Today's Headlines

    Experts to Address Data Breach Best Practices

    Jim Cheraq and Meghan Musselman, Partners with Hudson Cook, will address What to Do in the Event of a Data Breach as part of AFSA’s webinar series on next Wednesday, October 11 at 3:00 p.m. ET.

    Registration is now open.

    Data breaches, no matter the size, can significantly affect your company. How should you respond to a data breach? How do you identify and comply with your legal obligations? How do you manage reputational risk? Can you prepare in advance? It’s not “if,” but “when.”

    Come learn how you and your company should respond and why you should be starting to prepare now.

    CFPB Announces Final Small-Dollar Lending Rule

    Today, the Consumer Financial Protection Bureau (CFPB) released its final rule governing Payday, Vehicle Title, and Certain High-Cost Installment Loans. Upon a quick review, as anticipated, the rule is limited to short-term personal loans of 45 days or less. The extent to which AFSA members are affected by the rule's requirements regard "payment withdrawal practices, related disclosures, and recordkeeping."

    The bureau also released a fact sheet  in conjunction with today's rule.

    The final rule will become effective 21 months after publication of the rule in the Federal Register. Certain provisions necessary to implement the consumer reporting components of the rule, specifically § 1041.11, will become effective 60 days after publication of the final rule in the Federal Register to facilitate an orderly implementation process. The rule will likely face Congressional and legal challenges from other members of the small-dollar lending industry.

    AFSA is pleased to see that the bureau has made the important distinction between beneficial traditional installment lending, and payday and title lending.

    “Today’s rule is a validation of what we have been saying all along – that the small-dollar lending industry provides access to quality products, like traditional installment loans, and is critically important for the American consumer,” said Chris Stinebert, President and CEO of AFSA. “During congressional testimony when asked about the proposed rule, Director Cordray noted how essential it was that any rule focus on making sure there is room for responsible loans such as installment lending.”

    AFSA, Sister Trades File Legal Challenge to CFPB’s Anti-Arbitration Rule

    Last week, the American Financial Services Association, the U.S. Chamber of Commerce, American Bankers Association, the Consumer Bankers Association, Financial Services Roundtable, Texas Association of Business, Texas Bankers Association, and nine chambers of commerce located throughout Texas today filed a legal challenge to the Consumer Financial Protection Bureau's (CFPB) anti-arbitration rule.

    AFSA President & CEO Chris Stinebert was featured in the American Banker commenting on the rule.

    The coalition issued this joint statement:

    "For years, our organizations have tried to work with the CFPB to promote strong consumer protection while maintaining a functional arbitration system. The CFPB's own study found that arbitration provides more benefits to consumers than class action lawsuits. Unfortunately, the CFPB chose to instead finalize a rule that will harm consumers and businesses by effectively banning arbitration and increasing speculative class action litigation. As Congress continues to consider action within its purview, we are filing this challenge to ensure all legal remedies are utilized to preserve arbitration for consumers. Ultimately, we hope this legal challenge will compel the CFPB to take this misguided rule back to the drawing board. If left unchecked, the CFPB's rule will harm consumers and businesses alike while providing a financial windfall to the class action plaintiffs' bar."

    The legal challenge rests on the following grounds: 

    1. The rule is fatally unconstitutional because it was promulgated under a structure established in the Dodd-Frank Act that renders the Director of the CFPB unaccountable to and effectively insulated from control by, the President and Congress
    2. The rule violates the requirements of the Dodd-Frank Act because the study conducted by the CFPB was flawed, based on biased data.
    3. The rule is arbitrary and capricious action in violation of the Administrative Procedure Act because it failed to address key considerations-among them, whether effectively eliminating arbitration in contracts would injure consumers.
    4. The arbitration rule departs from the requirements of the Dodd-Frank Act because it is not "in the public interest and for the protection of consumers."  

    The full complaint can be read here.

    AFSA Releases Fintech Regulation White Paper

    AFSA Staff

    On October 3, AFSA’s State Government Affairs department released its October white paper on the ongoing evolution of the regulation of fintech companies. At a time when federal and state regulators debate how these emerging sources of consumer credit should be regulated, AFSA’s white paper examines the Office of the Comptroller of the Currency’s (OCC) proposed special purpose national bank charter for fintech companies and outlines the concerns raised by state regulators and fintech companies in response to the proposed charter.

    The white paper also includes information on ongoing legal battles relevant to the regulation of fintech companies, including suits from the Conference of State Bank Supervisors and the New York Department of Financial Services challenging the OCC’s proposed charter and other cases regarding the “valid when made” doctrine. Finally, AFSA’s white paper looks at pilot programs launched at the state and federal levels to encourage innovation and create so-called “regulatory sandboxes” for fintech companies. AFSA remains committed to monitoring fintech regulation closely and will continue provide updates to members on any relevant developments.

    AFSA’s State Government Affairs team publishes white papers monthly, and members can find previous papers on AFSA’s website under the SGA Resources section.

    Industry Study Shows Sixth Straight Year of Growth in Non-Prime Auto Space

    The non-prime automotive financing sector experienced the sixth consecutive year of market growth in 2016, according to the 2017 Non-Prime Automotive Financing Survey. Co-sponsored by the National Automotive Finance (NAF) Association and American Financial Services Association (AFSA), the survey is a benchmarking tool to identify trends in the industry.

    Through the combined efforts of both associations, 54 companies participated in this year’s survey. This is the 21st year of the survey, started by NAF, and the third year both trade associations have teamed up as co-sponsors. This effort is believed to be the most comprehensive survey of the non-prime auto-lending sector.

    Over the past few years, significant improvements to the survey have been implemented. For example, an easier data-gathering approach through a web survey and a new reporting format give the report broader and more comprehensive coverage and provides information that cannot be found anywhere else.  Contributing to the report are TransUnion, FactorTrust and Black Book, all providing additional market insight by supplying data and analysis on nonprime auto financing. 

    Key findings from the survey include:

    • Sixth consecutive year of market growth
    • Competition increases, pace slows
    • Banks led market share development with positive gain in 2016
    • Several indicators showed a trend towards improved quality including higher credit scores for new and used, decreases in payment-to-income, decreases in average annual net charge-off, and annualized repossession rate. 
    • Delinquency increases
    • Operating expenses increase
    • Profit reduction

    Benchmark Consulting International administered the survey and provided the report analysis. Participating finance sources responded to survey questions covering topics such as originations, servicing, and loss management. The results are reported in 129 graphs.

    The survey’s findings are distributed to finance company participants. To purchase the report, contact Diane Merino at the National Automotive Finance Association at (717) 676-1533 or email Diane.merino@nafassociation.com.

    First AFSA Law & Compliance Symposium Schedule Updated!

    AFSA Staff

    Since the recession and passage of Dodd-Frank, federal and state financial regulators have emphasized the importance of consumer protection and stressed the necessity of strong compliance programs. In response, consumer finance companies have increased their compliance efforts and in so doing, have faced new challenges including conflicting regulations, statements, enforcement orders, and guidance.

    The schedule of the symposium is designed to help members meet those challenges head on by providing insights and guidance on critical federal and state compliance issues for the financial services industry. Some highlights include:

    • Opening Keynote from Jerry Kilgore, former Attorney General of Virginia, accompanied by a sitting AG;
    • Focused attention on state compliance considerations;
    • Breakouts focusing on enforcement, CFPB rulemaking, state exams and credit reporting.
    • Compliance hot topic roundtables;
    • Various small group discussions and working group meetings on issues affecting day-to-day and 35,000 foot view issues.
    • Lots of networking opportunity!

    Visit the Symposium website to see why this is the one event in 2018 you don't want to miss!

    The conference is intended for company representatives who have compliance responsibilities - whether they are in management or legal, government, or compliance departments. In conjunction with the Law & Compliance Symposium, the following AFSA committees will meet: Law Committee, Operations and Regulatory Compliance Committee (ORCC) and the State Government Affairs Committee (SGA).