ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

CFPB's Anti-Arbitration Rule: Like Recommending Chocolate Sundays to Treat Obesity

The Consumer Finance Protection Bureau's (CFPB) anti-arbitration rule to facilitate expensive class action litigation to resolve consumer finance disputes in lead-footed courts is like a doctor recommending Chocolate Sundays to treat obesity.

After March 2018, the CFPB rule would prohibit mandatory arbitration clauses in consumer finance contracts that would preclude customer participation in class action lawsuits. Congress should not tarry in voiding the rule within the 60 day window and expedited procedures of the Congressional Review Act (CRA).

Litigation is deadweight to the economy. It is typically vexing and exorbitantly costly to the litigants. Renowned federal circuit judge Learned Hand remarked: "I must say that as a litigant, I should dread a lawsuit beyond almost anything short of sickness and death." Ambrose Bierce in The Devil's Dictionary defined a lawsuit "as a machine which you go into as a pig and come out of as a sausage."

Class actions logarithmically multiply the vexations and costs of ordinary lawsuits. A plaintiff class size may reach tens of millions and expose the defendant to potentially crippling liability. The costs of notifying and communicating with such huge numbers put class actions out of reach for any but jumbo-sized law firms excited by the prospects of huge legal fees. They often settle class actions to enrich themselves but leave the class plaintiffs in the lurch.

Settlement of the Bank of Boston class action is exemplary. The class attorneys walked away with approximately $9 million in fees while class members had their accounts credited between a paltry $2.19 and $8.76. To add insult to injury, their accounts were also debited for up to $91 to cover the costs of the settlement, i.e., plaintiffs; and defendants' attorneys' fees and litigation costs. The outrage is fully described in Kamilewitz v. Bank of Boston Corporation (United States Court of Appeals for the Seventh Circuit, August 8, 1996),

The number of civil lawsuits filed annually approximates a staggering 15 million. Delay is both pervasive and costly. And justice delayed is justice denied. Read more at HUFFINGTON POST

FactorTrust Partners with eCash Software on Proprietary Data, Scores

Expanded Collaboration Enhances Solutions for Lending Customers

ATLANTA--(BUSINESS WIRE)--FactorTrust®, The Alternative Credit Bureau™, announced today an enhanced partnership with eCash Software, a leading software solutions company for small lending institutions, in delivering integrated proprietary data and scores to its lending customers.

FactorTrust's proprietary database of underbanked and near-prime consumers (those with credit scores of 700 or below) has more than 250 million transactional data records collected in real time. eCash previously implemented FactorTrust's Military Lending Act (MLA) solution in its verification processes, and is now fully integrating this real-time data across its entire platform. In addition, eCash is also incorporating FactorTrust's risk-scoring capabilities, further strengthening eCash customers' ability to more effectively evaluate the creditworthiness of their consumers.

"Lenders are continually faced with the challenge of how to effectively and intelligently manage risk in this market," said FactorTrust CEO Greg Rable. "By partnering with us, eCash benefits from the analysis of loan performance data we gather daily on millions of underbanked consumers. This not only provides their lender customers with instant lending decisions, but also gives consumers the credit they deserve."

"Our continued, enhanced partnership with FactorTrust means more value to our customers in finding and doing business with the right consumers," said eCash Software CEO Scott Putnam. "FactorTrust's expertise in understanding this market has proven extremely beneficial over the years and our partnership is certainly an asset we pass on to our existing and potential customers."

FactorTrust has long-provided alternative credit data, analytics and risk scoring information that lenders need to make informed decisions about consumers.

House Subcommittee Considers Bipartisan Legislation on Debt Collection Practices

The Stop Debt Collection Abuse Act of 2017, H.R. 864, was among nine bills reviewed during a hearing on Examining Legislative Proposals to Provide Targeted Regulatory Relief to Community Financial Institutions.

The House Financial Services Subcommittee on Financial Institutions and Consumer Credit considered several pieces of legislation July 12, including U.S. Rep. Mia Love's, R-Utah, proposal to amend definitions in the Fair Debt Collection Practices Act and require the Government Accountability Office (GAO) to study debt collection practices at the federal, state and local levels.

"Just to give everyone an idea, H.R. 864, the Stop Debt Collection Abuse Act, was a bipartisan effort on behalf of myself, [U.S. Reps. Keith Ellison, D-Minn., Emanuel Cleaver, D-Texas and French Hill, R-Ark.] to make sure that the federal government uses the same practices that the private [debt collection] sector uses," Love said.

Love's legislation was re-introduced in the 115th Congress.

The legislation was among nine proposals considered by the subcommittee during a hearing, "Examining Legislative Proposals to Provide Targeted Regulatory Relief to Community Financial Institutions." Read more at ACA INTERNATIONAL

The easiest, most cost-effective way to stay MLA Compliant.

WHAT IT IS:

The Military Lending Act (MLA) mandates special requirements for lenders extending credit to active duty military personnel, their family members and dependents, National Guard members, and members of a reserve component of the Army, Navy, Air Force or Marine Corps. Intentionally failing to follow these provisions can result in significant fines and possible imprisonment.

You can now easily and immediately identify whether applicants and current customers are covered by MLA regulations by confirming status against the Department of Defense Manpower Database.

MLA Verify can be utilized as a stand-alone report or easily added to a credit report. Additionally, MLA screening can be applied through batch processing to an entire database of candidates. Once identified, military service members and families can then be filtered into a separate group and treated appropriately.

WHAT IT DOES:

MLA Verify returns:

Confirmation of MLA "covered borrower" status.

Most recent name and address of record for a submitted applicant.

WHAT IT IS USED FOR:

MLA Verify is used for quickly identifying whether or not a candidate meets the requirements to be covered under the federal Military Lending Act. MLA Verify is used during the origination process for closed-end short-term loans, payday loans, vehicle title loans, and tax refund anticipation loans, along with other types of credit regulated under the MLA.        Read more at MICROBILT

Banks Riled by New Consumer Finance Protection Bureau Rule

In the scrum of unsettling news about an administration and Congress that are enacting harmful right-wing measures on an almost daily basis, it is affirming to note when progress is being made. The Conversation recently ran an article about the important steps that the Consumer Financial Protection Bureau (CFPB) has already taken to protect consumers in the United States. The brainchild of Elizabeth Warren, the CFPB was included in the Dodd-Frank Wall Street Reform and Consumer Protection Act that passed Congress in 2010. The agency opened in 2011.

One positive step the CPFB has taken is to ban the forced consumer arbitration requirements which are often included in the fine print of consumer agreements for credit cards, loans and other products offered by banks and financial institutions. These requirements have put a stranglehold on consumer efforts to recover fraudulently obtained funds -- and to reform the banking industry by allowing court cases seeking remedies to unfair practices. The ban represents a significant step in the struggle for a pro-consumer footing in relation to the financial industry.

In a July 10 Consumer Financial Protection Bureau news release, the agency announced,

a new rule to ban companies from using mandatory arbitration clauses to deny groups of people their day in court. Many consumer financial products like credit cards and bank accounts have arbitration clauses in their contracts that prevent consumers from joining together to sue their bank or financial company for wrongdoing. By forcing consumers to give up or go it alone - usually over small amounts - companies can sidestep the court system, avoid big refunds, and continue harmful practices. The CFPB's new rule will deter wrongdoing by restoring consumers' right to join together to pursue justice and relief through group lawsuits. Read more at TRUTH-OUT.ORG

OHIO ENACTS NEW CONSUMER INSTALLMENT LOAN ACT

The Ohio Governor signed Ohio S.B. No. 24 that enacts the Ohio Consumer Installment Loan Act (CILA) effective September 11,  2017 [see our Alert of May 24, 2017 for additional information]. The new lending law generally mirrors the existing OMLA, the general  lending law in Ohio, but has additional restrictions including:

The loan term must be six months or more from the loan

transaction date;

The loan generally must require equal monthly payments

with exceptions for variable rate loans and open-end credit;

The loan may not be refinanced during the first 120 days of

the loan;

A loan origination fee may not be imposed more than three

times in any 12 month period; and

The loan must not be secured by real property.

Please let us know if you have any questions or would like more information  at DREHER TOMKIES LLP

SunTrust launches financial wellness program for companies

SunTrust has launched a financial wellness program for companies.

"We are offering this program at no profit ... to build financial confidence in America," SunTrust East Tennessee Region President Jim Vaughn said.

The program, called Momentum onUp, includes on-site sessions and online resources to help employees establish financial goals, start an emergency savings fund, navigate their expenses and spending habits, and take steps toward financial wellness.

The workplace program is an extension of the onUp Movement, which is for individuals, that SunTrust launched in 2016

More than two dozen companies have already signed up and are introducing the program to their employees, including McKee Foods, Home Depot, Delta Airlines and Equifax.

"More than 40 percent of Americans live paycheck to paycheck, and 75 percent report experiencing financial stress," SunTrust CEO Bill Rogers said in a prepared statement. "Progressive companies can improve overall wellness in America by offering a financial fitness program for their employees." 

Read more at NOOGA.COM

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