Today's Headlines

    Federal Agency Issues TCPA Rule

    AFSA Staff

    On Friday May 6, the Federal Communications Commission (FCC) released a notice of proposed rulemaking on the use of modern dialing technologies when contacting consumers via cell phone about debts owed to or guaranteed by the government – such as student loans, mortgages and taxes.

    The proposal would limit the frequency of the calls to three per month and also limit the duration of the calls. In the proposed rule, the FCC broadly seeks comments on several proposals including which calls are covered by the phrase “solely to collect a debt,” the inclusion of servicing calls, and allowing consumers to stop calls anytime.

    The FCC also posed several questions in the proposal.

    • Should the FCC place any limits on a covered caller using or transferring information obtained during covered calls in order to collect other debts or to address other matters?
    • How should the Supreme Court’s decision in Campbell-Ewald Co. v. Gomez inform the FCC’s implementation of the Budget Act amendments to the TCPA?
    • Should the FCC encourage debtors hearing from a live agent to discuss a debt and potential servicing options?  If so, how?
    • How should covered calls be harmonized with other laws and rules that more generally govern debt collection?

    Comments on the proposed rule are due June 6 and reply comments are due June 21. AFSA will submit a comment letter.

    Payday Lenders Seek Gov't Intervention After Google Ad Ban

    American Banker, Kate Berry (5/11/2016)

    On May 12, Google moved to prohibit payday lenders from advertising on its platform. The company defines a “payday loan” as one which has an APR higher than 36 percent or requires repayment in 60 days or less. Consumer advocates have long sought the change and now turn their attention other large search firms like Microsoft and Yahoo.

    Industry analysts have noted that the policy is discriminatory, citing the monopolistic tendency of Google and their decision as making a blanket statement about the industry as opposed to discerning good actors from bad. "This unprecedented abuse of power by a monopoly player should concern lawmakers at both the state and federal levels and should invite scrutiny of state and federal regulators," said Lisa McGreevy, president and CEO of the Online Lenders Alliance. "The policy discriminates against those among us who rely on online loans, especially the large number of Americans who cannot raise $2,000 in case of emergency."

    The ban comes just a few weeks before the Consumer Financial Protection Bureau (CFPB) is set to release their rules governing payday and other small dollar loans.

    Borrowers will still be able to find payday lenders on Google – the lenders would, however, be unable to use the site as a lead generator. "The online payday loan market will shift modestly from lead generators to direct online payday lenders, but only modestly," said Alex Horowitz, a senior research officer at the Pew Charitable Trusts, which has been studying the payday loan industry for years. 

    Is the F&I manager an endangered species?

    Automotive News, Hannah Lutz (5/9/2016)

    Experts are divided on whether the F&I Manager is going extinct. They do agree, however, that the entire process is changing. Industry analysts note that it can be difficult to justify a $120,000 per year employee as the economy and market slows, and as technology picks up much of what the F&I manager is used to doing. In many modern dealerships, the sales person is handling the financing as well.

    Gerry Gould, director of training at United Development Systems in Clearwater, Fla., says compliance proficiency carries a learning curve. That's why he maintains F&I managers won't disappear, at least for a while. "With all the regulations, F&I has to be separate from the sale because you need people who are well-versed" in compliance requirements, he says. "You can't hold [just] anyone accountable for overseeing an F&I department."

    The real change, however, is online retailing. F&I isn’t disappearing but instead, going with the times. Dealers who fail to understand that consumers are armed with online research and refuse to meet the consumer online, will suffer marketshare.

    House Republicans to Unveil Bill Relaxing Bank Regulations

    Bloomberg BNA, Rob Tricchinelli (5/11/2016)

    In the coming weeks, House Republicans are set to unveil a bill that would allow banks to be deemed compliant with certain financial regulations in exchange for maintaining higher capital levels. The bill’s sponsor, Rep. Steve Stivers (R- OH), criticized compliance costs for small financial institutions.

    The bill will also include language that would give the Consumer Financial Protection Bureau (CFPB) a dual mandate of both consumer protection and safeguarding access to credit. 

    Five Ways Baby Boomers In Business Should Mend Their Ways, Jim Henry (4/30/2016)

    In an article with, Jim Henry distilled a presentation made at the AFSA Vehicle Finance Conference from millennial expert Jason Dorsey. The presentation and the list details how baby boomers should mend their ways as millennials take a new and more pronounced role in the business world.

    1. Instead of business cards, a short email or text message is the best way to exchange contact information. As far as the phone, Dorsey noted that real friends don’t call expecting a live conversation. Forget long messages of any type, too.
    2. Don’t hand a millennial a map – they have GPs-enabled devices and only use those.
    3. Not everyone has a pen and baby boomers shouldn’t be upset when a millennial pulls out their smartphone to take notes or exchange information.
    4. Baby boomers have the tendancy to view millennials as “slackers.” They’re just like any other generation – those who work hard, do so. Millennials are just as interested in buying cars, owning homes and starting families as their baby boomer bosses.
    5. Baby boomers think that millennials are tech-savvy. This isn’t always the case. More often than not, millennials are tech-dependent. “We don’t know how it works. We just know we can’t live without it,” he said. The question for businesses is, Dorsey said, “How simple can you make it? Just so it works.”

    CFPB Issues Proposal to End Forced Arbitration

    F&I Showroom, Greg Arroyo (5/10/2016)

    On May 5, the Consumer Financial Protection Bureau (CFPB) issued its proposed rule prohibiting mandatory arbitration agreements in contracts. More than a year ago, the bureau issued a 728-page report on the use of pre-dispute arbitration which it said found that consumers were awarded far less than they would have been if they had joined a class action lawsuit.

    But not all findings in the study supported the elimination of mandatory arbitration clauses. For instance, the study showed that in many class action cases where the principal purpose of seeking class relief was to pressure a settlement, members of the class action got nothing or next to nothing. It also found that class action cases almost never make it to trial, while a significant percentage of arbitration proceedings actually resolve the disputes. The study also showed that arbitration is both faster and more economical than litigation.

    “Late last year, the CFPB released a study on arbitration, which the bureau says shows that consumers are harmed by arbitration agreements as opposed to class action lawsuits. However, a careful review of the CFPB’s study demonstrates that the opposite is true …,” the American Financial Services Association wrote in a news brief issued last Thursday. “In 60% of class actions studied by the CFPB, consumers received no remuneration at all.

    “In the 15% of cases where consumers received monetary compensation in class actions, they received an average of just $32.25, after waiting an average of 23 months,” the associated added. “In contrast, consumers who prevailed in arbitration agreements, on average, received $5,389. The real winners in class action lawsuits are plaintiff’s attorneys, who divided approximately $424 million in fees.”

    “The essence of the proposal issued today is that it would prevent mandatory arbitration clauses from imposing legal lockouts to deny groups of consumers the right to pursue justice and secure meaningful relief from wrongdoing,” Cordray said.

    That’s not how the AFSA views the bureau’s proposal. “Despite a wealth of evidence suggesting that the bureau’s interpretation of its own study is flawed, today’s rule, in its present form, would have a negative impact on customers by taking away a valuable tool to resolve disputes,” the associated stated. 

    Big Banks Are Winning the Battle for Millennials

    American Banker, Brian Patrick Eha (5/5/2016)

    US Bancorp launched its new mobile app last October and focused on millennialls’ needs front and center. The cohort likes things done instantly, so the app includes the ability to send small amounts of money to friends, peer-to-peer, within the app. They expect to be greeted personally, so the app allows for a self-portrait to greet them as they login.

    The app is just the latest tool in attracting millennials – or the largest and fastest growing customer segment in the country – as banks and financial institutions invest in technology to make day-to-day banking easier. Investing in technology like, mobile check deposit, online banking tools, and security functions like finger print recognition have already generated a return on investment.

    However, the benefits seem to be enjoyed by big banks more than other financial institutions because of banks’deeper pockets and the desire to come back from recent reputational blows. Big banks are now out performing regional or local banks in terms of customer happiness. Technology is the key differentiator.

    The popular narrative suggests that millennials are distrustful of big banks, but in reality, they want convenience, speed and features. Industry analysts note that the main reason some of the big banks are so successful is their willingness to recognize that millennials cannot be lumped into one large group. Some banks are focusing key resources on affluent millennials, others are focusing their resources on those whose paychecks are at the lower end of the earnings spectrum.