepaid card companies facing new disclosure requirements in April may look to take advantage of a disclosure testing policy at the same agency

A "trial disclosures sandbox" might let companies move away from paper-based fine-print or try out formats better suited to mobile apps

Prepaid account disclosure rules set to go into effect next year have the industry eyeing a new CFPB program that could give companies more leeway over the disclosures.

The prepaid industry has blossomed from gift and payroll cards to rechargeable debit-like products from Netspend Holdings, Inc. to hybrid mobile wallet-plastic card products like PayPal, Inc.'s Venmo card. Despite the industry's move toward more mobile and electronic capabilities, it now faces new paper disclosure requirements for fees and other product details from the Consumer Financial Protection Bureau.

The new disclosure requirement are very specific. Not only as it relates to what is required to be disclosed, but how it should be formatted what fees need to be prominent, down to the size of the text font. The regulation requires that not only one disclosure is required in the specified format, but an additional disclosure on all of the possible fees again in a specific format and how it is possible to avoid the fee if used in a certain way. Read more at PAYMENTSJOURNAL

National Debt Holdings

How Fintech Serves the 'Invisible Prime' Borrower

For decades, the main recourse for cash-strapped Americans with less-than-stellar credit has been payday loans and their ilk that charge usury-level interest rates, in the triple digits. But a slew of fintech lenders is changing the game, using artificial intelligence and machine learning to sift out true deadbeats and fraudsters from "invisible prime" borrowers - those who are new to credit, have little credit history or are temporarily going through hard times and are likely repay their debts. In doing so, these lenders serve people who don't qualify for the best loan deals but also do not deserve the worst.

The market these fintech lenders are targeting is huge. According to credit scoring firm FICO, 79 million Americans have credit scores of 680 or below, which is considered subprime. Add another 53 million U.S. adults - 22% of consumers - who don't have enough credit history to even get a credit score. These include new immigrants, college graduates with thin credit histories, people in cultures averse to borrowing or those who mainly use cash, according to a report by the Consumer Financial Protection Bureau. And people need access to credit: 40% of Americans do not have enough savings to cover an emergency expense of $400 and a third have incomes that fluctuate monthly, according to the Federal Reserve.

"The U.S. is now a non-prime nation defined by lack of savings and income volatility," said Ken Rees, founder and CEO of fintech lender Elevate, during a panel discussion at the recently held "Fintech and the New Financial Landscape" conference held by the Federal Reserve Bank of Philadelphia. According to Rees, banks have pulled back from serving this group, especially after the Great Recession: Since 2008, there has been a reduction of $142 billion in non-prime credit extended to borrowers. "There is a disconnect between banks and the emerging needs of consumers in the U.S. As a result, we've seen growth of payday lenders, pawns, store installments, title loans" and others, he noted. Read more at WHARTON UPENN

Dreher Tomkies LLP

Need an advance? These startups offer cheaper alternatives to payday loans

What you need to know about paycheck advances and emergency loans

If you were in a financial bind, would you turn to your employer instead of a payday lender?

Coming up with cash quickly can be a costly endeavor for the 78% of working Americans who often live paycheck to paycheck. Many turn to payday loans because they're convenient. But they also carry high interest rates and allow rollovers, trapping many in a cycle of repeat borrowing and indebtedness.

In recent years, startups from Silicon Valley and beyond have stepped up to offer payday alternatives through the workplace. Some, including Earnin and PayActiv, have put a new twist on the two-week pay cycle to give people access to their wages as soon as they've earned them. Others, such as HoneyBee, SalaryFinance and TrueConnect, allow employers to offer low-cost emergency loans as an employee benefit.

These startups say that by providing solutions for the two main reasons people take payday loans - to manage cash flow or pay for unexpected expenses - they will eliminate the need for them. Read more at MARKETWATCH

CFSA Conference _ Expo

How many Americans are underbanked or unbanked? by Philip Burgess

It's hard to deny that banks are the primary financial conduit for the majority of the American population: Based on the numbers from the latest edition of the Federal Deposit Insurance Corporation's national survey on financial inclusion in the U.S., approximately 93 percent of the country's households include at least one individual who has a bank account in their name. But in a country with more than 300 million residents, the remaining 6 to 7 percent who don't have bank accounts still make up a group of considerable size.

Even within the parameters of the hundreds of millions of Americans who do have bank accounts, there still exist a considerable number of individuals who barely use banks, don't use credit cards at all or are otherwise disengaged from the financial system of the U.S. As such, any examinations of the general financial state of this country would be remiss if they did not include mention of these demographics of the population. Additionally, it's important for business owners to consider the percentage of unbanked in U.S. households, as well as the underbanked and, if they don't already have such measures in place, to adopt tools that allow them to bring these individuals into their customer base, such as credit decisioning solutions from Microbilt.

Investigating the origins of unbanked and underbanked populations
To understand why it is worthwhile for companies - particularly small and medium-sized businesses - to consider the unbanked and underbanked in their strategic planning and reach out to them as potential customers, owners must first examine how these demographics originated. Read more at MICROBILT


Walmart turns to virtual reality for associates' training program

Walmart is harnessing the power of virtual reality to train over a million associates across the country. The big-box retailer will deploy 17,000 Oculus Go headsets to almost all of its 5,000 stores in an effort to provide its employees the caliber of training its managers get at the Walmart Academy facilities. Walmart took VR training for a spin at those facilities using PC-tethered Oculus Rifts, but the standalone Go headsets make it so much easier to expand the program.

The retail giant will launch its VR training efforts in October, sending four headsets to every supercenter and two to every Neighborhood Market and discount store. Walmart US Academies senior director Andy Trainor explained that the method, which uses repeatable and scalable content, is effective because "[w]hen you watch a module through the headset, your brain feels like you actually experienced a situation." He added: "We've also seen that VR training boosts confidence and retention while improving test scores 10 to 15 percent -- even those associates who simply watched others experience the training saw the same retention boosts."

During its pilot test this summer, Walmart used Rift headsets tp train associates on how to operate the company's high-tech Pickup Towers. It'll likely do the same for other associates, seeing as it's adding 500 more towers the across the country by the end of the year.
Read more at ENGADGET


CANADA: Watchdog tells consumers to 'be vigilant' about illegal payday lenders

14 unlicensed lenders identified as targeting New Brunswickers

The province's financial watchdog is warning consumers about unlicensed online payday lenders operating illegally in New Brunswick.

The Financial and Consumer Services Commission received a string of recent complaints about unlicensed lenders targeting New Brunswickers and using inappropriate collection practices, such as calling borrowers at their place of work and making threats.

In some instances lenders are calling borrowers up to 50 times a day the commission said in a statement Monday.

The payday lending industry is built on short-term loans that come with high interest rates that are supposed to be repaid by the next paycheck. Penalties for missed payments are stiff. The industry has been criticized for exploiting vulnerable people and deepening the cycle of debt.

On Jan. 1, New Brunswick introduced new regulations to protect consumers, including mandatory licensing for payday lenders.

Alain Doucet, a compliance officer with the commission's consumer affairs division, said lenders cannot contact a borrower at their place of employment or call their employer. They can't harass, threaten or garnishee a borrower's wages, either, he said. Read more at CBC.CA


Financial Stocks Are Looking Up, So Maybe a Recession Isn't On the Way

11:48 a.m. If there is one thing the bulls and bears can agree on, it's that the Dow Jones Industrial Average and the other major indexes are in the process of testing their October lows. Some days-even the up ones-it feels hard to believe that the market can do anything but head lower. But here's something that makes us feel a little more optimistic: Bank stocks are outperforming.

Much of the recent concerns have centered on whether the U.S. is headed for a recession. If it is, then we'd expect to see bank stocks take it on the chin. That was one reason that the Financial Select Sector SPDR ETF's (XLF) 8.4% drop from Dec. 29 through Oct. 26-even as the S&P 500 returned 1%-was so frightening.

"Banks and Financials remain a focus of ours considering their role as the linchpin of the economy and an indicator of business activity," writes Vermilion Research's David Nicoski and team. "It's no wonder weakness within the Sector has been atop our list of concerns for the market."

No longer. Vermilion upgraded financials to Market Weight from Underweight on Tuesday, citing the sectors price stabilization and its recent strength relative to S&P 500. Since October 26, Financial Select Sector SPDR ETF, which counts Berkshire Hathaway (BRK.B) and JPMorgan Chase (JPM) as its top holdings, has gained 5.3% to the S&P 500's 0.9%.
Read more at BARRON'S


NYC May Pull The Plug On Cashless Restaurants, Retailers

New York City Councilmember Ritchie Torres proposed legislation Wednesday that would require retail establishments to accept cash and forbid them from only accepting credit and debit cards. Retailers and restaurants that do not take physical currency, Torres says, box the unbanked and underbanked-populations that, disproportionately, tend to be non-white-out of the economy.

"There are hundreds and thousands of New Yorkers who may have no permanent address or home, and many New Yorkers who are underbanked, either because of poverty or because they lack documentation," Torres told Grub Street on Tuesday. "Requiring a card is erecting a barrier for low-income New Yorkers-period."

While unbanked people lack bank accounts entirely, the underbanked may maintain them, but rely primarily on other modes of financial transaction (cash, for example). According to the 2017 Survey of Unbanked and Underbanked Households, over 14 million adults qualified as unbanked and nearly 49 million qualified as underbanked nationwide. Black and Hispanic households were far more likely than white households to operate outside the banking system, a statistic that serves a point Torres emphasized to Grub Street. Read more at GOTHAMIST

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