ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

NEWS: June 9, 2016

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CFSA
AFSPA





As you know, the Consumer Financial Protection Bureau (CFPB) has recently announced a new, highly restrictive proposed rule that will severely impact your business and limit the availability of short-term, small-dollar credit to consumers.  


The Federal Administrative Procedures Act gives us the right to push back before the rule becomes set in stone. As a CFSA or AFSPA member, you will have our support to effectively share your comments and fight back! 

In a few weeks, a public comment period will begin and continue through September 14th. Our goal is to generate as many different comment letters from our member companies, including you, your employees, business associates, contacts and customers. 

Here's what you can do TODAY

* Call us toll-free at 1.888.544.2313 for more information or to ask questions. 
* Email us at [email protected] to ask questions or to get more information.

CFSA will be able to assist you in the comment period process by sending your company our "FIGHT BACK PACKET" to start the process of creating individualized comment letters to be submitted to the CFPB. Also, we will provide you with important information about the CFPB proposed rule and other ways to get involved, including a webinar exclusively for CFSA members. Email us at [email protected]

In order to protect you, your business, and your customers, get involved by taking action today. Your business and our industry depends on it.

Sincerely,
Dennis Shaul and Dan McCabe

PS: To learn more about the rule proposal and how to get involved, visit  www.cfsaa.com
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Factor Trust
Dreher Tomkies LLP
Washington Post: Regulators need to strike the right balance in limiting payday lending
By Editorial Board June 7
IN AN ideal world, American households would be immune from the financial vicissitudes that can oblige them to meet cash crises by borrowing small amounts at high interest. In the real world, 46 percent of households lack the ready funds to meet an unexpected $400 expense, according to a recent Federal Reserve study; and about 4% of that group told the Fed they would cope using a payday loan or similar option. A significant percentage of payday borrowers may, in turn, find themselves paying off old small-dollar loans with new ones, creating a crushing burden of debt. Hence this policy question: how to preserve realistic credit options while minimizing the potential for abuse and exploitation.

Ever since its inception in 2010, the Consumer Financial Protection Bureau has had in its sights the nation's estimated 20,000 payday lenders, which do business in 36 states and online. Now the CFPB has unveiled a proposed regulation that would radically change the payday lending business model - or, the industry complains, destroy it. Similar to an outline the bureau sketched a year ago, the proposed rule requires the kind of expensive, ability-to-pay underwriting that payday lenders characteristically avoid. Their business model mitigates the inherently high risk of default by charging high fees and interest and, often, "churning" accounts.
microbilt
CapitalCompliance
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AFSPA
CFSA
Executive: Proposed federal payday loan rules could cost Wichita jobs
New federal rules proposed last week for payday lenders could have an adverse impact on a major Wichita employer, according to the company's chief operating officer.

Bill Baker of Curo Financial Technologies - the Wichita-based parent company of Speedy Cash - said a proposed rule announced June 2 by the Consumer Financial Protection Bureau could ultimately affect the more than 600 employees the company has at its Wichita headquarters and call center.

The rules would mandate that payday lenders consider borrowers' ability to repay loans and limit the number of repeat loans offered to the same party.

While the changes may not manifest until as late as 2018, Baker said they could significantly alter the way lenders like Speedy Cash do business, which he said could lead to job cuts at Speedy Cash's parent.

"We were disappointed with what they issued," Baker said. "Largely, what we in the industry believe it does is it cuts off access to short-term credit. One thing these rules can't regulate is demand."

"In states where prohibitive legislation has been put in for short-terms loans, we've seen customers turn to overdraft protection, which is far more expensive, or, worse yet, we've seen them turn to unlicensed lenders. Those avenues are almost always more expensive."
LeadToro
LoanTec
Chicago online lender Enova preps for payday loan regulation
A crackdown on high-cost payday loans could take a big bite out of Enova International's revenue, but the Chicago-based online lender isn't sweating it yet.

The federal Consumer Financial Protection Bureau proposed new regulations last week primarily targeting payday loans: short-term, high-cost loans that are typically due on a borrower's next payday.

Those loans make up less than 9 percent of Enova's business, but other types of loans the company offers may also be affected.

Enova discussed the potential implications in an investor call Monday, saying it's well-positioned to be agile as the market changes and to pick up business if brick-and-mortar lenders fail. The company has 1,200 employees, most at its Loop headquarters and Gurnee office.

The new rules would require lenders to ensure consumers can repay loans, as well as cut off repeated debit attempts that lead to fees for consumers - an attempt to curb "debt traps," or instances where borrowers seek fast cash and end up with long-term debt because of fees and high interest rates. Read the story at CHICAGO TRIBUNE
Prepay Nation
Opportunity Tax Service
Obama Elitists Help Proles (working people) with Their Finances by Charlotte Hays
There are people who face emergencies and don't have kindly relatives to bail them out and thus resort to pay day loans.

The bureaucrats who work for the Consumer Financial Protection Bureau (where they pull down notoriously cushy salaries) do not fall into this class. So they are probably giddy with rectitude for having found a way to almost eliminated pay day loans as source of credit for people who lack their taxpayer-funded salaries.

The CFPB just released a set of regulations that will make it all but impossible for people to get payday loans.

Before we proceed--yes, payday loans are in general a bad idea. The interest is high, but guess what? They can bail out somebody in a pinch and sometimes the high interest rate beats the consequences of not being able to get the money. Another consideration: people should be able to make their own mistakes and learn to manage their own finances.

At a Congressional hearing last year, a consumer advocate testified that the interest rate for payday loans should be capped at 36 percent, the legal limit for loans to armed service members. A congressman responded with a question that perfectly illustrated the fallacy of converting payday loan fees into annualized interest rates:
Would you loan me $100 for two weeks in return for one dollar? That's about a 36 percent interest rate.

The obvious answer is no because the dollar earned is not worth the risk of losing $100, especially when the borrower is financially strapped. The fate of that $100 rests in the same precarious hands whether the loan term is two weeks or one year. Risk rather than time drives current interest rates, so even if convenience-related fees are characterized as interest, 15 percent, not 390 percent, is the fair measure of payday lenders' avarice. Read more at INDEPENDENT WOMEN'S FORUM
DM Metrics
TLPP
Four Things You Need to Know about Payday and Small-Dollar Lending by Center for Financial Services Innovation
Thursday in Kansas City, Missouri, the Consumer Financial Protection Bureau (CFPB) issued a proposed rule on payday loans and other small-dollar loan products. This rule introduces protections that would curb consumer harm and have other broad implications for much of the small-dollar credit (SDC) industry: payday lenders, auto title lenders, installment loan providers, and more. There's a lot of fog around this topic. Having conducted extensive research on small-dollar credit, here are 4 things lenders should understand about SDC borrowers and their needs:
1. There are four well-defined reasons people turn to small-dollar loans. There is no one-size-fits-all solution for consumer credit needs. However, each of the 24 million SDC borrowers in America1 broadly fall into one of four primary need cases: unexpected expense, misaligned cash flow, exceeding income, or planned purchase. Underlying each of these need cases are specific implications and recommendations for providers seeking to better address these consumers' financial health challenges. For instance, exceeding income borrowers typically access debt they cannot afford and are much more likely to fall into harmful cycles of debt. Providers should try to identify these consumers and offer them high-quality, safe solutions that help them improve their debt situation, rather than exacerbate it.
Insight
Sherman & Associates
ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION 



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Alternative Financial Service Providers Association
757.737.4088

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