ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

NEWS: June 23, 2016

NEWS is brought to you by AFSPA Endorsed SUPPLIERS

Dreher Tomkies LLP
GAO Releases Report on CFPB Personnel Management and Organizational Culture Issues
Jun 21, 2016

The GAO recommends that the CFPB take additional steps to help ensure sustained commitment and accountability for its growing diversity initiatives and employee grievance process.

The U.S. Government Accountability Office has released a new report with the results of its survey of diversity and discrimination at the Consumer Financial Protection Bureau. The survey, conducted at the request of the U.S. House Financial Services Committee, found that the CFPB needs to take additional actions to support a fair and inclusive workplace.

Less than 18 percent of all survey respondents, who were comprised of nonexecutive CFPB employees, said they felt they had experienced discrimination at the CFPB. Black respondents reported the highest amount of discrimination at 26.8 percent, and women were more than twice as likely to report they had experienced discrimination than their male counterparts.

When asked if "differences among individuals (e.g., race, national origin, religion, age, cultural background, disability, sexual orientation) are respected and valued" at the CFPB, 72.6 percent of all respondents strongly or somewhat agreed with the statement. However, when examining employee responses based on race, the GAO found that 58.5 percent of black employees and 64.7 percent of Hispanic employees agreed with the statement.
DM Metrics
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. 
To request a PACKET, email us at [email protected] and provide:
1) Company name
2) Number of storefronts
3) Contact information including your company's phone number, email, and address

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  
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Factor Trust
FactorTrust Announces New Customer Relationship with LendUp
Inventive Silicon-Valley-based Short-Term and Installment Lender Utilizes FactorTrust Data for Underwriting Consumer Loans

ATLANTA--(BUSINESS WIRE)--FactorTrust, The Alternative Credit Bureau, announces a new customer relationship with Silicon-Valley-based consumer lending company LendUp. LendUp leverages FactorTrust data to expand its robust underwriting process.

A 2015 Federal Reserve Board study found that 47 percent of Americans could not cover a $400 emergency expense without borrowing money, underscoring the critical need to preserve access to short-term, small-dollar loans. LendUp's mission is to not only give these consumers access to the funds they need, but to also lower the cost of borrowing over time and help customers build their credit scores.

To support this undertaking, the company developed the LendUp Ladder to ensure consumers have an actionable path to increased access to money at better rates for longer periods of time where available. Customers climb the ladder by earning points. Customers earn points by repaying loans on time and by other actions such as taking the free financial educational courses offered by the company. Read the RELEASE
microbilt
Georgia Supreme Court Considers Online Payday Lender Legality
A case before the Supreme Court of Georgia Tuesday asks whether online payday lenders can legally operate in the state.

Georgia law prohibits payday loans, which are small loans that typically have to be paid back within a short period - often at a great cost.

Nevertheless, three online companies, Western Sky Financial, Delbert Services and CashCall, provided these kinds of loans to Georgia residents. And they're now arguing the loans weren't illegal because the companies were based out of state.

According to Georgia's attorney general, Western Sky Financial collected more than $15 million from Georgia residents in offering loans.

Alex Horowitz at Pew Charitable Trusts' Small Dollar Loan Project said similar cases have come up across the country.

"There are questions about authority and whether state attorneys general have the authority to regulate this type of transaction where the lender claims choice of law from another state," Horowitz said.

The challenge comes from the fact that all of the laws regulating the short-term loan industry have been at the state level, Horowitz said. Read the story at WABE.org
Insight
CFPB Faces Employee Morale, Fairness Issues: GAO By David Baumann
June 20, 2016
The CFPB continues to face employee morale and fairness perception problems, the Government Accountability Office said in a report released Monday.

And the agency lacks tools to measure whether those issues are being addressed, the agency said in its performance audit, which included a survey of CFPB employees.

The GAO study followed a series of congressional hearings in 2014, during which CFPB employees leveled allegations of discrimination and retaliation. In addition, employees complained in an internal report that year that bureau managers demonstrated elitism, favoritism, discrimination and a lack of respect.

Some 85% of those who responded to the GAO survey said their supervisor treated them fairly. However, more than 30% disagreed with the statement that a culture of accountability exists for all employees.

A similar percentage disagreed with the statement that success at the agency is based more on merit than personal connections and favoritism. And in the CFPB's Office of Consumer Response, Office of Human Capital and two of the four agency regional offices, 40% or more disagreed.

More than 25% of respondents said they could not raise concerns or file a complaint without fearing reprisal from a manager. And 23 of the 45 survey respondents who reported experience with the agency's equal employment opportunity complaint process disagreed with the statement that the Office of Civil Rights was a neutral party.
Capital Compliance
High-Cost Lending at Risk Under CFPB Proposed Rules
6/16/2016 by Richard Eckman, Philip Hoffman | Pepper Hamilton LLP
The proposed rule raises troubling issues regarding the impact on some traditional bank products as well as some marketplace lending products.

The Consumer Financial Protection Bureau (CFPB or Bureau) released its long-awaited payday lending proposed rule on June 2 as part of a rollout that included a field hearing and all 1,300 pages of the proposed rule. The proposed rule largely echoes the proposals released by the Bureau as part of the Small Business Review Panel in March 2015. The proposal is issued pursuant to the authority granted to the CFPB to determine certain financial products or practices as unfair, deceptive and abusive. In addition to the proposed rule, the CFPB is also launching an inquiry into other potentially high-risk loan products and practices focused on lower-income individuals that are not specifically covered by the proposed rule.

A copy of the proposed rule can be found here. Comments are due to the Bureau on or before September 14, 2016. Read more at JDSUPRA
LoanTec
Federal regulations will hurt payday loan operations in U.S.
BY BOB ZEITLER Special to The Star
This month the Consumer Financial Protection Bureau came to Kansas City and put on a show for the news media, announcing new federal regulations that will essentially eliminate the regulated, short-term lending industry, greatly limiting millions of consumers' access to a range of credit products - and put me out of business.

My company offers cash advances, or "payday loans" (typically around $350), that provide convenient access to funds that help thousands of working Missourians meet financial obligations. My customers use payday lending to manage periodic shortfalls because it's less expensive than unlicensed loans, bank overdraft programs, bounced checks, late payments to credit card companies or utility re-connections.

Last year, I was selected by the Consumer Financial Protection Bureau as one of a number of "small entity representatives" to provide input on how the payday lending rule the agency outlined would affect small businesses. It was clear the bureau was not really interested in our perspective but was going through the motions required by law: the first material we received from the bureau didn't have any small-business-specific data and included a prediction that its proposal would result in 59 to 84 percent revenue declines for our businesses.

You don't need to be an MBA to know that an 84 percent loss in revenue will destroy small businesses and subject larger operators to a slow death. The proposed rules set bureaucratic requirements that no small operators could possibly meet, leaving consumers without a valuable, effective option for managing financial challenges. The bureau has utterly failed to understand my customers, dismissing the very real needs and the rational actions of millions of Americans. The bureau falsely assumes that if our stores close, people will suddenly be better off. But taking away my customers' ability to borrow doesn't erase their need for credit or ease the challenges they face. Read more at KANSAS CITY STAR
Prepay Nation
Payday regulations latest example of bureaucratic swarm
Thomas Jefferson complained in the Declaration of Independence that King George III "has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people, and eat out their substance."

Americans today can empathize. An unending string of new regulations from a multitude of offices like the Department of Labor, the Environmental Protection Agency and the National Labor Relations Board have left people with less dynamic economy and fewer job opportunities.

And the swarm is only increasing. This month, the recently created Consumer Financial Protection Bureau proposed 1,300 pages of new regulations on businesses providing payday loans. By the CFPB's own estimates, the rule is likely to cut 80 percent of payday loan volume, putting thousands of companies out of business.

Why the disdain for this industry? Payday lending has always been a target of regulators, who see it as a predatory industry preying on low-income earners. "One could readily conclude that the business model of the payday industry depends on people becoming stuck in these loans for the long term," claims the CFPB.

Of course, it's highly unlikely that federal bureaucrats living in leafy Washington, D.C., suburbs have ever needed a quick $100 to pay for daycare, fix their car or keep their utilities running. Just because they don't know anyone without a bank account doesn't change the fact that one in nine American households doesn't have a checking account, and three-quarters live paycheck-to-paycheck (i.e., those who may need a payday loan on occasion).
Opportunity Tax Service
Bill with CFPB Restrictions Faces Possible Veto
President Obama's senior aides recommended he veto a House Financial Services appropriations bill that contains myriad of legislative riders - including restrictions on the CFPB.

Those provisions, which include subjecting the agency to the annual appropriations process, are supported by credit union trade associations.

Despite that support, the legislative riders are unlikely to be enacted this year. The Senate Financial Services appropriations measure does not include them, and when House appropriators have proposed them in the past, they have been dropped from the final legislation.

In a statement of administrative policy issued by the Office of Management and Budget Tuesday, the administration said the bill would politicize the leadership of the CFPB, severely weaken its independence and undermine its ability to serve the most vulnerable consumers.

In addition, the administration said, the bill would undermine key consumer protections by keeping the CFPB from enacting final rules restricting payday lending and mandatory arbitration agreements.

"These are problematic, ideological provisions that are beyond the scope of this bill," the administration said. Read the story at CREDIT UNION TIMES
TLPP
ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION 


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AFSPA

Alternative Financial Service Providers Association
757.737.4088

315 Tuscarora St., Lewiston, NY 14092
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www.afspassociation.com