At a glanceFriday, May 08, 2020

Collection Industry News At A Glance - May 8, 2020
Friday May 8, 2020
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Legislation to clarify PPP tax deductions introduced in Senate

A bipartisan group of senators Wednesday introduced legislation – the Small Business Expense Protection Act – that would clarify small businesses can deduct eligible expenses that were paid for by forgivable paycheck protection program (PPP) loans from their taxes.

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76% Security Professionals Face Cybersecurity Skills Shortage: Report

A report from cybersecurity research firm Stott and May revealed that most of the cybersecurity leaders are struggling with skills shortage. The research report “Cybersecurity in Focus 2020” highlighted that 76% of respondents believe there is a shortage of cybersecurity skills in their organization, which represents an improvement when compared to 2019 (88%). Nearly 72% of organizations are still struggling to procure cybersecurity talent with no improvement from 2019.

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Regulatory roundup: Injunction for collections, CFPB on SBA loans and FTC on credit reporting

CARY, N.C. – A variety of regulatory developments within financial services arrived this week, ranging from a federal judge siding with a national collections organization, the Consumer Financial Protection Bureau offering guidance involving federal assistance for small businesses as well as the Federal Trade Commission delivering a report to Congress about its ongoing efforts associated with credit-report disputes.

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Credit card use dropped alongside coronavirus shutdowns, job loss in March

Americans stopped using their credit cards in March just as the coronavirus was hitting the U.S. economy, a new report found.  On Thursday, the Federal Reserve released consumer credit data that showed revolving credit, like credit cards, fell at a 30.9 percent annual rate in March, which is the “biggest percentage decline since January 1989,” according to MarketWatch.  The financial website reported that revolving credit fell $28.2 billion in March.

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US consumer borrowing fell for first time since 2011

WASHINGTON (AP) — U.S. consumer borrowing fell in March for the first time in more than eight years, with the category covering credit cards dropping by the largest amount in over three decades, the Federal Reserve reported Thursday.

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Amid Ongoing COVID-19 Pandemic, Governor Cuomo Announces Moratorium on COVID-Related Evictions Will Be Extended Until August 20th

State is Banning Late Payments or Fees for missed Rent Payments During Eviction Moratorium and Allowing Renters Facing Financial Hardship to Use Security Deposit as Payment.

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Bipartisan Coalition of Attorneys General Send USTelecom Letter Outlining Plan to Strengthen Illegal Robocall Enforcement

Rutledge announced the effort to expand illegal robocall response by calling on USTelecom – the leading organization representing telecommunications providers – and its Industry Traceback Group (ITG) to continue its collaboration with a bipartisan coalition of 52 attorneys general by bolstering technological capabilities to improve enforcement against illegal robocallers. The coalition’s letter urged the association to further develop robocall traceback and other tools suited for law enforcement needs.

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Gov. Wolf, Attorney General Shapiro Announce Protections from Foreclosures and Evictions Through July 10

Governor Tom Wolf was joined by Attorney General Josh Shapiro today to announce that he signed an executive order that protects Pennsylvanians from foreclosures or evictions through July 10. The action builds on a Pennsylvania Supreme Court order which closed court eviction proceedings until May 11 and ensures no renter or homeowner will be removed from their home for 60 more days.

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Consumers struggling with debt settlement lack representation in civil court appearances

Finances have become compromised for many consumers who have been forced to stay home during the COVID-19 pandemic, which means many are struggling with debt. The benefits from last month’s stimulus have left many consumers wanting more assistance, as the unemployment rate continues to soar and retirement plans take hit after hit.  Now, experts at The Pew Charitable Trusts have found that consumers who show up to court for debt settlement are often unrepresented and forced to go up against lawyers and hired professionals. This makes outcomes unbalanced and debt even harder to eliminate. 

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Point of sale credit has its moment as a crisis hedge

A mix of consumer debt and economic anxiety is shining a light on firms that offer alternatives to revolving credit. This, in turn, creates a chance to further tie financing directly to checkout. Companies like Splitit, Affirm and Klarna have different models, but all approach consumers with an alternative to revolving credit card debt for larger purchases at the point of sale. Splitit reports 165% year over year growth in April, and 153% jump from March to April in volume. Klarna reported a 16% weekly jump for the final full week of April for online warehouse volume, with similar weekly jumps dating to late March—just before most of the U.S. went under lockdown.

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More businesses file for bankruptcy amid coronavirus; experts describe options

NEW ORLEANS, La. (WVUE) - Gold’s Gym, Borden Dairy and J.Crew all recently filed for bankruptcy and many say things are only going to get worse. As people struggle to make ends meet, many businesses will look for protection from mounting debts. These are not the kind of parking lots that spell business prosperity and after nearly two months of stay home orders, the lack of foot traffic is expected to force many businesses to file for bankruptcy.

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More And More Georgians Are Being Sued Because Of Their Debt

More and more Georgians are being sued for debt. Major corporations–some even traded on the New York Stock Exchange–buy bad debt from a company or credit card issuer for pennies. The companies will then sue in local courts for the full amount–and then some. And these debt collectors’ win rate is staggering, but it’s rarely because of the legal strength of their lawsuit.

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FTC Halts Online Subscription Scheme that Deceived People with “Free Trial” Offers

The operators of an online subscription scheme agreed to settle a Federal Trade Commission complaint alleging that the defendants duped consumers out of more than $74.5 million by luring them with supposedly “free trial” offers for cosmetics and dietary supplements, then enrolling them in subscriptions and billing them without their consent.

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CFPB Compliance Aid Clarifies ECOA Notification Obligations for PPP Loans

The Consumer Financial Protection Bureau today published a compliance aid to provide additional clarity regarding banks’ obligations under the Equal Credit Opportunity Act with regard to borrowers who have applied for a Small Business Administration Paycheck Protection Program loan. Under ECOA, banks must notify credit applicants with an approval, counteroffer, denial or other adverse notice within 30 days of receiving a completed application. The CFPB clarified that PPP loan applications are only considered completed applications once the creditor receives a loan number from the SBA or a response about the availability of funds.

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Refinancings may hit a 7-year high

Mortgage originations for refinancings may hit a seven-year high this quarter as Americans chase the lowest home-loan rates ever recorded. Refi volume probably will total $429 billion, more than double the $180 billion of the year-ago quarter, according to a Fannie Mae forecast. Mortgage holders who aren’t among the more than 30 million people who have lost jobs during the pandemic will be eager to lock rates that are the lowest ever recorded, said Keith Gumbinger, a vice president at HSH Associates, a mortgage research firm.

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Thousands of small businesses forced to wait for aid after lender snafu

Thousands of small-business owners who believed they were approved for emergency government-backed loans nearly three weeks ago have been left hanging after their lender struggled to deliver funds as expected.

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Consumer Financial Protection Bureau Issues Clarifications to Support Small Business Applying for PPP Loans

WASHINGTON, D.C. – The Consumer Financial Protection Bureau today issued clarifying FAQs to support small businesses who have applied for a loan from their financial institution under the Small Business Administration’s (SBA) Paycheck Protection Program (PPP).

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Convoke Introduces Debt Settlement Directory

ARLINGTON, Va., May 6, 2020 /PRNewswire/ -- Convoke, a leader in SaaS solutions for the debt collection market, today announced the most recent software update to its debt collections compliance and management hub. Each year, Convoke develops and releases several updates to its platform to support its clients' evolving needs. With this release, Convoke is pleased to introduce the Debt Settlement Directory, as well as other enhancements which include the addition of Data Group elements related to COVID-19.

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Opinion: How the coronavirus pandemic could forever change home buying and mortgage lending

Extraordinary times call for extraordinary measures. Business leaders in all parts of the U.S. economy are taking bold steps to respond to the coronavirus crisis. Those of us in the mortgage industry are implementing reforms that will be long-lasting in terms of how lenders operate and how consumers obtain financing. Here are three ways in which the crisis may permanently affect the housing sector.

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CFPB Seeks Health Guidance for Bringing Employees Back to Offices

The Consumer Financial Protection Bureau is looking to proactively confront the needs that will accompany its federal workers’ return to pre-pandemic business-as-usual in the eventual aftermath of COVID-19. The agency, charged with ensuring that America’s financial institutions are fair to its citizens, on Monday released a request for information seeking “public health preparedness and medical advisory services to advise senior leadership on a variety of health and operational matters” in response to the coronavirus pandemic and to help ease its impacts on the CFPB workforce. 

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U.S. household debt reached $14.3 trillion, credit standards tightened in first quarter

(Reuters) - American households added $155 billion of debt in the first quarter and overall debt levels rose to a new record at $14.30 trillion, the Federal Reserve Bank of New York said on Tuesday in a report that provides a snapshot of where household balance sheets stood before the coronavirus pandemic brought much of the economy to a halt.

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FTC Updates Congress on Efforts to Educate Consumers about Their FCRA Rights

The Federal Trade Commission has submitted a report to Congress updating lawmakers on the agency’s efforts to educate consumers about their rights to dispute and correct errors in their credit reports.

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NCUA’s Harper sends lawmakers new letter for CU relief

In a letter to Senate Banking Committee Chairman Mike Crapo R-Idaho, and Ranking Member Sherrod Brown, D-Ohio, NCUA Board Member Todd Harper has proposed several legislative opportunities to provide credit unions with relief during the coronavirus pandemic.

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Could COVID-19 Mean Lower Credit Card Limits?

Credit card issuers may be more likely to cut your credit line if you increase spending, have a subprime credit rating or use a hardship program to skip payments. But even those with decent credit could be at risk."If you start carrying more debt, credit card issuers become worried that you're in a financial crisis," says Beverly Harzog, bestselling author, credit card expert and consumer finance analyst at U.S. News. "Right now, that alone is understandable. But if you're also opening several new cards or getting personal loans, the issuer might cut your limit to decrease their own risk."

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Agencies are Cutting Access to Mortgage Data for Low-Income Borrowers

Two Urban Institute (UI) analysts have raised an alarm about changes to federal regulations that threaten to limit access to important data about the mortgage market and credit availability for low and moderate-income borrowers and communities. Most of the changes are coming through rulemaking at the Consumer Financial Protection Agency (CFPB) and relate to the Home Mortgage Disclosure Act (HMDA).

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Nearly 50 Million Cardholders Had Credit Limits Reduced, Card Closed Involuntarily in Last Month Due to COVID-19 Impact

CHARLOTTE, N.C., May 4, 2020 /PRNewswire/ -- One in four American credit cardholders said they've involuntarily had their credit limit slashed on at least one of their credit cards or even had a card closed by their issuer in the past 30 days, according to a new report from CompareCards.

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Governor Walz Signs Executive Order on COVID-19

[ST. PAUL, MN] — Governor Tim Walz today signed Executive Order 20-50, exempting federal, tribal, state, and local COVID-19 relief funds from being automatically intercepted by creditors and debt collectors.

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Legislative Update In The Debt Settlement Industry: Enacted And Proposed Legislation

In the past year new enacted and proposed legislation has developed within the debt settlement industry. Felix Shipkevich and Bianca Petcu, of Shipkevich PLLC recently hosted a webinar that detailed the new enacted and proposed legislation titled, Legislative Update in The Debt Settlement Industry: Enacted and Proposed Legislation. The webinar discussed the newly enacted legislation in Virginia and Texas, and the newly proposed legislation in Illinois, New Jersey, New York, and California. This article contains a summary of the legislative changes discussed during that webinar.

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Consumer debt hits new record of $14.3 trillion

Consumer debt hit a fresh record high to start 2020, even as credit card balances declined while Americans adjusted to the coronavirus pandemic. Household debt balances through March totaled $14.3 trillion, a 1.1% increase from the previous quarter and now $1.6 trillion clear of the previous nominal high of $12.7 trillion in the third quarter of 2008 during the financial crisis, according to New York Federal Reserve data released Tuesday.

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Credit card applications have dropped by 40% amid coronavirus—here’s when to apply for a new card

When consumers face economic hardship, opening a new credit card may be a helpful option to get by. But surprisingly, many Americans aren’t taking this approach during the global coronavirus pandemic. New credit card applications were down 40% from the first week of March to the last week, according to a new report from the Consumer Financial Protection Bureau’s (CFPB) Consumer Credit Panel.

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Banks have the biggest share of mortgages in forbearance

The overall share of home loans in forbearance rose to 7.54% in the last full week of April, from 6.99% in the prior week, with bank-based servicers holding the biggest slice. Mortgage servicers that were banks had 8.41% of their portfolios in forbearance in the April 20 to April 26 period, up from 7.87% in the prior week, the Mortgage Bankers Association said in a report on Monday. Independent servicers had 7.13% of their portfolios in forbearance, up from 6.52%, the report said.

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Credit Unions, CUSOs Fighting Fraudsters

“Credit unions across the country are on high alert for scammers looking to take advantage of members during the pandemic and are stepping up fraud prevention efforts as a result,” according to PYMNTS’ April Credit Union Tracker® done in collaboration with PSCU.  Detailing warnings recently issued by New York’s Sidney Federal Credit Union and the City of Boston Credit Union, among many others, credit union (CU) members are the target of cyberattackers posing as the Centers for Disease Control (CDC), the World Health Organization (WHO) and other legitimate organizations publicly associated with the pandemic response.

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Anti-Robocall Law Exemption Faces Test in Supreme Court Argument

The Supreme Court on Wednesday will hear argument as to whether automatic phone calls for government debt collection should be exempt from an anti-robocall law.

Businesses are hopeful the court will invalidate the law’s exemption for the debt calls—and then strike down the entire anti-robocall statue as unconstitutional.

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Working at home had a positive effect on productivity during the pandemic, survey says

Almost everyone seems to hate getting stuck in an office cubicle next to a co-worker who won’t shut up.  Bosses who call too many meetings can be even more annoying.  And traffic jams on the way home from work might be the worst way to cap the day after that.  So perhaps it’s not exactly shocking to learn that working from home during the COVID-19 pandemic has had a positive effect on workers’ productivity, according to 54% of respondents in a recent survey of professionals ages 18-74.

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D.C. joins states in getting student loan companies to provide relief amid pandemic

Nine states and the District have reached agreements with student loan companies to provide residents relief during the health crisis, offering a lifeline to millions of people with debt held by private outfits.

A dozen loan servicing companies, including Navient, Nelnet and Aspire, will let borrowers postpone their payments for three months without the threat of late fees or negative impacts on their credit ratings. The companies also will hold off on filing debt collection lawsuits during that time and help eligible borrowers enroll in payment plans tied to their income.

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Hospitals still aggressively collecting medical debt amid pandemic

Despite government shutdowns and increased economic hardship among Americans, hospitals are continuing to use aggressive tactics like garnishing wages to collect past-due medical debt, according to a report from ProPublica and MLK50: Justice Through Journalism.

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Americans are getting fewer robocalls because of the pandemic

(CNN Business)One of the biggest consumer headaches has eased up at least in part due to the pandemic.

The number of robocalls made to US phone numbers last month was the lowest in two years, according to new data provided to CNN Business from YouMail, a robocall-prevention service that tracks robocall traffic across the country. This includes both scam and legitimate calls, such as payment reminders from banks.

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Almost half of America is now carrying credit card debt, and more of it

Nearly half (47%) of U.S. adults, or about 120 million people, currently have credit card debt, up from 43% reported in early March, according to a new report from

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Coronavirus drives record number of complaints to consumer bureau

The Consumer Financial Protection Bureau (CFPB) received a record-breaking number of complaints about banks and lenders in April as millions of Americans struggle to navigate the economic toll of the coronavirus pandemic, the bureau's director said Friday.

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CFPB Report Shows Credit Applications Dropped Significantly in March 2020

According to a new report from the Consumer Financial Protection Bureau’s Consumer Credit Panel (“CCP”), consumer credit applications have dropped significantly since the onset of the COVID-19 pandemic.

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Coronavirus drives record number of complaints to consumer bureau

The Consumer Financial Protection Bureau (CFPB) received a record-breaking number of complaints about banks and lenders in April as millions of Americans struggle to navigate the economic toll of the coronavirus pandemic, the bureau's director said Friday.

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Consumer Financial Protection Bureau Report Shows Substantial Decline in Credit Applications in March

WASHINGTON, D.C. – A Consumer Financial Protection Bureau (Bureau) report examining the effects of the COVID-19 pandemic found that consumer credit applications declined substantially in March. Applications are measured by the number of credit pulls or “hard inquiries” that lenders perform when a consumer applies for new credit.

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NCUA chairman backs NAFCU’s call for CU CECL exemption

NCUA Chairman Rodney Hood Thursday called on the Financial Accounting Standards Board (FASB) to exempt credit unions from the current expected credit loss (CECL) standard. Since 2016, when the standard was issued, NAFCU has continuously urged FASB to exempt credit unions from the standard due to their unique capital framework and the negative impact the standard could have on the industry.

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