ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

July 17, 2018

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Trump hit a home run with consumer watchdog director choice

The foundation of government service requires adept, nimble thinking that is in tune with what is best for the public and the country. Whether working in Congress, the Department of Homeland Security or the Office of Management and Budget, level-headedness, critical thinking and an ability to understand complicated issues are key.

With more than two decades of government service in various roles under her belt, Kathy Kraninger has the foundational skills to serve as the director of the Consumer Financial Protection Bureau (CFPB) - but her qualifications to lead such an important agency don't stop there.

As she currently oversees $250 billion in federal tax dollars, Kraninger understands how to direct resources where they are most needed to best serve the American public and when to leave those resources in the hands of taxpayers rather than allow the bureaucracy to waste them.

In her current role, she is responsible for the budget and policy management of seven cabinet departments and more than two dozen federal agencies and bureaus, including those overseeing financial regulation. With these responsibilities comes the need to understand what each department or agency does, focuses on and requires. Read more at THE HILL

FactorTrust®, a TransUnion company, provides alternative credit data, analytics and risk scoring information to help lenders make more informed decisions.

CFPB is prioritizing supervision of credit bureaus

The Bureau of Consumer Financial Protection (BCFP) is prioritizing supervision over the credit reporting agencies, said a bureau representative during testimony Thursday before the Senate Banking Committee. NAFCU has stressed that the credit bureaus should be examined for data security compliance and held accountable when negligent.

Witnesses at Thursday's hearing, "An Overview of the Credit Bureaus and the Fair Credit Reporting Act," included Peggy Twohig, assistant director of supervision policy in the Division of Supervision, Enforcement and Fair Lending with the BCFP; and Maneesha Mithal, the assistant director of Division of Privacy and Identity Protection at the Federal Trade Commission's (FTC) Bureau of Consumer Protection.

During questioning from Senate Banking Committee Chairman Mike Crapo, R-Idaho, about the data breach at Equifax, Mithal responded that credit bureaus do hold the most sensitive information about consumers and it's on them to protect that information. She went on to say that the FTC could use more authority to pursue civil penalties in these data breaches where companies violated the laws. Read more at NAFCU

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How America became "The Land of the Fee"

Consumers may still harbor the goal of achieving the American dream, but that road is increasingly lined with fees -- for everything from taking out a student loan to opening a banking account.

How America transformed into a country where consumers' annual spending on loans and fees is as much as the government budgets of Canada and Mexico combined is examined in "Land of the Fee: Hidden Costs and the Decline of the American Middle Class," by Devin Fergus, professor of history, black studies and public affairs at the University of Missouri.

The book, due out on July 16 from Oxford University Press, comes as lawmakers push for greater financial deregulation and President Donald Trump boasts that his administration has eliminated 22 rules for every new regulation introduced.

"Land of the Fee" investigates how today's fee-heavy economy owes its existence to a deregulatory push that began in the 1970s -- with lawmakers on both sides of the aisle giving green lights to legislation that paved the way for payday lenders, risky mortgages and costly student loan products.

As Fergus writes, "Fees are no longer merely an annoyance" but "contribute to the systematic transfer of wealth" from the middle class to wealthy corporations and executives.

Read more at MARKETWATCH

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The Supreme Court could cripple an Obama-era consumer finance watchdog if agency critic Brett Kavanaugh is confirmed

The Consumer Financial Protection Bureau, established in 2010 to protect Americans from the type of predatory financial practices that caused the financial crisis two years before, is likely to face one of its toughest critics at the Supreme Court if President Donald Trump's pick, Brett Kavanaugh, is confirmed by the Senate.

Kavanaugh, a judge on the Court of Appeals for the District of Columbia Circuit, has repeatedly ruled that the structure of the consumer watchdog is unconstitutional.

In October 2016, Kavanaugh claimed that the head of the agency, which was founded in the aftermath of the 2008 global financial crisis, had more power than any government official besides the president, and struck down its structure on constitutional grounds even as a dissenting judge said the same result could have been reached more narrowly.

"The concentration of massive, unchecked power in a single Director marks a dramatic departure from settled historical practice and makes the CFPB unique among independent agencies," Kavanaugh wrote in an October 2016 ruling in PHH v. CFPB. He declared that the director of the CFPB was not just a director, but was the "President of Consumer Finance." Read more at CNBC

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Deputy Attorney General Rod J. Rosenstein Delivers Remarks Announcing the Establishment of the Task Force on Market Integrity and Consumer Fraud

Washington, DC ~ Wednesday, July 11, 2018

Remarks as prepared for delivery

Good morning. I am pleased to announce that President Trump signed an Executive Order establishing a new Task Force on Market Integrity and Consumer Fraud. The Task Force will focus on combating fraud against consumers - particularly the elderly, service members, and veterans - and corporate fraud that victimizes the general public and the government.

I am joined this morning by leaders of some of the agencies that work with the Department of Justice to protect American consumers and taxpayers: Acting Director Mick Mulvaney of the Consumer Financial Protection Bureau; Chairman Jay Clayton of the Securities and Exchange Commission; and Chairman Joe Simons of the Federal Trade Commission. Acting Associate Attorney General Jesse Panuccio, one of the key members of the task force, is also here today and will be available to take questions.

Fraud committed by companies and their employees has a devastating impact on American citizens in the financial markets, the health care sector, and elsewhere.

Two weeks ago, the Attorney General and the Secretary of Health and Human Services announced the prosecution of 601 defendants in our nation's largest coordinated health care fraud enforcement action. The fraud schemes allegedly involved more than $2 billion in false billings. 162 of the defendants, including 76 doctors, were charged for illegally distributing opioids and other dangerous narcotics. Read more at DEPARTMENT of JUSTICE

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.

CALIFORNIA: Latest battle over California lending market: Should grocery stores offer large loans?

Walk into a Northgate supermarket and, along with produce and pan dulce, you can walk out with a small loan from the store's Prospera financial services stand.

Those loans top out at $2,500. Now, a bill working its way through the state Legislature could boost that maximum to $7,500 - enough, the bill's author said, to pay for an immigration lawyer or a funeral.

The loans are marketed by Northgate but actually made by Insikt, a San Francisco firm that argues the change would help working families and small-time entrepreneurs while disrupting California's increasingly expensive market for personal loans. Lenders commonly charge interest rates higher than 100%, while Insikt, if the bill passes, would be able to charge no more than 35%, plus fees.

"The large loan market is dominated by a lot of predatory loan structures and pricing that we want to create a better alternative for," said Insikt founder and Chief Executive James Gutierrez. "There are people who need larger loans. Borrowers can get a loan up to $2,500 from us, but then they have to piecemeal the rest and they're likely coming in at over 100% APR."

Read more at LOS ANGELES TIMES

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Jones reflects on 'Check' history. by Larry C. Bowers

Cleveland businessman Allan Jones is somewhat surprised by the success of his Check Into Cash business. The corporation recently celebrated its first 25 years.

Jones took a break from the company's birthday celebration at The Village Green recently, to talk about how he got involved in the business, and the trials and tribulations along the way.

One of Cleveland's community leaders, and a high-profile businessman, Jones reflected back to when he first came onto the idea of payday lending, providing small, short-term loans to people with immediate needs, and willing to pay a small fee.

In June 1993, Jones had a collection agency serving communities across Tennessee, and in Atlanta. He had offices in Cleveland, Chattanooga, Nashville, Tullahoma, Murfreesboro, Cookeville, Jackson, Memphis and Knoxville.

He did not have an office in Johnson City, but he had heard about a businessman there, James Eaton, who was operating a payday loan operation with surprising success.

"I was in Knoxville, when I heard about it," he said. "I left in my Piper Saratoga and flew to Johnson City to look at what he was doing."

What he discovered was a big surprise, and a decision maker.

Read more at CLEVELAND DAILY BANNER

If a debtor is employed, we will find them!

House advances eight financial services bills

The U.S. House of Representatives advanced eight bills from the Financial Services Committee this week, including a bill that provides greater Congressional oversight on international insurance standard negotiations.

The International Insurance Standards Act of 2017 (H.R. 4537), sponsored by Rep. Sean Duffy (R-WI), preserves the state-based system of insurance regulation while ensuring Congressional oversight on international insurance standard negotiations.

Another bill introduced by Duffy, the Housing Choice Voucher Mobility Demonstration Act of 2018 (H.R. 5793), encourages families receiving housing choice voucher assistance to move to lower-poverty areas and expand access to opportunity areas.

"I'm pleased to see these important Financial Services Committee measures pass the House today and applaud the hard work of their sponsors. These bills are vital in achieving the committee's goal of alleviating burdensome regulations on our nation's capital markets to help Main Street businesses expand, create jobs, and spark innovation. They also focus on improving access to affordable financial services and products for people and families by expanding housing options for those in lower-poverty areas," Financial Services Committee Chairman Jeb Hensarling (R-TX) said.

Read more at FINANCIAL REGULATION NEWS

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

The unbanked world is bigger than you think. by Philip Burgess

With the explosion of online banking, you'd think that just about everybody has a bank account or utilizes traditional banking services. But as the most recent data available from the Federal Deposit Insurance Corporation shows, over 23 million Americans are underbanked or unbanked, a figure that includes children.

But if you think that number is big, you may be surprised by how many people in the world go without these traditional financial services, a potential consumer market that may present new business opportunities for companies that use alternative credit data in their lending decisions.

More than 28 percent of the world is unbanked

Globally, 2 billion individuals - specifically those who are 18 years of age or older - are unbanked, according to statistics compiled by the World Bank. With a worldwide population of 7.4 billion, this means that nearly 28.5 percent of the world's population doesn't have a checking account, or use other financial services that banks traditionally offer.

Any number in the billions is hard to wrap your head around, but thanks to the speed with which mobile technology is advancing and becoming cheaper to produce, the unbanked world is smaller than it once was. Indeed, in 2011, the total was closer to 2.5 billion, making the 2014 total a drop of 20 percent over three years.

With the approximately 700 million more people worldwide having an account, this means 62 percent of the globe's populace is banked, substantially higher than barely half (51 percent) back in 2011. Read more at MICROBILT

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Consumer Banking Watchdog Could Take Complaints Database Offline

Taxpayers have until midnight tonight to share concerns about an end to public access of a consumer banking complaint database -- the latest in a series of moves by the Trump Administration to dismantle the Consumer Financial Protection Bureau.

That watchdog agency, also known as the CFPB, was created in the aftermath of the 2007 - 2008 financial crisis. It takes and reviews complaints from consumers against banks, lenders, and other financial institutions. In some circumstances, the CFPB has levied fines and other punishments against banks for anti-consumer practices.

A public database of consumer complaints can be viewed on the CFPB website. It currently lists more than 1 million complaints -- with more than 8,000 of those originating in the Bay Area.

However, public access to the complaint database is not required by law. Acting CFPB director Mick Mulvaney has expressed skepticism of its value.

"I don't see anything in here that says I have to run a Yelp for financial services, sponsored by the federal government," Mulvaney said at a banking conference in April, as reported by The New York Times. "I don't see anything in here that says I have to make all of those [complaints] public."

Read more at NBC BayArea

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FCC plans to stop reviewing informal complaints-filing a formal one costs $225.

Ajit Pai's Federal Communications Commission is proposing that it stop reviewing the vast majority of consumer complaints about telecom companies. Going forward, consumers harmed by broadband, TV, and phone companies would have to pay $225 in order to get an FCC review of their complaints.

The FCC accepts two types of complaints: informal ones and formal ones. It costs nothing to file an informal complaint and $225 to file a formal one; given that, consumers almost always file informal complaints. Besides the filing fee, formal complaints kick off a court-like proceeding in which the parties appear before the FCC and file numerous documents to address legal issues. It isn't an easy process for consumers to go through.

The FCC is scheduled to vote Thursday this week on a proposal that would change the FCC's complaint rules by deleting two references to the commission's "disposition" of informal complaints. Read more at ARS TECHNICA

Know the who, what, when and where of all 240 million smartphones in the U.S.

CFPB says the Education Department is obstructing its student loan lawsuit

(CNN) The Consumer Financial Protection Bureau says the Department of Education is blocking access to documents it needs for its lawsuit against Navient, one of the nation's biggest student loan servicers.

The CFPB sued Navient last year, claiming the company misled borrowers and processed their payments incorrectly.

The agency asked a federal judge this week to order Navient to produce the documents as part of its discovery process, according to a court filing.

But Navient says it needs the Department of Education's permission to release the information because of privacy laws, according to court filings. The department has not granted permission, according to the CFPB's letter.

The consumer agency says it needs these documents to identify the consumers affected. It is seeking debt relief for borrowers who were allegedly harmed by Navient's practices.

It argues that the privacy law should not be used to "resist discovery of relevant information" and that a court can order Navient to hand over the records. Read more at CNN

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ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

 Members own over 64,000 locations and online operations

 

AFSPA helps our members grow their Alternative Financial Services business by providing them with the best information, research, data, support, relationships and by vetting and presenting the best available product and service providers for the Alternative Financial Services Industry.