|
ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
NEWS: March 28 NEWS is brought to you by AFSPA Endorsed SUPPLIERS |
ARIZONA bill would allow loans with 164 percent fee
A last-minute bill introduced at the Arizona Legislature would open borrowing opportunities for people without credit, at a fee that tops out at 164 percent.
The legislation is the latest attempt to open the lending market beyond the 36 percent interest-rate cap that voters put on payday loans nine years ago. It won party-line support from the Senate Appropriations Committee on Tuesday, with Republicans in favor and Democrats opposed.
Although supporters cast House Bill 2496 as a departure from "flex loans" and auto-title loans, it sparked the same debate that surrounds those other high-interest loan proposals. Supporters said it would fill a need for people with short-term cash needs who can't qualify for conventional loans. Critics said it amounts to lending that could trap people in debt.
"It's like every year it's a new scheme," said Kathy Jorgensen, representing the Society of St. Vincent de Paul in opposition to the proposal.
$2,500 maximum
This year's bill would create a consumer line of credit, capped at $2,500, which must be paid off in a year. No collateral is required. Instead of an interest rate, the loans would carry a daily "transaction fee" of 0.45 percent, which works out to 164.25 percent a year.
Borrowers who fall behind in mandatory monthly payments could freeze the past-due amount and its daily fee and work out a repayment plan. However, they still would be liable for the balance of their loan and required to pay at least 8 percent of the balance each month.
|
|
Justice Department changes its tune on Consumer Financial Protection Bureau
Times have changed since the last time it filed arguments on the matter
Not long ago, the Justice Department argued in court that the structure of the Consumer Financial Protection Bureau was perfectly legal. Now it says it isn't.
What changed? The Constitution remains the same and the law that established the CFPB remains intact, but the United States is under new management and President Trump is determined to jettison holdovers whose views he finds disasteful.
Thus, the Justice Department is now arguing that Trump should be able to fire CFPB Director Richard Cordray, even though a few months ago it made exactly the opposite argument.
When the CFPB was established as part of the Dodd-Frank Act, lawmakers wanted to protect it from political pressure so they gave it a single director who, unlike most other appointees, can be fired only "for cause," meaning for misconduct or dishonesty.
Most political appointees are routinely dismissed when a new administration takes office, but Cordray's term runs through next year, and so far Trump has not found grounds to dismiss him
|
|
Texans Need to Tell Lawmakers to Keep the Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau is a runaway success. In the nearly five years since its founding, the CFPB has handled more than 1 million consumer complaints, including 53,000 from Texans, and returned $12 billion of ill-gotten gains from financial companies back to 29 million consumers.
But now two of Texas' most prominent elected officials - Sen. Ted Cruz and Rep. Jeb Hensarling - have each introduced legislation to dissolve or defang the consumer-finance watchdog. Texans should be demanding that the agency be strengthened, not weakened.
The CFPB has re-established law and order in the financial services sector. Thanks to the bureau, Texas-based EZCORP had to stop illegally collecting debts by visiting consumers' homes and workplaces, and contacting consumers' bosses and landlords about debts. In fact, the company had to return $7.5 million to 93,000 consumers whom the company harmed.
This issue hits home here in Texas. Nearly 45 percent of Texans with a credit file, including 44 percent of people in the Dallas metro area, have a debt in collections, not including mortgages. And debt collection is the No. 1 topic about which Texans file complaints with the agency.
|
|
From the Front Lines to Behind the Curtain by Julie Sepulveda
At Capital Compliance Experts, we are committed to building a team with the skills that add value to our customers, business and to the services we offer. Our newest edition, Jessica Escamilla, brings nine years of front-line financial service experience and customer facing industry knowledge to our crew.
As our new Compliance Specialist, one of Jessica's roles is to consult with customers to obtain the numerous items needed to prepare Anti-Money Laundering Programs. Instead of completing monitoring logs like she did in her past positions, she is now analyzing them and has a different perspective. "I now see the importance and magnitude of all the paperwork that I was once required to complete."
Jessica's years of experience includes working for large payday loan and check cashing stores. She knows what it is like to be face-to-face with customers. Most recently, she worked as an Assistant Manager and was responsible for completing many of the reports (SARs and CTRs) and the various miscellaneous documents that she is now requesting from our customers.
She knows all too well the policies and procedures of performing the daily tasks and what it takes to successfully manage a money service business. She has experience with services like payday loans, title loans, signature loans, check cashing, wire transfers, money orders, bill payment and prepaid cards to name a few.
Read more at CAPITAL COMPLIANCE
|
|
The value of delivering education through consumer lending services by Walt Wojciechowski
Loan officers and other personnel on the front lines of your consumer lending services often engage individuals who are new to the whole process. There's always going to be those first-time homebuyers or young adults who are trying to finance their first cars.
In light of the fact that your lending department interacts with inexperienced consumers from time to time, it's worth assessing the value of integrating educational modules into your consumer lending practices.
The challenge of engaging consumers
One of the challenges financial institutions (FIs) face today is how consumers view their relationships with such businesses. According to research from Accenture, most consumers (79 percent) believe the primary purpose of engaging a bank is to handle transactions such as making deposits. Only 21 percent of consumers visit banks to receive advice on how to improve their financial well being.
What this means is that consumers may relegate banks and other FIs to handling bill payments and checking account statements. Such services don't provide a great return. In contrast, lines of credit and other lending products generate more revenue.
With respect to this issue, FIs need to deliver targeted messaging to consumers who only engage them for transactional needs. This might entail sending an email educating a particular individual about your investment and lending services. That's an example of educational marketing. However, refrain from sending email blasts to those who have not indicated they would be interested in lending products and services.
Read more at MICROBILT
|
|
The biggest credit card complaints in America
Credit card complaints can be difficult to address. Sometimes credit card companies are hard to reach or it's not clear who you should be complaining to. In the wake of the financial crisis of 2008, the federal government set up the Consumer Financial Protection Bureau (CFPB) to help protect consumers. The CFPB government agency helps consumers address complaints they have with banks, credit unions, credit card companies, payday lenders and other financial companies.
The CFPB releases data on complaints that it receives (but keeps consumer information anonymous). Below, we dive into credit card complaint data to see what issues keep cropping up.
Key Findings
The big three - Billing disputes, identity theft and account closings dominate the list of credit card issues American consumers complain about the most. These three issues make up over 36% of all complaints. (Note that "Other complaints," which are undefined, account for 12% of all complaints.)
Filing complaints works -Over 30% of complaints ended with the consumer receiving a resolution of some sort. More than 20% received monetary relief and 11% received non-monetary relief. Non-monetary relief includes resolutions like changing account terms or correcting submissions to a credit bureau.
Read more at AOL FINANCE
|
|
PUBLIC RECORD DATA ALONE LACKS PREDICTIVE POWER by Dan Richard
While the Big 3 Bureaus assert they use alternative sources of data in putting together a consumer's credit profile, the majority of this claim hinges on their use of public records; documents available to everyone, which, by themselves, prove lacking at predicting credit-related behaviors.
On one hand, public record data can offer insights into underbanked borrowers-those having a depository account and at least one alternative financial service (AFS), characterized typically with low traditional credit scores and limited access to traditional credit options. For these consumers, public record data helps distinguish a couple of trends:
- For one, these consumers are considerably more likely to have a bankruptcy in their history than the general population. In fact, nearly 15 percent of them do.
- Additionally, nearly 44 percent have a derogatory public record of some kind in their recent past, which can includebankruptcy, judgments and/or tax liens.
- Coincidentally, another 44 percent have also changed addresses in the last 24 months. This tendency towards low address stability correlates with FactorTrust's own address stability metrics on this population.
Public record data can help lenders gauge the property profile and identity stability of most consumers, underbanked or not. Even the lack of public records, such as property ownership, can be useful to know. FactorTrust has seen this type of data yield predictive enhancements to its models, particularly when combined with stability characteristics not captured through public records, including:
- cell phone numbers,
- email addresses, and
- bank accounts.
However, the drawback to public record data is the lack of a behavioral component, as changes to public record profiles occur drastically slower than changes to a credit file, by virtue of the types of data points being measured. Furthermore, with the context of public record attributes being largely outside of the credit domain, there is little financial insight to draw when attempting to use such data to predict the outcomes of credit transactions.
Public record data as an alternative data source offers advantages for expanding coverage and qualifying an identity, yet its lack of predictive power and dissimilarity to credit outcomes limit its usage as the go-to-alternative data source.
Instead, public record data should be combined with alternative credit data to provide a more comprehensive look at consumers' creditworthiness.
Read more at FACTORTRUST
|
|
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.
|
| Alternative Financial Service Providers Association
757.737.4088 315 Tuscarora St., Lewiston, NY 14092
dan@afspassociation.com
www.afspassociation.com |
|
|
Copyright © 2016. All Rights Reserved.
|
|
|
|
|
