ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

A public comment period has begun and will continue through September 14th.

Our goal is to generate as many different comment letters from our member companies, including you, your employees, business associates, contacts and customers. 

We need to count on you to get involved to protect

your business,  your customers, and our industry.

Financial Service Centers Of America (FISCA) Statement In Response To H.R. 5485 And Sewell-Waters Amendment Votes

WASHINGTON, July 8, 2016 /PRNewswire/ -- Financial Service Centers of America (FiSCA), the national trade association representing 5,000-member financial service center locations around the U.S., issued the following statement today in response to the votes on H.R. 5485, the FY 2017 Financial Services and General Government Appropriations Act, and the Sewell-Waters Amendment #17:

"We applaud the House of Representatives for standing with the American people this week and voting to preserve access to credit for millions of consumers across the country," said Ed D'Alessio, FiSCA's Executive Director. "By passing H.R. 5485 and rejecting the Sewell-Waters Amendment, this bipartisan group of lawmakers took an important step in keeping critical and often lifesaving lines of credit open for hard-working Americans."

Bipartisan language in H.R. 5485 requires the Consumer Financial Protection Bureau (CFPB) to pause the implementation of the proposed federal rules governing small dollar lending in America, an extensive and economically devastating regulation that would deny access to short-term credit options to millions of Americans. The Sewell-Waters Amendment would have stripped provisions from the underlying government funding bill, which prohibits funds from being used by the CFPB to enforce regulations or rules with respect to payday loans, short term loans, vehicle title loans, or other similar loans during FY 2017. H.R. 5485 passed by a vote of 239 to 184, and the Sewell-Waters Amendment failed by a vote of 240 to 182.

"Members of the US House of Representatives, and Chairman Crenshaw in particular, are to be commended for standing up for millions of working middle-class consumers in Florida and across the Nation. CFPB has ignored the facts, and rushed an ill-conceived and highly political rule-making process with devastating consequences to our customers - the very consumers CFPB is mandated by law to ensure have both appropriate protection and continued access to credit. CFPB has ignored the pleas of states, consumers who depend on short term credit, small businesses which provide state and federally regulated short term credit, and our Nations' insured depositories," said D'Alessio. Read the entire RELEASE

What payday loans mean to me. by Robert Sherrill

In February, I was given the unlikely opportunity to testify before Congress on the Consumer Financial Protection Bureau's (CFPB) proposed small-dollar lending rule. My testimony was unlikely because I grew up in public housing, spent time in federal prison for selling drugs - and I'm a satisfied customer of the payday lending industry. Now with the CFBP officially releasing its proposed rule on June 2, a rule that will threaten access to small-dollar loans for millions of Americans just like me, I felt compelled to tell my story and make sure others know the true value these loans have for people in need of short term credit. Mine is a true success story and I owe a great deal of it to the payday lending industry. Without the payday and title loans I was able to get, nothing that I have been able to achieve would have happened.

Ten years ago, I started a commercial cleaning business, Imperial Cleaning Systems, Inc. in my hometown of Nashville, Tennessee. Today I have 20 employees.

As most small-business owners know, starting your own company isn't easy. Cash isn't always available to grow your company, and banks and credit unions don't make loans less than $1,000 to people like me, or to anyone else for that matter. Access to credit is hard to come by for many small-business owners, but next to impossible for those of us who've made mistakes in our past. Personal loans, known as payday and title loans, were my only option to keep my business afloat.

I turned to a local company, Advance Financial, for access to cash through payday and title loans. These loans saved my business and may have saved my life. The CFPB says these loans are too expensive. I've found that the most expensive credit is the credit you can't get.

The federal government is trying to drastically limit the only options millions of Americans like me count on for survival. Eliminating access to small-dollar loans will do more harm than good. While I don't quite understand this 1,300-page proposed rule, I do understand that 80 percent of non-bank lenders could go out of business according to some studies. I also understand that our communities will suffer and people like me will have nowhere to go for accessible credit.

Read the entire blog at THE HILL

CFPB Wants to End Short-Term Loans That Can Help Real People

With just a little help at the right time, Robert Sherrill turned his life around.

He'd grown up in public housing, dropped out of school in ninth grade and spent time in prison for selling drugs. But he had gotten out and started a commercial cleaning business in Nashville which now has 20 employees and makes about $400,000 per year, he says.

The key for Sherrill was a series of short-term loans to cover business expenses when he was starting out. His first was for $250 to cover expenses. He repaid it in two weeks, then took out another loan for his business. He met payroll, purchased equipment and supplies and stayed above water in his business' formative years with the help of these small loans.

The money didn't come from banks. They don't make loans in those amounts, and even if they did, they wouldn't likely lend to someone with Sherrill's past. It didn't come from government. No program meets these unique needs.

No, Sherrill got the money that kept his business afloat "and may have saved my life" from Advance Financial, his local payday and title loan lender. He didn't have to produce a lot of collateral. Owning his own business wasn't held against him. Nor was his prison record.

"Mine is a true success story, and I owe a great deal of it to the payday lending industry," Sherrill told a congressional committee back in February. "Without the payday and title loans I was able to get, nothing that I have been able to achieve would have happened."

Sherrill was in Washington to testify before a committee looking at new rules proposed by the Consumer Financial Protection Bureau, a rogue and possibly unconstitutional agency created by the Dodd-Frank financial law. Read the story at BREITBART

How a scorned industry plans to keep the 400% loan around

When federal regulators recently took their first ever step to protect consumers who use payday lenders, many experts described the move as a fatal blow to the industry. The payday trade association said "thousands of lenders" would be forced to "shutter their doors."

But larger payday lenders have already concluded they will be able to withstand the regulatory onslaught -- and keep alive the most controversial loan in the United States: one with an annualized interest rate of 390 percent or more.

"It's certainly our intention to survive," said Patrick O'Shaughnessy, chief executive of Advance America, at a Springfield, Virginia, branch this week.

The Consumer Financial Protection Bureau proposed tough new rules last week to end what it calls "payday debt traps" that embroil consumers in an escalating cycle of high-priced loans. The CFPB, which projects that the proposed rules could shrink payday loan volume by as much as two-thirds, attempts to limit the type of serial borrowing that accounts for most payday transactions and the bulk of the industry's profits. It does not limit interest rates.

Interviews with executives from several payday lenders provide a window into how one of the most scorned industries in the United States will try to contend with the regulatory attack. In the past, payday lenders have shown a chameleon-like ability to adapt under threat. In Ohio, for instance, a 2008 law placed a rigid cap on short-term loans; payday lenders entered into the "mortgage" business, offering similar loans under similar terms.

Ultimately, payday lenders say they are almost certain to take legal action against the CFPB to block the proposed rules, which experts say are likely to resemble the final product. But even if they lose, some of the biggest firms are already eyeing ways to make up for what all sides agree would be a massive plunge in business, by shifting to longer-term loans with similarly high interest rates or by plucking away business from smaller competitors.

Read the entire article at DAILY HERALD

The payday lending market is at a bit of a crossroads as regulators flex their regulatory muscles and look to establish new rules for the payday lending industry.

While much has been written - on these pages and beyond - about that debate, there are three universal truths about these short-term, small dollar lending products.

First, consumers need them and use them. It's well documented that in the U.S. nearly 60 percent of Americans are ill-prepared to cover an unexpected expense and nearly half do not have ready access to even $400 to cover an emergency expense.

Second, the typical borrower is a banked, middle class, middle income person. The stigma of the payday lending industry is that the providers of these services prey on unbanked, financially illiterate consumers. They are more likely the person who's standing in line in front of you at the grocery store.

And third, the demand won't go away. While debates swirl about how these loans should be structured, priced and offered, consumers still need them. Shrink the options for those consumers to get those types of lending products, and they will be forced to seek other, less attractive and more expensive alternatives such as overdraft fees, late fees on bills, or the services of unsavory lenders who are not regulated by anyone. Read the article at PYMNTS.COM

If payday loans go away, what replaces them? by KEN SWEET, ASSOCIATED PRESS

NEW YORK (AP) - The lenders who advance poor people money on their paychecks charge exorbitant interest rates that often snare the most vulnerable customers in a cycle of debt, the industry's critics have long said.

Yet even consumer advocates who loathe the industry admit it fulfills a need: Providing small amounts of cash quickly to people who can't qualify for credit cards or a bank loan. Roughly 12 million Americans take out a payday loan each year, spending more than $7 billion, according to the Pew Charitable Trusts.

But with proposed new regulations from the Consumer Financial Protection Bureau predicted to cut deeply into the industry, experts and consumer advocates are trying to figure out what will replace it.

The traditional payday loan model works like this. A customer will borrow money, often at a retail payday loan store, where the borrower provides a post-dated check or gives written authorization for the lender to debit their checking account on a certain date, usually 14 to 30 days from the date the loan was taken out. Unlike an installment loan, where the loan is paid back over a period of months, a payday loan is due in its entirety when it comes due.

The problem with this structure is that the majority of payday loans are renewed or extended, critics say, which means a customer cannot come up with the full sum to pay off the loans and must re-borrow the loan for a fee. Roughly 60 percent of all loans are renewed at least once, and 22 percent of all loans are renewed at least seven times, according to a 2014 study by the CFPB. Read the entire article at SALON

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