ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

             ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

NEWS: October 5, 2015

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Congress Grills CFPB Director over New Rules, Bureau Methods
Consumer Financial Protection Bureau Director Richard Cordray was the sole witness at the House Committee on Financial Services Hearing yesterday, a hearing occasioned by the CFPB's Semi-Annual Report.
Throughout the long (nearly 4-hour) and often contentious hearing, Committee Members pushed Cordray on his agency's rulemaking authority, the efficacy of statistical methods behind enforcement, the agency's lack of transparency and the merit behind newly proposed Bureau rules involving payday lending and auto financing.
Cordray was surely not expecting a friendly audience and - with the exception of several Democrats who spent the whole of their time praising the Bureau's work - a visibly agitated Cordray spent the bulk of his time defending Bureau actions.
Much of the discussion centered on Bureau plans to create new, Federal rules for payday lending. Several Committee members, including Randy Neugebauer (R-Tex) and Committee Chairman Jeb Hensarling (R-Tex) challenged Cordray on the Bureau's plans to regulate small dollar, short term loans. Neugebauer specifically criticized the Bureau for not identifying alternative products that could fill that credit need.  Rep. Dennis Ross (R-Fla) noted that proposed CFPB regulation would eliminate many payday lenders and that the ratio of complaints to transactions is not nearly big enough to justify Federal regulatory action.
Read the article at INSIDEARM
Prepay Nation
Alternative Lending Regulation? A Guide To The Issues As Treasury's Comment Period Draws To A Close
Over the summer, the Treasury Department requested comments on the online marketplace lenders that provide an alternative to bank loans for consumers and small businesses. With the volume of loans rising rapidly, and the field getting crowded with new players, it's clear that such alternative lending is here to stay. And, overall, that's a good thing: With banks focused on larger customers, small businesses - which typically need financing of less than $250,000 and often face insurmountable difficulties getting it - benefit from these new ways to get funds.
But there's been a downside of the rapid emergence of this largely unregulated industry. For small business borrowers, shopping for loans and comparing offers can make buying a used car look easy. In the worst case, entrepreneurs get pressured to sign up for expensive financing, and wind up in a death spiral where they keep having to take out more debt to pay back the earlier financing whose rates and terms they never really understood.
Last month, a group of lenders, brokers and small business advocates got together to introduce a small business borrowers bill of rights as a way to nudge the industry, voluntarily, in the right direction. But there's a lot to be said for having rules that all players have to follow, and it will be far better for both lenders and borrowers if federal regulators take the lead than if states are left to themselves to create a patchwork of conflicting rules."I find it hard to believe there will not be some effort for government to take a role," says John Arensmeyer, chief executive of the Small Business Majority, which represents 28 million small business owners across the country and filed a detailed response to Treasury.   FORBES
Dreher Tomkies LLP
FDIC Grilled on Coercion Against Payday Lenders
A government agency must face claims about the pressure it used to make banks stop working with payday-loan businesses, a federal judge ruled.
     The Community Financial Services Association of America and Advance America, a payday lender that belongs to the organization, brought the lawsuit in question in Washington, D.C.
     They claimed that business took a dive when Federal Deposit Insurance Corporation coerced banks about their supposed "reputation risk."
     Having lost "beneficial banking relationships," Advance America for example says it was forced to look for new banking partners on short notice.
     The move has allegedly left the lenders unable to compete for banking resources and has stigmatized them.
     Advance America and the CFSA say the pressure was part of a campaign initiated by the Justice Department known as "Operation Choke Point," which took aim at banks that worked with financial entities regulators saw as higher risk for fraud and money laundering.
     The payday lenders contend that the operation violated their due-process rights since there was no showing that the lenders actually violated the law.
     A House committee investigated Operation Choke Point and the FDIC's involvement in 2014.
     Meanwhile U.S. District Judge Gladys Kessler advanced some of the lenders' civil claims on Friday.   Read article at COURTHOUSE NEWS SERVICE
ZERO Parallel
CFPB Orders Indirect Auto Finance Company to Provide Consumers $44.1 Million in Relief for Illegal Debt Collection Tactics
Westlake Services and Wilshire Consumer Credit Pressured Borrowers with Illegal Threats and Phony Caller IDs
WASHINGTON, D.C. - Today the Consumer Financial Protection Bureau (CFPB) announced an enforcement action against an indirect auto finance company and its auto title lending subsidiary for pressuring borrowers using illegal debt collection tactics. The CFPB found that Westlake Services, LLC and Wilshire Consumer Credit, LLC deceived consumers by calling under false pretenses and using phony caller ID information, falsely threatened to refer borrowers for investigation or criminal prosecution, and illegally disclosed information about debts to borrowers' employers, friends, and family. The Bureau ordered the companies to overhaul their debt collection practices and to provide consumers $44.1 million in cash relief and balance reductions. The companies will also pay a civil penalty of $4.25 million.
"There's no excuse for lying to your customers, and today's action will provide millions of dollars in relief for borrowers caught up in Westlake and Wilshire's deception," said CFPB Director Richard Cordray. "Consumers struggling to pay their bills deserve to be treated with respect, not subjected to illegal threats and deceptive phone calls. We will continue to clean up the debt collection market and root out these illegal and inexcusable practices."    Consumer Financial Protection Bureau
Southwestern Investor Group
WHO USERS FRIEND ON FACEBOOK COULD AFFECT THEIR CREDIT SOMEDAY
Most Facebook users have a friends list that is composed of a motley crew of various people they met in high school and college, coworkers, friends they made on vacation, the six or seven friends they've made in the last 10 years and a whole pile of people that they feel certain they probably know, even if they can't remember where from.
In short, with few exceptions, most of us aren't too choosy about who we friend on FB - until those people post too many political rants/inspirational chain mails and we unfriend them.
However, a new patent rolled out by FB and covered by Popular Science this week indicates that perhaps we all might want to think about getting a little more selective - since in the future the social network just might use our connections to determine our creditworthiness.
Specifically, a new patent issued to FB this week would allow lenders to check one's friends' credit scores before determining whether or not to underwrite a loan.
In a fourth embodiment of the invention, the service provider is a lender. When an individual applies for a loan, the lender examines the credit ratings of members of the individual's social network who are connected to the individual through authorized nodes. If the average credit rating of these members is at least a minimum credit score, the lender continues to process the loan application. Otherwise, the loan application is rejected.   Entire article at PYMNTS.COM
Business Solutions NEWS

What doesn't affect a credit score? By Walt Wojciechowski
Across the country, millions of consumers have started to focus on what affects their credit scores. And while that kind of effort to better understand their ratings is a good idea, it should also come with the caveat that there are still many misconceptions lingering in the general public about what does and does not end up impacting scores. Specifically, it might be wise for consumers to figure out what has no impact, because it allows them to devote more effort toward fixing the things that actually matter.
When it comes the issues related to credit, consumers should try to keep in mind that it's specifically related to how they've handled accounts on which they owe money, according to a report from the Better Business Bureau. Things like age, race, religion, immigration status, sex, and even marital status don't matter at all here. However, it is important to note that married couples trying to get credit together, such as for a credit card, auto loan, or mortgage, will be judged jointly on their individual credit histories, meaning that those who have struggled before might end up hurting the chances they and their partners are approved.  

Read the article at MICROBILT 

Alternative Financial Solutions
Alternative Data and Buy-Here, Pay-Here
Transportation is a key factor in upward mobility in the U.S. In many parts of the country, it is nearly impossible to work without a vehicle. However, in order to buy a vehicle, one must have credit.
For the owner and operator of a buy-here, pay-here store (BHPH), the operator is in the unique position of not only building a financial bridge upward, but to shape the way the industry and regulators view this segment. The buy-here, pay-here operator is not only the dealer, but the finance company as well. Being in this position comes with additional responsibilities and a vast array of challenges. Recently, the FTC penalized a Texas BHPH operation regarding credit reporting. The FTC's complaint alleges that Tricolor Auto Acceptance (TAA), violated the Furnisher Rule, which was implemented under the Fair Credit Reporting Act. The rule requires companies that report information about consumers to consumer reporting agencies (CRAs) to maintain policies and procedures designed to ensure that the information they report to CRAs is accurate and to allow consumers to dispute information they believe is inaccurate directly with the company that furnished the information.   FACTORTRUST
LoanTec

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Alternative Financial Service Providers Association
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