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ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
NEWS: February 1 NEWS is brought to you by AFSPA Endorsed SUPPLIERS |
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The CFPB Is In The Crosshairs, Exactly Where It Belongs
The Consumer Financial Protection Bureau (CFPB) has been one of the most controversial components of the 2010 Dodd-Frank Act. It has issued contentious rules, tortured data to make other rules, engaged in an extravagant spending spree, and even found itself blasted by the Government Accountability Office (GAO) for employment discrimination.
The CFPB's funding and structure - a formulaic revenue stream tied to the Federal Reserve, and a sole director rather than a bipartisan commission - were points of conflict before the Bureau was even up and running. In October 2016, the D.C. Circuit Court of Appeals struck down the Bureau's sole-director structure as unconstitutional and recognized the president's power "to remove the director at will, and to supervise and direct the director."
Now that Republicans have control of the House, the Senate, and the White House, Democrats are very nervous about what might happen to Sen. Elizabeth Warren's (D-Mass.) brainchild.
Democrats know that President Trump might fire the CFPB's director, Richard Cordray, and they're actively pushing against converting the CFPB to a bipartisan commission.
Republicans have long argued that, at the very least, the agency should be structured similar to regulatory agencies such as the Federal Trade Commission, the Securities and Exchange Commission, or the Commodity Futures Trading Commission. Last year's major Dodd-Frank reform legislation, the Financial CHOICE Act, included a provision to convert the CFPB to a commission. Read more at FORBES
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Consumer Financial Protection Bureau Fights to Stay Alive Under Trump
The gloves are off. Supporters of the Consumer Financial Protection Bureau, the brainchild of Senator Elizabeth Warren (D-Mass.), which is tasked with protecting consumers against financial fraud, unleashed a legal tsunami this week in efforts to save CEO Richard Cordray and stay independent under the Trump administration.
"The independence of the agency is crucial," said Constitutional Accountability Center President Elizabeth Wydra during a conference call on Thursday. The center filed a motion on behalf of Senator Sherrod Brown (D-Ohio) and Representative Maxine Waters (D-Calif.) to intervene in a case in which a federal appeals court previously issued a ruling that would put the CFPB under the direction of the president. U.S. PIRG, Americans for Financial Reform and a host of other consumer advocates filed their own motion to intervene in the case, as well. If allowed to stand, the ruling would give the Trump administration the power to fire the agency's first and only director Cordray.
Attorneys general from 17 states also joined the fight earlier this week.
"Rich Cordray is the LeBron James of regulators, it makes no sense to fire him," said Ed Mierzwinski, consumer program director of the U.S. PIRG, during an interview with FOX Business. Mierzwinski notes that the bureau has returned nearly $12 billion to consumers over the past five years and has grown to a staff of 1,500 to help snuff out bad financial behavior aimed at consumers. Read the entire article at FOX BUSINESS
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The Last Obama-Era CFPB Enforcement? Manatt Phelps & Phillips LLP
Making the most of its enforcement powers before the new administration takes over, and likely concerned that its days as a stand-alone bureau may be coming to an end, the Consumer Financial Protection Bureau (CFPB) took action against entities ranging from Virginia pawnbrokers to national lender Moneytree, Inc. to two of the nation's largest credit bureaus, while still finding time to launch a new tool to monitor developments in consumer lending.
What happened
In December, the CFPB filed four complaints in Virginia federal court against Spotsylvania Gold & Pawn, Inc., Fredericksburg Pawn, Inc., Pawn U.S.A., Inc., and A to Z Pawn, Inc. The CFPB claims that all four defendants violated the Truth in Lending Act as well as the Dodd-Frank Wall Street Reform and Consumer Protection Act's ban on unfair, deceptive, or abusive acts or practices by misstating the charges associated with pawn loans.
The defendants, say the CFPB, disclosed only a low annual percentage rate (APR) that did not reflect a host of other fees added on to the loans, such as "appraisal," "interest," "storage," or "setup," in some cases understating the true annual percentage by half of the actual cost.
Each of the suits requests a halt to the allegedly illegal practices as well as penalties and restitution for the thousands of impacted consumers.
"When consumers take out a loan, they are entitled to know the actual cost," CFPB Director Richard Cordray said in a statement. "We are taking action ... against pawnbrokers that deceived consumers about these costs, and we will work to make sure they stop violating the law and provide relief for consumers who were wronged."
In another enforcement action, the CFPB filed an administrative complaint against Moneytree, Inc., a Washington-based financial services company offering payday loans and check cashing, among other services, challenging the company's online advertisements and collection letters as deceptive. Advertisements for the company's check-cashing services tricked consumers about the true cost, the CFPB asserted, with an ad in early 2015 offering to cash consumers' tax refund checks for "1.99." The actual fee was 1.99 percent of the amount of the check cashed, not $1.99, despite what the ad implied, the Bureau said. Read more at LEXOLOGY
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It matters not whether a payday lender or a dog groomer, morally policing advertising is a dangerous precedent
One of the many perks of living in a democratic capitalist society is the laissez faire relationship between (legitimate, legal) business and government.
But questions must be asked when giants step on smaller businesses. Especially when based on the moral posturing of a cabal of pious zealots.
Such is the case with Google, who in the six months following July last year, disabled "more than 5m payday loan ads" and "took action on 8,000 sites promoting payday loans" because they "often result in unaffordable payments and high default rates for users." It would appear Google has grown a conscience.
Banning adverts for dodgy v------, misleading get rich (or slim) quick schemes, illegal gambling sites and the like is a mostly sensible attempt at something akin to protecting consumers through self-regulation. But banning perfectly legitimate, legal businesses from promoting their services is an impediment to liberty that stifles competition.
Facebook has a similar policy, born from the so-called Coalition for Better Ads. Between the search and social giants, a duopoly exists: they collectively account for over 75 per cent of the digital advertising market, which only makes this position more egregious and untenable.
When advertisers are so reliant on the channels provided by the duopoly, an authoritarian stranglehold on the distribution of information exists. Advertisers are trapped in their digital walled-gardens if they want an efficient way of reaching consumers.
This is not a defence of payday lenders; although the policy will likely push those in need to less regulated, bad actors. It's one of net neutrality, free speech, and healthy competition in a free market. Impeding the ability for legitimate businesses to ply their trade can never be justified.
Consumers should have access to all content and applications regardless of the source, based on the laws and regulations of nation states on a pro rata basis. The internet is meant to express the free flow of ideas and enhance commerce, not impede it. Read the entire article at CITY A.M. |
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ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
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.
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