ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

FTC Charges Debt Collection Operation Took Consumers' Money for Phantom Debts

The Federal Trade Commission has charged a North Carolina debt collection operation with using intimidation and deception to take money from consumers for debts they did not owe, or that the defendants had no right to collect. A federal court temporarily halted the scheme and froze its assets at the request of the FTC, which seeks to end the practices.

According to the FTC, the defendants used a variety of trade names that sound like law firms, such as Lombardo, Daniels & Moss; Barron, Gibson & Phillips; and Cohen, Daniels & Moss, to attempt to collect debts that consumers did not owe. The FTC's complaint alleges that the defendants' collectors claimed that consumers were delinquent on payday loans or other debts, and threatened them with arrest or other formal legal action if they did not pay. Their collectors also allegedly called consumers repeatedly and regularly used profanity. Many people paid - more than $2.1 million in total - because they believed the defendants' false claims or just to stop the harassment.

The FTC also alleges that the defendants illegally disclosed purported debts to third parties, failed to disclose that they were debt collectors calling to collect a debt and that any information consumers provided could be used for that purpose, and failed to send consumers legally required written notices with the debt amount and the creditor's name, giving consumers an opportunity to dispute the debt. Read more at The Federal Trade Commission

Rep. Hensarling: CFPB's actions raise questions about director's political future

House Financial Services Committee Chairman Jeb Hensarling (R-Texas) is raising questions about the Consumer Financial Protection Bureau director's political future and its impact on a pending CFPB rule regarding payday and car title loans.

Hensarling in a Tuesday letter told CFPB Director Richard Cordray to "assure the public of the integrity" of the bureau's rulemaking process, citing reports the director has sped the loan rule to be released before his rumored run for governor of Ohio.

The Texas Republican asked Cordray to say when he plans to leave the CFPB, to deny any political considerations in the loan rulemaking process and to promise to preserve all records related to the rule.

Hensarling's letter is the latest chapter in the feud between the powerful congressional chairman, who has called on President Trump to fire Cordray, and the director, who had been largely protected from GOP attacks under the Obama administration.

Cordray, a Democrat, served as Ohio's attorney general before joining the CFPB and has been rumored to be planning to step down from the bureau to run for the state's governor in September. As an executive branch employee, Cordray cannot engage in campaign activity until leaving the CFPB. Read more at THE HILL

CFPB may narrow coverage of final payday loan rule

According to a Wall Street Journal article published this past weekend, "people familiar with the matter" are reporting that the CFPB's final payday loan rule will be narrower in its coverage than the CFPB's proposed rule.

The CFPB's proposal established limitations for a "covered loan" which could be either (1) any short-term consumer loan with a term of 45 days or less; or (2) a longer-term loan with a term of more than 45 days where (i) the total cost of credit exceeds an annual rate of 36%, and (ii) the lender obtains either a lien or other security interest in the consumer's vehicle or a form of "leveraged payment mechanism" giving the lender a right to initiate transfers from the consumer's account or obtain payment through a payroll deduction or other direct access to the consumer's paycheck. The proposal excluded from coverage purchase-money credit secured solely by the car or other consumer goods purchased, real property or dwelling-secured credit if the lien is recorded or perfected, credit cards, student loans, non-recourse pawn loans, overdraft services and overdraft lines of credit, and apparently credit sale contracts.

According to the WSJ article, the final rule is expected to cover only short-terms loans with a term of less than 45 days (presumably subject to the same exclusions contained in the proposal). The article indicated that the final rule is now undergoing a peer review by other agencies, including the OCC and FDIC, with an early September deadline for completion. It also reported that a CFPB spokesman indicated that the CFPB is "nearing the end of its rule-making process."

Read more at JD SUPRA

The Ongoing Efforts to Regulate Online Loans in Virginia

No job? No problem, borrowers can go online to get a loan - and pay five thousand percent interest. But, as Michael Pope reports, that era might be coming to a close.

Walk into a brick-and-mortar storefront location to get a car-title loan or a payday loan and the lender has all kinds of restrictions, from the interest rate to how long the loan can be to whether or not the lender has access to your bank account. But go online and it's the Wild West. Over the summer, industry leaders have been meeting with advocates like Jay Speer at the Virginia Poverty Law Center to craft new regulations for online loans.

"The good news is that the attorney general's office, consumer advocates like me who represent borrowers who are screwed over by the payday and the car-title lenders and the consumer finance companies all seem to be on the same page."

Delegate Mark Levine of Alexandria says he may end up crafting a proposal before the next time work group meets in September.

"I'm hopeful that we are going to put some regulation on the exorbitant loans that are coming in from out of state."

The work group was created earlier this year when lawmakers expressed concern that online lenders were using a loophole in the law to evade consumer protections that apply to lenders who operate brick-and-mortar stores in Virginia. Read more at VIRGINIA PUBLIC RADIO

Illinois RTO Tax Bill Signed Into Law

This week, Illinois Governor Bruce Rauner signed the Rental Purchase Agreement Occupation and Use Tax Act into law. The bill, sponsored by State Senator Tom Cullerton, potentially could save Illinois rental dealers millions of dollars in use tax obligations.

The new law, which takes effect on January 1, 2018, means that rental dealers will no longer pay a use tax on wholesale purchases, which aligns with other states where consumers pay a sales tax on rental payments. It shifts the manner in which rental property is taxed, helping to reduce the final taxation and saving RTO dealers money.

Illinois rental dealers have been trying to get this issue addressed for two decades, but faced continuous hurdles, both in the political arena and from the Illinois Department of Revenue. "I told the IRDA board that passage of this bill was 25 percent to 30 percent at the outset of the spring session," says Michael Houlihan, the association's lobbyist. He observes that the effort succeeded this time because of IRDA's grassroots efforts, which helped generate a good bipartisan push for the bill among the leadership and rank-and-file members in the legislature.

The effort also required explaining the nuances of the bill, as many lawmakers thought that it increased taxes. "This particular bill is tricky to explain in an elevator pitch," Houlihan adds.

Read more at RTOHQ.ORG

You're Too Stressed to Save For Retirement.  Day-to-day expenses are killing retirement dreams.

It's easy to tell someone to save more when you aren't the one paying his bills.

A survey from Schwab Retirement Plan Services found that workers who have access to a 401(k) plan, but aren't contributing to it, are buried under day-to-day financial stress. Schwab surveyed 1,000 people, half who save their 401(k) and half who don't and found that 60% of savers and 53% of non-savers who have at one time contributed to a 401(k) say their 401(k) is their largest or only source of retirement savings. However, a quarter of non-savers say they are not saving or investing for retirement at all right now.

"In comparing individuals now saving in their 401(k) plans and those who aren't, we uncovered some common challenges but also a number of striking differences in the way each group thinks about their overall financial picture," says Steve Anderson, president of Schwab Retirement Plan Services. "What's important for everyone to remember is that - no matter how far away retirement may seem - the more you can prepare for it in the present, the better off you'll be at the end of your career."

Again, that's easy to say when you aren't the one paying the bills. More than twice as many non-savers as savers say keeping up with monthly expenses is a significant source of stress (42% compared to 20%). A full 45% of non-savers say they either have no money left over or are actually behind on bills at the end of each month, compared to 23% of 401(k) --savers who say the same. Read more at THE STREET

CONSUMER FINANCIAL PROTECTION BUREAU TAKES ACTION TO SHUT DOWN CREDIT REPAIR COMPANY FOR CHARGING ILLEGAL FEES AND MISLEADING CONSUMERS

Washington, D.C. - The Consumer Financial Protection Bureau (CFPB) today filed a proposed final judgment in federal court that would resolve a lawsuit against Prime Marketing Holdings, LLC for illegal credit repair practices. The lawsuit alleged that the company charged illegal advance fees and misled consumers about the cost and effectiveness of its services and the nature of its money-back guarantee. The proposed order would permanently ban the company from doing business within the credit repair industry and require a $150,000 civil money penalty.

"Today we are taking action to shut down a company that deceived consumers into paying for credit repair services that did not live up to the company's promises," said CFPB Director Richard Cordray. "We remain committed to taking action against companies that mislead consumers into paying illegal fees with false promises."

Prime Marketing Holdings is a credit repair company incorporated in Delaware with an office in Van Nuys, Calif. Prime Marketing Holdings has operated under various names including Park View Credit, National Credit Advisors, and Credit Experts. Between Oct. 1, 2014 and at least June 30, 2017, the company charged over 50,000 consumers more than $20 million for credit repair services. Read more at Consumer Financial Protection Bureau

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