ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

             ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

NEWS: June 30, 2015

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Government Accountability Office studying CFPB's payday lending rulemaking
WASHINGTON (6/26/15)--The U.S. Government Accountability Office (GAO) is currently investigating whether the Consumer Financial Protection Bureau (CFPB) has properly assessed potential impact of its upcoming payday lending proposal.
Sen. David Vitter (R-La.) wrote to the GAO June 11 expressing concerns about the burden the proposal could pose for small entities.
A Vitter spokesman confirmed to News Now Thursday that the GAO investigation has started. Vitter is the chair of the Senate Small Business and Entrepreneurship Committee. 

In his letter, Vitter requested information on whether the CFPB:
* Sought adequate input from small entity representatives (SERs) what would be affected in a way that guarantees adequate input;
* Distributed adequate informational materials to SERs on the proposal, including information on how the proposal would impact the cost of credit;
* Has given small entities enough time to give their input before a proposed rule is drafted;
* Allowed the participation of the Small Business Administration's Office of Advocacy and the Office of Management and Budget's Office of Information and Regulatory Affairs; and
* Taken steps to minimize the impact on cost of credit for small businesses, based on information gained through the CFPB's Small Business Regulatory Enforcement Fairness Act (SBREFA) panels. 

Vitter also requested the GAO interview SERs who participated in the SBREFA panels to gauge their reactions on the panel process. He specifically wanted the GAO to find out if SERs believe their industry was adequately represented; received proper materials; and if their concerns were accurately characterized and considered.    Read more...CREDIT UNION NATIONAL ASSOCIATION 

VPCS Quiz

Forbes: Congress Should Reign In Rogue CFPB
Some in the business community may look down on the small dollar lending industry but given the lackluster economic "recovery" of the last few years it has gained a toehold across America. The customer base serving millions of Americans who live paycheck to paycheck and are often in need of a small, short-term loan to fill a need like a car repair. The growth of the industry and the revenue streams of Cash America International (CSH), First Cash Financial Services (FCFS), and to a lesser extent EZCORP (EZPW) are proof of its need, especially among with working families and the increasingly cash-strapped middle class that are often left out of traditional banking services.

To be fair, small dollar lending is not without risks. Default rates hover near 40% another reason why bigger banks that have tightened up their lending standards refuse to serve the market. That being said, the federal government appears to have set out on a deliberate course to damage, if not destroy the industry as a whole, failing to understand both the risks and the mathematics of short-term lending.
The commonly understood phrase "The power to tax is the power to destroy" derived from the famous Supreme Court decision, McCulloch v. Maryland. The same inferred when it comes to over burdensome regulations -the power to regulate is the power to destroy over time. Just ask small community banks that are grappling with costs to comply with Dodd-Frank. Those costs are likely to spur another round of community bank consolidation, which will also serve to limit the availability of funds to those in need.  

Read more...FORBES

 

CFPB Publishes Over 7,700 Consumer Complaint Narratives About Financial Companies
Over Half of Consumers Filing Complaints Online Opt In to Share Their Experiences Via the CFPB's Public Complaint Database
WASHINGTON, D.C. - Today the Consumer Financial Protection Bureau (CFPB) goes live with an enhanced public-facing consumer complaint database, which includes for the first time over 7,700 consumer accounts of problems they are facing with financial companies concerning mortgages, bank accounts, credit cards, debt collection, and more. The CFPB is also publishing a Request for Information today seeking input on whether there are ways to enable the public to more easily understand and make comparisons of the complaint information.   Read more...CONSUMER FINANCIAL PROTECTION BUREAU 

MicroBilt

Can Alternative Credit Scoring Models Help Millions of Consumers?
More than 50 million Americans have no score, but several startups are helping them qualify for credit in other ways.
Consumers with a solid credit history may not give it a second thought when they apply for a cellphone, an apartment or a new insurance policy. But for the estimated 53 million Americans without a FICO score - often recent graduates, immigrants or those who prefer not to use credit - these seemingly simple tasks can be much more complicated.
Aneesh Varma, 31, knows this frustration firsthand, having moved from New York to the U.K. eight years ago when he worked in finance. "I had a decent job and a decent salary, but I didn't realize your history doesn't move over with you," Varma says. "I was starting from scratch." Varma couldn't get a cellphone contract when he arrived and says he still couldn't "confidently apply for products" even three or four years after the move. He wrote to members of Parliament and U.S. senators to alert them of the challenges faced by immigrants without credit in their adopted country. Eventually he decided to create his own solution, a startup company called Aire that bills itself as "scores for humanity."   

Read more...US NEWS and WORLD REPORT 

PaySafe

* OHIO has more than 1,300 payday-lending stores and an additional 600 title-loan companies, where people receive a short-term loan by using their vehicles as collateral. One in 10 Ohioans has used a payday loan, according to Pew research.

 

* CALIFORNIA: Over $3.3 billion is transacted by payday lenders annually in the State of California and while the size of the transactions has gone down over the past year, the number of transactions has increased. 

AFSPA Platinum Level

Fight erupts over Kennesaw State University's study of payday loans
A battle has erupted over a Georgia university professor's study of payday lending.
Last December, Kennesaw State University released a study of how consumers respond to protracted use of payday loans- the short-term, high-interest loans that many critics contend harm low-income borrowers. The study, by KSU data scientist Jennifer Priestley, cast doubt on claims by critics that extended refinancing of payday loans is harmful to consumers' financial welfare.
"Our research fills a gap in the science of how consumers respond to protracted use of payday loans," Priestley said in announcing the findings.
The study, as Kennesaw State noted prominently, was commissioned by the Consumer Credit Research Foundation, a nonprofit group that says it's "committed to adding a reasoned and rational voice to the public debate on consumer lending and the availability of short-term credit."

Now another nonprofit group, the Campaign for Accountability, is raising questions about the study. The Campaign for Accountability, which says it works "to expose misconduct and malfeasance in public life," including "predatory lenders," on June 10 filed an open records request with Kennesaw State seeking numerous documents related to the payday loan study.   Read more...BIZ JOURNALS 

DM Metrics LLC

Congress Created a Frankenstein Bureau
When Congress passed the Dodd-Frank Wall Street regulation bill, they created an economic Frankenstein monster.
They sold the bill as a way to help consumers by creating an independent federal agency to place regulations on the marketplace. That agency, the Consumer Financial Protection Bureau (CFPB), has morphed into a monstrosity, staking and harming the people it was intended to help.
Designed deliberately to be shielded from the democratic process the bureau was placed beyond the reach of congressional oversight. Critics warned that would give bureaucrats unmitigated and unprecedented power to create government red tape with little recourse or ability to reign in overreach and abuse.
Recent efforts by CFPB bureaucrats to destroy the short-term lending industry are proving critics correct. The CFPB is promulgating on a rule that will place so many regulatory burdens on the small dollar loan industry that most companies will simply close shop. The regulations make no sense in a world where you should be able log onto a computer and secure a couple hundred dollars in a few minutes. The new rules would make the securing of these small dollar loans resemble the paperwork and background checks required for million dollar mortgages.  

Read more...The BLAZE

 

Consumer Financial Protection Bureau Seeks to Hurt Consumers
I've done it myself. More than once.
I've borrowed money online. I went on my computer, entered the required data, got an email within an hour that said I had been approved and had my money the next day.
I was just starting out as an independent writer and editor, and expenses were arriving before payments from clients. It was borrow a few hundred bucks or pay a ton in hot check fees. I did it three times in all. Twice I paid it back within days. Once, I made payments for the full six months.
Yes, it is expensive, but less than a bounced check fee and it didn't destroy my credit. It was a lot of interest, and those payments served as a tough lesson in the importance of getting and keeping the books in order.
But what's important is the product was there. I needed cash quickly, and I got it even though I was just starting out on my own and had little to offer as collateral.
The people who always know what's best for us are trying to put a stop to this. They say it would be better if these loans were not available since those who use them obviously don't know how to manage their money or they wouldn't be in this situation.
But the average loan is $388, the average customer is all paid up in three months or less, almost three-quarters of the loans are paid on time and fewer than 11 percent are charged off. Would any bank out there go for doling out $388 loans that are paid up in three months or less?   Read more...HUMAN EVENTS 

Dreher Tomkies LLP

Debt Collectors vs. Debt Buyers: What's the Difference?
A consumer may not know the difference between a debt collector and debt buyer, but the fact is they are quite different - and consumers can benefit from knowing which is which. While debt buyers have been around for awhile, over the last decade they have become much more prevalent in consumers' dealings with debt. Debt collectors, on the other hand, have been around much longer than debt buyers, and with consumers facing a historical amount of delinquent debt in recent times, debt collectors continue to garner front-page coverage because of how many consumers they come in contact with.
Debt buyers are also commonly referred to as asset buyers, since they are purchasing the assets of entities and their accounts receivables. Technically, any private entity that is owed monies can sell the debt. In doing so, the private entity relinquishes the legal rights to the existing debt and transfers that right to the entity purchasing the debt - the debt buyer. The most common types of defaulted debts sold are medical and financial services-related products such as depository accounts, credit card debts and installment loans, among others.
It is also important to note that just because a debt is purchased from the original entity doesn't absolve a consumer of the debt as the original contract generally has provisions allowing the debt to be sold, thus forging a new relationship with the debt buyer and consumer.   Read more...CREDIT.com 

A&S Management Group

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