December 4, 2018
2018 edition: 96 / 104
Analytics is your competitive advantage!
CFPB Annual Report to the Director 2018. Nov. 29, 2018
'Advocating for Fair Process in Consumer Financial Protection'

Today my office's seventh annual report is available on our webpage. At the Ombudsman's Office, we are an independent, impartial, and confidential resource that assists consumers, financial entities, consumer or trade groups, and others in informally resolving process issues with the Bureau. In short, we advocate for fair process in consumer financial protection.

As in previous years, our annual report outlines our work process and summarizes our activities from fiscal year 2018. This year, the report introduces a new office brochure and appendix of charts and figures for ease of reference. We provide examples of our work throughout the report and highlight the various ways we assist in our Demonstrating the Ombudsman in Practice section, such as: assisting stakeholders in engaging with the Bureau's Request for Information process, sharing resources to assist consumers in recognizing financial frauds and scams, and facilitating technical assistance to companies responding to consumer complaints. Read the ANNUAL REPORT

We Provide lenders with an end-to-end cloud SaaS lending solution fully customized and white labeled for each lending client.
Dennis Shaul
There's no downplaying the impact of Operation Choke Point.
Dennis Shaul, CEO of Community Financial Services Association of America (CFSA)
November 28, 2018

Operation Choke Point was real, and it exceeded legal limits. Overwhelming evidence, in the form of more than 900 pages of newly unsealed emails and depositions, proves government officials illegally targeted lawful businesses in an ideological crusade based on personal disdain. If there were other reasons at play, these regulators would not have needed to resort to backroom pressure tactics, including threatening the jobs of Federal Deposit Insurance Corp. officials and bank executives with criminal prosecution unless they cut off banking relationships with small-dollar lenders and other lawful businesses.

The small-dollar lending industry has long known that government bureaucrats with a partisan agenda were determined to bring the industry to its knees, but this illegal campaign went farther than anyone could have imagined - with those at the very highest levels of the Department of Justice, FDIC and Office of the Comptroller of the Currency targeting customers of regulated banks based on their personal bias.

The emails and depositions newly unsealed in a lawsuit against the government show that through Operation Choke Point, senior federal officials - most notably at the FDIC - fostered a culture of open criticism and disdain for the small-dollar lending industry. At the same time, they publicly denied any knowledge or involvement of the program. In 2015, former FDIC Chairman Martin Gruenberg testified to Congress that "our supervised banks understand that the FDIC will not criticize, discourage or prohibit banks that have appropriate controls in place from doing business with customers who are operating consistent with federal and state law." However, according to the new documents, we now know that former FDIC Atlanta Regional Director Thomas Dujenski wrote in an email, "I literally cannot stand pay day lending" - and every bank under his supervision ultimately terminated their relationships with small-dollar lenders. Similarly, former FDIC Chicago Regional Director Anthony Lowe recounted in a deposition a conversation with top FDIC officials in which a directive was given to all regional directors that "if a bank was found to be involved in payday lending, someone was going to be fired." Lowe subsequently used his power over banks in his region to ensure banking relationships with small-dollar lenders were terminated.      Read more at AMERICAN BANKER

March 18-21, 2019 / DORAL MIAMI
CFSA Conference _ Expo

Senate narrowly votes to advance Kraninger's nomination to head CFPB

Despite heated Democratic opposition, the Senate has moved a step closer to confirming Kathy Kraninger as the new head of the Consumer Financial Protection Bureau.

A motion to limit debate on Kraninger's nomination passed on strict party lines Thursday, 50-49, according to American Banker. The motion advances Kraninger to a final vote, expected sometime this week.

Kraninger, currently an associate director for general government with the White Houses Office of Management and Budget, would succeed acting CFPB Director Mick Mulvaney. However, she has faced stiff opposition from Senate Democrats, who have pointed out that she has no experience in consumer protection, financial regulation or the banking industry. Democrats have also repeatedly blasted Kraninger for her refusal to explain her role in developing the policies that led to immigrant children being separated from their parents at the border and the government's botched response to Hurricane Maria in Puerto Rico.

National Debt Holdings is a professional Receivables Management Company that partners with creditors to purchase and/or manage receivables at all stages of the account life cycle.

CFPB: Payday Lending Rule, New Report and MLA Concerns. by Manatt, Phelps & Phillips, LLP

This week in news from the Bureau of Consumer Financial Protection (CFPB or Bureau), a Texas federal court granted a stay of the compliance deadline for the Payday, Vehicle Title and Certain High-Cost Installment Loans Rule, allowing the industry to breathe a sigh of relief.

The Bureau also released a report on the Remittance Rule and received a letter from a bipartisan coalition of 33 state attorneys general expressing concern about enforcement of the Military Lending Act (MLA).

What happened

Payday Loan Rule. In 2017, the CFPB issued the proposed Payday Loan Rule, creating new consumer protections for a wide variety of short-term loans. Nearly 1,700 pages in length, the rule declared it "an unfair and abusive practice" for any lender to make covered short-term or longer-term balloon payment loans, including payday and vehicle title loans, before reasonably determining that consumers have the ability to repay the loans according to their terms. Before making a covered loan, a lender must make a reasonable determination that the consumer would be able to make the payments on the loan and be able to meet the consumer's basic living expenses and other major financial obligations without needing to reborrow.  
Read more at JDSUPRA

We Provide Lenders with an end-to-end cloud SaaS lending solution fully customized and white labeled for each lending client.

Determining the best credit risk management solutions. by Walt Wojciechowski

Because credit is so integral to operating capital - i.e., the lifeblood of every business - it carries a similar level of importance in and of itself. Company owners, at one point or another throughout any given business day, may be thinking about either their own organization's credit status, that of their business partners or vendors and (last but not least) their customers. This stems, in no small part, from the question of credit risk: how much the company must face as a result of its own issues, as well as that originating from choosing to do business with the wrong partner or taking on customers with bad d e b  t histories.

While the scale of credit risk can be much bigger for organizations that operate in the B2B space than companies whose customers are mostly or entirely individuals, because of the sheer dollar amounts involved, there's no question of the matter's overall magnitude. As a result, company owners need to always be looking for the most ideal credit risk management solutions to ensure this issue is always monitored and never gets out of hand. Several tools available from Microbilt may be particularly valuable in this context.

Identify the source of greatest risk
Some companies will primarily be at risk from their dealings with other businesses, while others face the most potential trouble from offering credit to individual customers who are decidedly less than reliable for various reasons. More often than not, however, the possibility of problems in this general area comes from a blend of both of these sources. According to The Risk Management Association, developing a genuine.... Read more at MICROBILT

Creating and producing results since 1982

What Happened to Alternative Data?

What is Alternative Data?
A customer who runs a successful payday lending operation in the U.S. startled me the other day with a question. He wanted to know what happened to the world of alternative data.

His question caught me off guard. After all, his business of providing small-dollar loans to financially underserved customers wholly depends on alternative data. ("Alternative data" is data about unbanked and underbanked consumers who have been largely shut out of the mainstream market for financial services.)

Why You Need More Than Just Alternative Data
As we talked, it became clear that our customer's question was really an expression of exasperation at how things were shaping up elsewhere in the financial services market.
  • Point number one - It turns out that alternative data by itself doesn't provide all the intelligence that lenders need for making the most profitable business decisions. They also need advanced analytics, taking advantage of every applicable advance in Artificial Intelligence (AI) and machine learning to yield the most comprehensive and accurate insights from the alternative data they collect.
This isn't conjecture. At Accelitas, we've seen this truth borne out in engagements with lender after lender. It's something our customers appreciate about our Accelerated Insight® API platform and our professional services organization. Our data scientists are hands on, working closely to pick the right indicators and algorithms to deliver the most predictive results for each customer.
Read more at ACCELITAS

Decision Cloud is a black box platform, which allows users to build decision waterfalls, utilizing Insight's services, as well as a plethora of third party vendor services.

How Payday Loans Help the Average American

Online payday lenders have recently become the target of various consumer advocates, state regulators, and the Justice Department in general. While the efforts of the government to weed out malevolent actors in the finance sector is plausible, it might have some consequences which may be unintended. One of these consequences involves snatching away a service that is extremely helpful to the underbanked American who needs short-term loans to get by - short-term loans like the payday loan.

Payday lending works in a very simple way. You have an emergency need for cash, you search on the internet for "payday loans near me" and find a payday lender. All you need to qualify is a job, an active checking account and the right identification, and you can typically borrow up to $500 and pay it back as soon as your salary comes in. All you have to do is provide an authorization to the lender to retrieve the amount of the loan plus interest of about 15 percent or a postdated check for the same. As soon as your salary rolls in, you can either pay the loan back in person, or the lender can cash the check. Your first time taking the loan will be fast and simple, typically taking no more than 15 minutes.

This is an invaluable service for millions of Americans, who live from one paycheck to the next. They have to manage their finances and meet their obligations, just like their higher-earning counterparts. However, when the unexpected comes knowing on the door, their finances are thrown into disarray, and they will typically need some kind of short-term loan to help them get by.

For some of them, this loan can come from their friends and family. However, most of them don't have such a last resort, and that's where payday lenders step in.

Accelitas is an alternative data resource that delivers the power of AI to reach more underserved consumers and deliver predictive insights that are customized to your business.

Prime the Refund Pump Now - and Collect More During Tax Season

You may not be thinking about the 2019 tax season yet - but you should be. In fact, now's the ideal time to start contacting consumers about settling debts using their tax refunds.

Why? Because according to IRS data, in 2018, 72% of consumers who filed a tax return received an average refund of $2,8251. You have an opportunity to capture a piece of that all that extra cash - if you follow this advice.

Don't wait until March or April to contact consumers
According to IRS data, 50% of all 2018 refunds were issued on or before March 9th 1. If you wait too long, you could miss out on half the opportunities to collect from consumers who receive a tax refund. You also don't want to hit them when the cash is burning a hole in their pockets. Instead, contact them before they've received their refunds.

My best recommendation is that you begin your tax season recovery efforts early. Your collections officers will already be contacting debt-holding consumers and with the holiday season being tough financially, many people will be unable to pay. Arm your collections officers with talking points about how consumers can use their tax refunds in 2019 to get back on track early in the new year.
Read more at TRANSUNION

Compete in the data-driven lending era

Get to the bottom of things with skip tracing software. by Philip Burgess

The daily lives of private investigators, while envisioned with great creativity by plenty of truly talented writers and film directors, are most often dominated by tasks unknown to those who know it entirely from its depictions in pop culture. Individuals who find fulfillment in the profession focus their efforts intensely on doing each aspect of their job with great efficacy.

Skip tracing stands out prominently as a frequent assignment of modern private investigators and bounty hunters - a term that sounds much more ominous on paper than it usually is in practice. This task - finding people who don't want to be found for any number of reasons, not infrequently financial obligations - relies upon the ingenuity, patience and hard work of dedicated professionals. (When those requirements are considered as a combination of tasks, it's often referred to as "legwork" by those in the business) Investigators also lean heavily on a variety of specialized tools, including skip tracing software from Microbilt.

In particular, it's important for small businesses to be aware of this technology so that they can be prepared if they were to ever require such services. Here, we'll delve into the essential tenets of skip tracing, how it has evolved through the years and its most essential modern uses, as well as how skip tracing software specifically aids those who ply the trade of people-finding.

A beginner's guide to skip tracing
The practice of successful skip tracing is, at least in part, self-explanatory: a professional "tracing" the path and, ideally, determining current whereabouts of someone who's "skipped" town - left their residence of record in a sudden or otherwise unexpected fashion. The precise etymology of the term is unclear, but the essential meaning isn't - and it hasn't changed over time, having been in use for at least several decades. Read more at MICROBILT


U.S. banking regulator to consider easing 'living will' requirements on large banks

NEW YORK (Reuters) - A leading U.S. bank regulator said on Wednesday the government is considering easing requirements around the "living wills" large banks must submit detailing how they could be safely dissolved in a crisis.

The Federal Deposit Insurance Corporation (FDIC) and Federal Reserve will propose changes in the coming months to rules dictating those plans, according to FDIC Chairwoman Jelena McWilliams.

The proposals will focus on simplifying and easing requirements around the plans, as banks have complained the lengthy documents can be onerous to produce.

"Resolution plans have been a valuable tool," McWilliams said at a banking conference. "At the same time, the process has imposed meaningful cost and burden on the firms and, frankly, the agencies."

The resolution plans, commonly known as living wills, require large banks to detail how they could be unwound in bankruptcy without disrupting the broader financial system. If regulators do not find a plan credible, they could impose restrictions on a bank's activities or even order it to divest.
Read more at REUTERS

Lend smarter. Collect quicker. Grow your business.

U.S. women earn half the income of men, new study finds

(Reuters) - Women earned roughly half the income of men in the United States over a 15-year period, taking into account time off for family or child care, according to a report released on Wednesday, which found the pay gap is far greater than has been assumed.

In an examination of women's income from 2001 to 2015, the Washington-based Institute for Women's Policy Research found that women's income was 51 percent less than men's earnings, which includes time with no income.

"Much ink has been spilled debating whether the commonly cited measure of the wage gap - that women earn 80 cents for every dollar earned by a man - is an exaggeration due to occupational differences or so-called 'women's choices'," Heidi Hartmann, president of the institute and a co-author of the study, said in a statement.

"But our analysis finds that we have actually been underestimating the extent of pay inequality in the labor market," Hartmann said.

The study, "Still a Man's Labor Market," showed that the wage gap has narrowed since 1968, with women's inflation-adjusted income rising to an average of $29,000 for the period from 2001 to 2015, compared with $14,000 from 1968 to 1982.

But women are nearly twice as likely as men to take at least one year off work, and they pay a high price for it. Women who left the workforce for a year earned, during their years on the job, an average of 39 percent less than men, the study found. Read more at REUTERS

Dreher Tomkies LLP
Dreher Tomkies LLP is a law firm concentrating in the areas of Banking and Financial Services law.

National Debt Holdings Understands that the Customer Experience is Key in Recovering Credit Union Accounts

National Debt Holdings understands that the management of credit union accounts is unique from other accounts receivable and has extensive experience using strategies that protect the creditor's brand while respecting the consumer.

What is the difference between a bank and a credit union? Simply stated, banks are for-profit organizations that pay their earnings to stockholders in the form of dividends. Credit unions are not-for-profit financial cooperatives that pay their earnings to members in the form of lower loan rates and higher savings rates. Thus, credit unions tend to have a much closer relationship with their members as their goal is to use profits to improve the financial well-being of their members and the communities they serve.

"National Debt Holdings is committed to preserving the brand and reputation of our credit union clients as well as their established community relationships," says Jeremy Poehler, President of National Debt Holdings. "Unlike larger banks, credit unions tend to be locally rooted and NDH understands the implications and importance of maintaining our client's good faith within their neighborhoods." Read more at NDH

We are transforming lending with innovative payment instrument data and technology, increasing credit access to the financially underserved, and reducing fees for borrowers and creditors.

TRENDING: Call Centers Push With Biometrics As Fraud Soars

The rate of contact center fraud has skyrocketed recently, growing by 350 percent during the past four years. For call centers, dealing with this growing issue requires a multi-pronged approached, complete with defense to beat attacks coming from both outside and inside the company. That means thwarting fraudsters who call in, masquerading as legitimate customers, or who hack into a cell center, as well as blocking any dishonest agents within the center from stealing customer information.

However, call centers need to implement these security measures in a way that doesn't introduce frictions into the customer experience. It's a tough challenge, and in the November Call Center Commerce Tracker™, PYMNTS explores the latest approaches to shielding sensitive payment information and authenticating customers.

Around The Call Center World

Biometrics have been making some buzz recently, as some service providers see the tech as the path to more robust authentication measures.     Read more at PYMNTS.COM

 Members own over 64,000 locations and online operations

Alternative Financial Service Providers Association

315 Tuscarora St., Lewiston, NY 14092