Today's Headlines

    Advocacy by Small Dollar Lending Industry Bears Fruit on CFPB Rule

    AFSA Staff

    Last week the Consumer Financial Protection Bureau (CFPB) released its final rule on payday, title and certain high-cost installment loans. The association reviewed the rule and noted how very different it is from the proposed rule, which was published in the Federal Register in July of 2016. The proposed rule was burdensome, inflexible and generally did not recognize the valuable role that legitimate small dollar credit options play in the lives of American consumers.

    AFSA and its members submitted a variety of comments to and worked with the bureau to illustrate this value. It is clear from the final rule that the CFPB took these comments seriously. The final rule applies only to two types of loans:

    • Short-term loans that have terms of 45 days or less; and
    • Longer-term, balloon-payment loans where the consumer is required to repay the entire balance, or substantially the entire amount, of a single advance more than 45 days after consummation in either a single payment or through at least one payment that is more than twice as large as any other payment.

    A third type of loan, which the rule refers to as a covered longer-term loan, is subject only to the rule’s requirements concerning payments. Covered longer-term loans are not subject to the ability-to-repay portions of the rule.

     

    AFSA has found that some installment loans may meet the definition of this type of covered longer-term loan. A covered longer-term loan is defined as a loan with a term of more than 45 days that has: (1) a cost of credit that exceeds 36 percent per annum; and (2) a form of “leveraged payment mechanism” that gives the lender a right to withdraw payments from the consumer’s account.

    The final rule showed that the efforts of AFSA and its members were effective. The bureau wrote, “Given that covered longer-term loans are only subject to the payment requirements in subpart C, and in view of the comments received, the Bureau concludes that the advantages of simplicity and consistency militate in favor of adopting an APR threshold as the measure of the cost of credit, which is widely accepted and built into many State laws, and which is the cost that will be disclosed to consumers under Regulation Z.”

    The Bureau added that, “…the Regulation Z definition of cost of credit would be simpler and easier to use…”

    And the Bureau concluded that, “…defining the term cost of credit consistently with Regulation Z would reduce the risk of confusion among consumers, industry, and regulators. It also reduces burden and avoids undue complexities…”

    AFSA will continue working closely with the bureau as it works to implement the rule.

    GoldPoint to Discuss Digital Marketing Tools for Finance Companies

    AFSA Staff

    Join us next Thursday, October 19 at 2 pm ET for “Digital Marketing for Finance Companies,” presented by GoldPoint. Registration is open now.

    We live in a digital age where consumers can do nearly everything with just a few clicks of a mouse or a few taps on a smartphone. Yet in this rapidly changing digital world there is one question for companies that remains the same: how do we get more customers? In our presentation, you’ll learn helpful tactics to building your clientele. Catering specifically to finance companies, we will be discussing and showcasing the best tools to help you increase web traffic and convert those visitors to customers.

    We will be focusing on five specific traction channels:

    • Email Marketing 
    •  SEO 
    •  Content Marketing 
    •  Engineering as Marketing 
    •  Affiliate Programs 

    We will discuss industry trends and software you can use to capitalize on digital marketing in each of these traction channels.

    Please note that slides and a recording of this webinar will not be distributed following the presentation, so make sure you set aside time to join us next Tuesday!

    This webinar is part of the AFSA Business Partner Webinar series. The webinars are designed to provide information that will allow AFSA members to more effectively design, develop and implement strategies for their companies success. Past recordings and a list of other upcoming webinars can be found in the AFSA Webinar Resource Center. For more information, contact Dan Bucherer, Communications Manager, at dbucherer@afsamail.org.

    MoneySKILL Gets a Face Lift

    The AFSA Education Foundation (AFSAEF) is pleased to announce a completely redesigned MoneySKILL®. The upgraded version of the MoneySKILL platform is live now and available for subscribers to review. These upgrades targeted outdated services and experiences to provide greater program stability and access using a variety of different devices, including computers, tablets and mobile phones.

    There are many new features, so if your company uses MoneySKILL, be sure to explore on your own. However, some of the most exciting include: setting default selected modules for creating new classes;  updated interface which includes a new modern and responsive design, and; new and improved menus and navigation for easier reading of the curriculum and content.

    Discovery, Recognition and Quick Response are Key to Data Breach Response

    AFSA Staff

    What to do in the event of a data breach was yesterday’s hot topic during AFSA’s webinar with Jim Cheraq and Meghan Musselman of Hudson Cook. Data breaches, no matter the size, can significantly affect any 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."

    Attendees learned about the chronology of a data breach and how the most important part of the the process is actually the discovery. Gathering knowledge or notice of the data breach is critical to understanding how it happened and taking steps to fix it.

    Additionally, Cheraq and Musselman discussed legal implications, specifically as they relate to personally identifiable information. The type of information released is important but what that information can be used to access is even more critical.

    Finally, the presentation covered the response stage and how important it is to study state and federal law, to determine which steps are best practice and which are required by law.

    The presentation slides and a recording of the webinar, as well as a calendar of future presentations are available to members in the Webinar Resource Center on the AFSA website.

    RegTech Conference Shares Message of Promise and Disruption

    AFSA Staff

    On October 3-4, American Banker hosted its first ever RegTech conference, an event that focused on regulatory technology and innovation in the financial services landscape. At the conference, speakers covered RegTech challenges and promises. Jo Ann Barefoot, an expert in everything FinTech and RegTech, discussed regulation innovation. She claims that RegTech serves the purpose to improve regulatory outcomes while driving the cost down by bringing in new technology.

    Barefoot believes that RegTech could be a huge benefit to regulators, however regulators are not built for this change. It will be tough to get their structures and processes coordinated to handle the RegTech future. Regulating during the speed of RegTech will be very hard because regulators may propose a rule on a specific tech tool and it may be gone in a year due to rapid movement of technology.

    Other speakers shared similar beliefs in the benefits of RegTech. New techonology can help speed up compliance and regulatory tasks that will allow companies to lower costs while increasing efficiency. Some speakers pointed out that a paradox does exist in the RegTech movement. Big companies are trying to reduce their number of vendors, while most RegTech companies providing the most exciting technology to monitor and help companies are vendors, so it will be difficult to balance.

    Daniel Kimerling, a Silicon Valley veteran and provocateur, had much different views than the rest of the speakers. During a fireside chat, Kimerling stated that community banks will eventually be gone. He believed that RegTech can be extremely beneficial, however older financial institutions are too old and too insecure. His view was that new institutions will be much more secure and use much better technology. He also emphasized that financial institutions should be run by people who can run large scale technology companies.

    Regardless, RegTech is an exciting new field that brings opportunities to companies both big and small. New technology can help companies minimize costs while benefitting business. AFSA continues to monitor this area.