NEWS: CFPB relaxes on suing lenders

ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

July 24, 2018

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Walmart's Fintech Partner Helps Break Paycheck-to-Paycheck Cycle

Walmart Inc.'s employees have adopted money-management tools from Even Responsible Finance Inc. at a faster pace than anticipated, prompting a fresh round of funding to expand the fintech startup.

More than 200,000 Walmart employees in the U.S. use Even's app to manage their finances or access their wages early, the Oakland-based startup said in a statement Thursday, and almost half of that group employs it every day. That's ahead of Even's projections, prompting interest from other big employers and leading to a $40 million funding round led by Khosla Ventures, the venture-capital firm that also backs grocery-delivery service Instacart and spacecraft maker Rocket Lab.

"We've been very surprised by the uptake -- we anticipated that we would get to 200,000 by the end of the year," Chief Executive Officer Jon Schlossberg said in an interview. "It's blown away what we expected in terms of engagement."

Lack of Savings

Walmart entered the partnership with Even and another fintech startup, PayActiv Inc., in December. The arrangement lets Walmart's about 1.5 million U.S. employees access earned wages ahead of scheduled paychecks, avoiding bounced checks or payday lenders. Read more at BLOOMBERG

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CFPB promotes fintech, relaxes on suing lenders

The Consumer Financial Protection Bureau has launched what acting Director Mick Mulvaney calls a "regulatory sandbox" to encourage financial technology firms to develop products and services. The initiative will be led by Paul Watkins, a former lawyer in the Arizona attorney general's office who helped set up a similar program in that state, the nation's first.

Mulvaney told the Wall Street Journal "he expects the bureau's new innovation office to look closely at cryptocurrencies, other financial technologies based on blockchain, private currencies and microlending. The office also could help companies explore alternatives to traditional credit-scoring methods, such as considering rent and mobile-phone payments, consumer shopping behavior and social-media activity in credit decisions."

Among Mr. Mulvaney's most significant steps is a shift in enforcement strategy: He has vowed to stop "regulation by enforcement." He has canceled a lawsuit against a payday lender and dropped investigations into some others. He has also delayed new rules on payday lending and prepaid cards, fired an advisory panel of outside experts and promised to restructure the bureau's fair lending group. Read more at Ecommerce Daily News

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U.S. consumer watchdog slashes fine in payday lender settlement

WASHINGTON (Reuters) - The U.S. consumer finance watchdog ordered an Alabama-based payday lender on Thursday to return $500,000 to borrowers who were overcharged, a fine that people familiar with the matter said was only a third of what the prior Obama-era head of the agency had sought.

The settlement between Triton Management Group Inc and the Consumer Financial Protection Bureau (CFPB) was signed by Mick Mulvaney, who President Donald Trump named in November as the agency's interim director.

Mulvaney's predecessor, Richard Cordray, a Democrat who was appointed by President Barack Obama, had decided Triton's customers were owed about $1.5 million and he wanted that money returned, according to three sources with direct knowledge of the matter. Read more at REUTERS

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U.S. consumer watchdog fines debt collector, drops customer payouts

WASHINGTON, July 13 (Reuters) - U.S. consumer watchdog chief Mick Mulvaney ordered that a debt collector and its former chief executive be fined $800,000 for harassing customers, but he dropped $60 million in customer payouts that his Obama-era predecessor had sought, according to three people familiar with the decision.

Mulvaney has vowed to rein in what he says is overreach by the Consumer Financial Protection Bureau (CFPB), which was created following the 2007-2009 financial crisis to combat predatory lending.

The settlement, announced on Friday, is at least the second in which Mulvaney, who was appointed head of the bureau in November, has dropped consumer payouts from cases under his review.

The CFPB said in a statement it had fined Kansas-based National Credit Adjustors (NCA) and Bradley Hochstein $500,000 and $300,000, respectively, for wrongly hounding borrowers over debt they owed to payday lenders. But Mulvaney, who is also White House budget chief, decided not to seek $60 million in restitution and debt forgiveness that his predecessor, Richard Cordray, had wanted, said the three people, who are familiar with the settlement discussions.

In a statement, the bureau said NCA and its partners had violated federal fair debt collection statutes, but a Mulvaney spokesman did not immediately comment on why the bureau dropped payouts to wronged customers. Read more at REUTERS

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How Kathy Kraninger plans to run the Consumer Financial Protection Bureau

Kathy Kraninger, the president's nominee to head the main federal agency tasked with protecting consumers from financial abuse, failed to sway Democrats after a three-hour hearing before the Senate Banking Committee.

Under questioning from lawmakers, Kraninger resisted being drawn out on how she planned to run the Consumer Financial Protection Bureau (redubbed the Bureau of Consumer Financial Protection by the Trump administration). Kraninger said in her opening statement that she would strive for transparency and fairness in leading the agency, which since its founding in 2010 has become a symbol of the partisan political divide on government regulation.

But she mostly avoided direct answers when asked about the bureau's recent changes to its approach, such as pulling back on enforcement actions against financial companies.

"Credit bureaus seem most directly in Kraninger's spotlight, which suggests continued risk for Equifax, Transunion and Experian," wrote Jaret Seiberg, analyst for Cowen, in a research note. "She also suggested a continued focus on Wells Fargo and student lending, though she appears more focused on government loans than private loans." Read more at CBS NEWS

How are Americans doing financially? by Walt Wojciechowski

Whether banked, unbanked or underbanked, the ideal borrower is one who makes payments on time and is in a position to do so by virtue of his or her financial situation. And based on a wealth of data, Americans are better off today than they have been in several years.

The examples are legion, but the evidence has been particularly apparent in terms of gainful employment. According to the Department of Labor, the unemployment picture in the U.S. as a whole has been at or below 5 percent for 25 consecutive months, staying steady at 4.1 percent since October 2017. Generally speaking, any jobless rate 5 percent or lower is considered full employment. In a recent poll of economists conducted by The Wall Street Journal, only 9 percent of economists said the U.S. hadn't yet achieved this status.

Not only are more people working again, they're making more in terms of earning. In February - the most recent month for which data is available - personal income levels rose more than $67 billion, according to the Bureau of Economic Analysis, an arm of the Department of Commerce. An uptick of 0.4 percent from January, discretionary income also experienced growth, totaling $53.9 billion.

Read more at MICROBILT

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Americans paid over $100 billion in credit-card interest in 2017-and they'll pay even more this year

Americans paid banks some $104 billion in credit-card interest and fees in the last year, up 11% on the year and 35% over the last five years, according to the personal-finance website MagnifyMoney, which analyzed data from the Federal Deposit Insurance Corporation (FDIC) through March 2018.

The bad news: That number will likely only rise this year. The Federal Reserve has forecast four interest rate hikes (one every three months) in 2018. The Fed has increased interest rates twice this year to between 1.75% and 2% and has penciled in two more quarter-point moves.

When the Fed raises rates, which it in June, credit-card debt gets more expensive, because banks often pass on those higher rates to customers. Consumers with credit-card debt will likely pay an additional $2.2 billion this year in interest payments because of the last rate hike, the credit-card website CompareCards found.

If the Fed raises rates a total of four times this year, it will create a total of $110 billion for Americans to pay in credit-card interest and fees, MagnifyMoney found.

Collectively, that's a huge amount, said Nick Clements, co-founder of MagnifyMoney. But people making payments on their credit cards are less likely to notice than those who make mortgage payments. "Most people will only see their minimum due increase by a couple of dollars," he said. "It's not dramatic." Read more at MARKETWATCH

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It's a good time to change jobs -- Here's why

If you want higher pay, the time to act is now. After a decade of tremendous job growth - but with little to no corresponding increase in wages - economic conditions are finally lining up to give employees bargaining power for bigger paychecks.

But getting a big raise often requires you to find a new job. It may even require you to switch professions.

The national unemployment rate in June was only 4 percent. In many areas of the country and in many industries, employers are willing to pay a premium for top talent.

However, pay increases, on average, are currently hovering below 3 percent across the country. And when you factor in rising inflation, the purchasing power of those raises is actually shrinking. But that's the "tyranny of averages" at work.

Those average numbers hide the potential for major - even life-changing - pay raises, because the truth is there are hot spots for employment.

Fortunately, more on-the-job training is being offered by employers desperate for workers. And online training designed for the skills employers want today is mushrooming.

Why is taking a new job often necessary to get a big raise? Read more at FOX NEWS

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ONE OUT OF EVERY 4 AMERICANS IS 'UNDERBANKED'

On a recent Tuesday evening at a Pay-O-Matic in Manhattan's East Village, a long line of customers - men, mostly - waited in virtually uninterrupted silence. Despite the discomforting July heat, they hung in there as long as it took to reach the teller windows. Many had no other choice - not if they needed to cash checks, pay the New York City Housing Authority for their apartments, transfer money to family back home or conduct other timely financial transactions.

Welcome to the world of America's unbanked and underbanked, and it's not confined to urban neighborhoods. According to a 2015 report from the Federal Deposit Insurance Corp. (FDIC): 27 PERCENT OF U.S. HOUSEHOLDS DO NOT HAVE REGULAR ACCESS TO BANKS AND OTHER MAINSTREAM FINANCIAL SERVICES.

That's 90.6 million financially marginalized people who are further penalized, in terms of time and money, by having to rely on alternate financial services (AFS), which charge fees for transactions that are often free to customers of banks, credit unions and other federally insured institutions. Despite the financial recovery since the Great Recession and the growth of online financial services, the number of households with little or no access to bank accounts has remained stubbornly steady since 2009, when the FDIC began collecting statistics on the phenomenon. Read more at OZY

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

Payday Loans, Be Gone: A Growing Set Of Startups Is Gunning To Unseat Them

Payday loans have an unsavory, predatory reputation. Even as Washington retreats on regulating payday lenders, a growing set of startups is trying to unseat them by giving workers early access to their wages.

One of the most prominent is Even, an Oakland, California tech company that helps consumers with personal budgeting. Even has raised $40 million in new funding. Khosla Ventures led the Series B round, with Valar Ventures, Allen & Company and Silicon Valley Bank also investing. That brings Even's total investment to date to $52 million, and Forbes estimates the startup will reach $20 million in revenue in 2018.

Before graduating college, Jon Schlossberg, Even's cofounder and CEO, thought he wanted to join the FBI as a forensic psychologist, trying to figure out criminals' motivations. He scratched that plan when he saw how bureaucratic the organization was and ended up working at a product design agency, and then at ecommerce retailer Bonobos. But Schlossberg says his boss at Bonobos eventually told him, "You need to leave. Whatever you do, I'll be the first to invest, but you're annoying." Schlossberg adds, "I don't do well when I don't have agency over the outcomes at a company."

Many Americans live paycheck-to-paycheck-60%, by Even's estimates-and Schlossberg wanted to address that problem. He became inspired when he read a psychology paper about how poverty can cause people to make poor financial decisions. He founded Even in 2014 with Quinten Farmer, whom he met after reading a blog post Farmer wrote about cryptocurrencies. They spent three years researching and building the Even app, which launched in December 2017.