ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

Do payday loans exploit poor people? Research review

Half of Americans have almost no savings, according to a May 2016 survey by the Federal Reserve. For such people, car trouble or a toothache can trigger financial ruin.

Payday loans are instant, short-term cash advances against someone's next paycheck. They can help in emergencies, but can also leave borrowers indebted for years. They target people without credit cards - often those with the worst credit - and charge these riskiest borrowers much higher interest rates. Annualized rates are about 390 percent, according to the Consumer Financial Protection Bureau (CFPB), a federal consumer watchdog. (At that rate, a $1,000 loan would cost over $4,000 to repay after one year.) By contrast, credit card interest rate averages tend to hover between 12 and 20 percent.

The market for payday loans grew quickly in the 1990s and 2000s. According to a Federal Reserve estimate, almost 11 million Americans use payday loans each year, spending, on average, over $500 in fees.

States' attempts to regulate the sector have had limited success. "Confusion reigns as to legal jurisdiction," note Keith Lowe and Cassandra Ward of Jacksonville State University in a 2016 paper.

In June 2016, the CFPB proposed a new federal rule that would require lenders such as CashAdvance.com, CashNetUSA, OneClickLoan and MyPaydayLoan to determine customers' ability to pay back high-cost loans while forbidding them from offering new loans to pay off the old ones.

According to the CFPB, more than 80 percent of such loans are rolled over within a month - that is, borrowers borrow more money to pay off the principle, circling deeper into debt. For every five borrowers who offer their cars as collateral, one loses the vehicle, the CFPB says.

Critics argue that the fees are exorbitant and amount to predatory lending. "It's much like getting into a taxi just to ride across town and finding yourself stuck in a ruinously expensive cross-country journey," said Richard Cordray, the CFPB's director, in a June 2016 statement. "Consumers are being set up to fail with loan payments that they are unable to repay."

The proposed regulation is still under review and could be challenged in the courts. Groups like the Community Financial Services Association of America are lobbying against the rule with their Credit Strengthens Communities campaign. The Center for Responsible Lending is lobbying for more regulation over the industry. Whatever the ethical concerns, proponents say payday loans fill a much-needed gap in services. Read this story at Journalist's Resource

The public comment period has begun and will continue through October 7th.

YOU need to get involved to protect

A Solution in Search of a Problem by Eric Peters

What do payday lenders and urgent-care medical clinics have in common? Both are vilified for charging more for their services than conventional banks (in the case of payday lenders) and your regular doctor (in the case of urgent-care clinics).

But if you need a loan (or medical care) right now - not next week - then a conventional bank (and your regular doctor) probably won't be able to help you. No matter how much you offer to pay for their services.

Payday lenders are short-term lenders and - like urgent-care clinics - offer "right now" services. You pay extra for that. They also offer convenience. You pay more for that, too.

And because of that, they're slammed.

Might as well also slam 7-Eleven for charging more for the chili dog you wanted at 2 in the morning; the nice restaurant for charging more for prime rib than a burger - or airlines for pricing first-class tickets higher than coach.

But urgent-care clinics, 7-Elevens, nice restaurants and the airlines aren't targeted by the government. Neither, interestingly, are conventional banks that charge $200K in interest on a 30-year $250K loan.

Short-term lenders, on the other hand, are.

It's not because their customers have been complaining. As it turns out, the opposite's true.

The Consumer Financial Protection Bureau - which regulates the payday loan industry, among other things - set up a website called "Tell Your Story," where ordinary citizens could lodge complaints about or praise payday lenders.

Well, surprise surprise.

A Freedom of Information request filed by the Community Financial Services Association - the trade association that represents short-term lenders - discovered that over the last five years, 2,308 positive "stories" were submitted to the CFPB's online BBS.

These represent 98 percent of all the "stories" submitted.

But CFPB buried them; the positive responses were never made public. The impression was left that "action" was needed to "correct" abuses that appear to be entirely the product of CFPB's bureaucrats - who have a vested interest in convincing the taxpaying public that "work" needs to be done, even when it doesn't.

It keeps the budgets fat, jobs secure. Read the story at INSIDESOURCES

Why financial wellness programs matter

Wellness programs - and the idea that investing in employees' social, mental and physical health can deliver solid returns - have been a well-established talent acquisition and retention pillar for quite some time. As wellness continues to evolve from simply a health focus to incorporating a financial focus, many employers are considering how they can implement a financial wellness program that will be beneficial to their employees and cost-effective for their business.

Human capital management provider ADP, in cooperation with SourceMedia, recently conducted a study that uncovered the benefits of financial wellness for both employers and employees and some of the obstacles that might prevent companies from offering them. Respondents - which consisted of employee benefits decision-makers - see financial wellness programs as having a positive impact on their workforce, but only one in five companies currently offer this benefit. However, interest appears to be growing; more than a third (36%) say they have a strategy or are considering financial wellness programs. Read the story at BENEFIT NEWS

My apologies to pawn shops

In the wake of America's big economic crisis back in 2008, dollar stores and thrift stores have seen a big resurgence. And now, another kind of retail quasi-lender is commanding all kinds of attention from sellers and buyers: pawnshops.

I admit to having grown up with a weird bias against pawnshops. To me, pawnshops were just one level above Vinny the Loan Shark operating illegally in some dark alley in the bad part of town, just waiting to break some knees. Where did that come from? I have no idea really, but let me quickly follow by saying that it is a most false stereotype. Pawnshops are respectable businesses that offer a viable service in many communities. These days, business is booming.

A pawnshop, owned and operated by a pawnbroker, makes secured loans on personal property that customers leave as collateral. The customer can redeem the property when the loan and loan interest are paid off. Think secured loans.

Interest rates charged by pawnshops, which in some states are regulated by state and local laws, can range from 5 to 6 percent per month. That's high, I know, but we're talking very short-term loans here. And the loans are on merchandise that is often used and in some cases suspect because it's impossible for the broker to predict the collateral's true value, should he have to sell it to recoup the money lent. Read the story at The Star Democrat

FACTORTRUST DEFINES A SEGMENT OF THE U.S. POPULATION TO REFLECT CREDIT ASPIRATIONS; CATEGORIZES CONSUMER AS CREDITCLIMBER

ATLANTA (Sept. 21, 2016) - FactorTrust, The Alternative Credit Bureau, encourages lenders to examine the underbanked population with a new lens. The company advocates that the 113 million U.S. consumers with FICO credit scores under 700 today should be recognized as CreditClimbers™ - consumers determined to improve credit scores in order to advance their situation and access more credit options.

While the percentage of unbanked consumers has decreased over the past five years, the number of underbanked consumers has remained relatively stable, according to the FDIC. The historical perception that the underbanked are all risky customers has harmed both consumers and lenders, says Rable, impeding industry and economic growth. "Every time a CreditClimber does something positive, they deserve to improve their credit score. The problem is that the vast majority of these customers and their credit performance are simply unrecognized and untracked by the Big 3 bureaus. We've seen people improve their credit scores - at every scoring level - by having alternative credit data factored in during the underwriting process. More data is better for both the consumer and the lender."

FactorTrust has more than a decade of insight and intelligence regarding the underbanked. The company is the industry pioneer, collecting the most current alternative credit data available in real-time and making it easily accessible to all its lender customers. For more information on FactorTrust, please visit www.FactorTrust.com or contact FactorTrust at 1-866-910-8497.

Here's Why Republicans Are Suddenly Demanding Tougher Bank Regulation

GOP senators want to know why Elizabeth Warren's consumer watchdog didn't go after Wells Fargo earlier.

WASHINGTON ? Republicans don't like the Consumer Financial Protection Bureau. They opposed the very idea of the watchdog when Elizabeth Warren first proposed its creation, and they have been trying to defang and defund it ever since Congress made her vision into a reality.

Republicans typically attack the CFPB for being good at its job. The agency has returned over $11 billion to a total of 25 million bilked consumers in its first five years, and every dollar that goes back to customers is a dollar that a financial firm doesn't get to book as its own profit. Banks, payday lenders and other operators have spent a lot of money on lobbying and campaign contributions to stem this cash outflow. And Republicans have responded by crafting legislation to tie up the CFPB with red tape and made it harder to enforce its consumer protection rules. Both the House and Senate are currently pushing bills that analysts at the investment bank Keefe, Bruyette and Woods describe as "weakening" the agency.

The CFPB has enjoyed a run of good press after it slapped a $100 million fine on Wells Fargo for using customers' personal information and money to sign them up for online banking services that the customers never asked for. Over at least the past five years, bank employees created more than 1.5 million sham checking accounts and applied for 565,000 credit cards. Many customers found out about the new accounts after they started accumulating fees.

But CFPB is still facing heat from Republicans ? ironically, this time, for not regulating Wells Fargo hard enough. Read the article at HUFFINGTON POST

COMMUNITY

Amscot Financial and Local Law Enforcement to Distribute Free Bike Helmets at Sessums Elementary for International Bike to School Day

Lowry Park Zoo in Tampa received a $100,000 check from Amscot Financial to help fund its new veterinary hospital.

For the fourth consecutive year Amscot Financial, a leading provider of convenient, consumer-oriented financial services, is pleased to be a sponsor of the Annual Calle Ocho festival, scheduled to take place on March 13th in the heart of Miami's Little Havana district.

Once again Amscot Financial has partnered with the Hillsborough Water Safety Team, led by St. Joseph's Children's Hospital, to provide children from low-income families with free swimming lessons. On May 19, Amscot will present a check for $1,000. Thanks to this partnership, 30 children will learn to swim this summer.

Amscot Financial has stepped forward as a $10,000 Sponsor in an upcoming dinner benefiting 100 Black Men of America's Orlando Chapter. The dinner is part of the chapter's "Project Success Program," which will provide scholarships to African American high school students graduating in 2016.

Amscot Financial, a leading provider of convenient, consumer-oriented financial services, recently awarded mini-grants of $250 to $1,500 in support of 12 different non-profit service organizations located in the Florida communities where the company serves several million consumers.

Amscot Financial has donated a $2,500 sponsorship in support of the Inaugural Levi Henry, Jr. White Hat Award Gala recognizing community members who exemplify outstanding community service.

For Check Into Cash, 2016 has been a year of giving. Since January, Check Into Cash has awarded $500 to one lucky winner a month, plus a matching $500 donation to preselected monthly charities via Facebook giveaway. But this month's giveaway will be slightly different. For August, Check Into Cash will allow the lucky $500 winner to choose a school to receive the matching $500 donation!

Why a franchise in the tax industry?

One of the Founding Fathers, Ben Franklin, said: "It this world, nothing can be said to be certain except death and taxes."

Over 135 million tax returns are filed each year, and over 50 percent of all tax returns are submitted by tax professionals.

Entrepreneur listed opening a tax service as one of the top 10 business that can weather any economy on August 18, 2015.

It's a myth that tax season is only four months long. Over 10 million people file extensions, which creates a period from April to October where many businesses and people still need to file.

Other franchise concepts also require high initial investments. In some cases, you'll need at least $250,000 to over a million dollars to apply for a franchise. Today, to open a McDonald's franchise, it costs anywhere between $1 million and $2.2 million. You also need to have $750,000 in liquid assets and must be the primary operator - no rest for the weary!

With Opportunity Tax Service, you can own a tax service franchise to subsidize your income, build for your retirement, diversify your business holdings, and more. How you run your tax service franchise is up to you! OPPORTUNITY TAX SERVICE

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