At a glanceWednesday, August 05, 2020

Collection Industry News At A Glance - August 5, 2020
Wednesday August 5, 2020
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Attorney General Becerra Opposes Proposal by Consumer Financial Protection Bureau that Protects Debt Collectors at Consumers’ Expense

SACRAMENTO – California Attorney General Xavier Becerra, as part of a coalition of 23 attorneys general, submitted a comment letter opposing the Consumer Financial Protection Bureau’s (CFPB) proposed rule on the collection of time-barred debt. Time-barred debt is debt for which the statute of limitations has expired. The proposed rule follows up on the CFPB’s previously proposed Debt Collection Practices Rule, which fails to protect consumers from abusive and unscrupulous debt collectors. In the letter, the coalition argues that the proposed rule is contrary to both the Fair Debt Collection Practices Act (FDCPA) and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and also fails to adequately protect consumers’ rights.

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The number of Americans skipping mortgage payments is falling — except among these borrowers

For nearly two months now, the share of mortgage borrowers who has received approval to skip their monthly loan payments has fallen precipitously.  But a new trend has begun to develop, which indicates that some homeowners are facing more financial pressure as the coronavirus pandemic continues.

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Lending seized up in the second quarter: Morning Brief

Bank lending collapsed in the second quarter. According to the latest Senior Loan Officer Opinion Survey — or SLOOS report — from the Federal Reserve published Monday, bank lending during Q2 tightened by the most since the financial crisis. Across all parts of the commercial lending business and all ares of consumer lending except housing, banks tightened standards and saw demand plunge during the months covering the most acute phase of the pandemic crisis.

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Bernie Sanders-backed bill in the US prohibits private entities from collecting facial data

Senators Bernie Sanders and Jeff Merkley introduced a bill in the US Senate which prohibits private companies from collecting people’s biometrics, including facial data, eye scans, voiceprints, and fingerprints, without their consent. It also bars private entities from selling, and leasing biometric data of people. Even in terms of consent, the bill, called National Biometric Information Privacy Act of 2020, requires private companies to receive written consent from consumers and employees before collecting biometric data such as eye scans or fingerprints. In case written consent isn’t obtained from a person, they will be in a position to sue the private entity, according to the bill.

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Attorney General Becerra Urges Congress to Pass Critical Provisions to Provide Equal Relief Options for all Federal Student Loan Borrowers

SACRAMENTO – California Attorney General Xavier Becerra today, as part of a bipartisan multistate coalition, urged the U.S. Senate to pass the Student Loan Fairness Act (S. 4237), which will extend Coronavirus Aid, Relief and Economic Security (CARES) Act relief to all federal student loan borrowers. Currently, the CARES Act relief applies only to one subset of federal student loans, Direct Loans, leaving nearly 8 million combined borrowers of commercially-held Federal Family Education Loans (FFEL) and institutionally-held Perkins Loans without coronavirus relief options. In their letter, the coalition expresses their support for S.4237 and highlights the importance of providing all federal student loan borrowers with critical relief options amidst the coronavirus pandemic.

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The COVID-19 pandemic and its impact on cybersecurity

The COVID-19 pandemic has presented a once-in-a-lifetime opportunity for hackers and online scammers, and cybersecurity pros saw a 63 percent increase in cyber-attacks related to the pandemic, according to a survey by ISSA and ESG.

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August 5, 2020, Wilmington, DE – Katabat, a leading global provider of debt management software solutions for lenders, fintechs, and collection agencies, announced today a strategic growth investment from Tritium Partners, a growth-focused private equity firm with extensive experience investing in fintech and financial services companies, and Terminus Capital, an enterprise software private equity firm. The investment provides Katabat with significant resources to expand and enhance its industry-leading suite of debt collection products. The transaction also represents an exit for Katabat’s venture backers, including Camden Partners, Osage Venture Partners and Activate Venture Partners. Terms of the transaction were not disclosed.

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Small-business owners have until Aug. 8 to apply for paycheck protection loans

The federal government is about to turn off the tap on its supply of forgivable loans for small businesses. Saturday, Aug. 8 is the last day for entrepreneurs to apply for a Paycheck Protection Program loan. Since it opened on April 3 via the CARES Act, more than 5 million loans to small businesses have been approved, adding up to $521.7 billion, according to Aug. 3 data from the Small Business Administration.

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Crown Asset Management, LLC (CAM), a leading purchaser of charged-off debt and RMAI “Certified Professional Receivables Company”, was recently selected as one of the 2020 Best Places to Work in Collections.  The program, now in its 13th year, is administered by Best Companies Group, which conducts over 60 local, national and industry “Best Places” programs each year.   

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Business groups urge Congress to allow tax deductions for expenses paid with PPP loans

A group of more than 170 trade associations is urging Congress to allow businesses to get tax deductions for expenses associated with loan forgiveness under the Paycheck Protection Program (PPP). "As part of the next round of COVID19 relief, we request that Congress reaffirm its intent and restore the tax benefits it intended to give distressed Main Street businesses as part of the CARES Act," the groups wrote in a letter this week to House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Mitch McConnell (R-Ky.).

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Personal loan rates are getting even lower — here’s why

Personal loans are one of the most flexible forms of financing and can be used for anything from consolidating debt or a significant expense like a car repair or medical bill. This type of loan already has pretty attractive interest rates — but the offerings are just getting better. Annual percentage rates on personal loans are even lower now, thanks to the Federal Reserve's rate cuts.

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Six banks commit to launching checking accounts through Google Pay in 2021

We're learning more details about the bid to expand Google Pay's offerings beyond digital peer-to-peer transactions. Six banks have announced partnerships with Google that will allow new customers to launch accounts at their institutions through Google Pay.

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TCPA’s 2015 Government-Debt Collection Exception Struck Down- Now What?

The Supreme Court’s recent decision in Barr v. American Association of Political Consultants held the government-debt exception of the TCPA unconstitutional under the First Amendment’s Free Speech Clause.  This means that going forward, companies that make “debt-collection” calls on behalf of the federal government can only do so with the prior express written consent of the called individuals.

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U.S. banks tightened lending standards, loan demand dropped in Q2, Fed says

Aug 3 (Reuters) - Loan officers at U.S. banks reported tightening standards and terms on all types of business, real estate and consumer loans in the second quarter as widespread coronavirus-related shutdowns plunged the economy into recession and tens of millions of workers lost their jobs.

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As coronavirus accommodations end, government urges banks to help borrowers

The government is urging financial institutions to work with businesses and consumers who have been adversely affected by the coronavirus pandemic as some borrower accommodations expire. Some borrowers may still find themselves under financial stress, the Federal Reserve, the Office of the Comptroller of the Currency, the Consumer Financial Protection Bureau and the Federal Deposit Insurance Corporation said in a statement on Monday.

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Bank visibility is key in determining branch closings

As the aftereffects of the pandemic across the country come to light, bank customers may find branches that were temporarily closed may not reopen depending on the branch's visibility, marketability and customer convenience, according to a report.

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FTC Alleges Merchant Cash Advance Provider Overcharged Small Businesses Millions

A leading provider of merchant cash advances used deception to lure small business customers, then regularly withdrew money from their accounts without consent even after the customers had repaid the money they owed, according to a Federal Trade Commission lawsuit.

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Banking Industry Has Critical Role In Saving Small Businesses

Retail banks and credit unions are confronting an enormous task as a result of the COVID-19 crisis. Not only must organizations manage their own earnings and financial challenges, but they must also respond to the financial and non-financial needs of consumers and small businesses. This requires re-imagining the way products and services are delivered and also the types of solutions offered. There is no playbook for the times we are experiencing.

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Demand for Online, Small-Dollar Loans Fell as Consumers Got Pandemic Relief, New Data Shows

As the coronavirus pandemic brought the economy to a standstill, regulators and economists thought that newly out-of-work consumers might need to resort to applying online for short-term, small loans, which are often costly. So far, at least, that hasn’t happened.At the height of business shutdowns and in the first wave of rising unemployment, demand for online small-dollar loans dropped, according to data provided exclusively to Morning Consult by the Online Lenders Alliance.

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Global Peer-to-peer Lending Industry

Amid the COVID-19 crisis, the global market for Peer-to-peer Lending estimated at US$120 Billion in the year 2020, is projected to reach a revised size of US$1.4 Trillion by 2027, growing at a CAGR of 42.7% over the analysis period 2020-2027. Consumer Credit, one of the segments analyzed in the report, is projected to record a 42.2% CAGR and reach US$218 Billion by the end of the analysis period. After an early analysis of the business implications of the pandemic and its induced economic crisis, growth in the Small Business segment is readjusted to a revised 44% CAGR for the next 7-year period.

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FCC Partnership to Fight Robocalls

On July 27, 2020, the Enforcement Bureau of the Federal Communications Commission (the “FCC”) designated the Industry Traceback Group (“ITG”) as the FCC’s official consortium for coordinating efforts to trace illegal robocalls. The ITG is a collaboration of wireline, wireless, VoIP and cable industry companies, led by USTelecom, with the mission of tracing and identifying the source of illegal robocalls. According to the ITG, it conducted more than 1,000 trace-back operations in 2019 and unmasked the source of more than 10 million robocalls.

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Top 6 cybersecurity trends to watch for at Black Hat USA 2020

At this year's Black Hat USA 2020 computer security conference, some of the top trends expected to surface include ransomware, election security and how to protect a remote workforce. This is the 23rd year for the conference, which will be entirely virtual for the first time and will take place from Aug. 1-6. According to the latest Gartner forecast, information security spending is expected to grow 2.4% to reach $123.8 billion in 2020.

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AG Healey Secures Loan Discharges and Refunds for Students Misled by Online Education Company

BOSTON — Attorney General Maura Healey announced today that a Nevada-based debt buyer will discharge hundreds of thousands of dollars of loans made to Massachusetts students to finance expensive and ineffective online study materials and educational services.

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U.S. weekly jobless claims rise for a second straight week, total 1.434 million

The number of Americans who filed new claims for unemployment benefits last week totaled 1.434 million, the Labor Department reported Thursday, roughly in line with expectations, as the coronavirus pandemic continues to ravage the U.S. economy. It was the 19th straight week in which initial claims totaled at least 1 million and the second consecutive week in which initial claims rose after declining for 15 straight weeks. Economists polled by Dow Jones had expected claims to rise to 1.45 million for the week ending July 25.

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Is student loan debt really the barrier to Millennial homeownership?

On Wednesday, the Census Bureau reported a surprise increase in the homeownership rate, up from 65.3% to 67.9%. This increase challenges the long-standing thesis that college-educated Americans are too broke to own homes due to the financial burden of student loan debt. From the Census Bureau: “The homeownership rate of 67.9% was 3.8 percentage points higher than the rate in the second quarter 2019 (64.1%) and 2.6 percentage points higher than the rate in the first quarter 2020 (65.3%).” I should start by saying I don’t think this number will stick. Any massive deviation from a historical trend needs to be questioned and the question I am asking (tongue in cheek) is: Has COVID-19 somehow impacted the accounting data?

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Record number of consumer financial protection complaints during pandemic

ASHINGTON, DC (NEXSTAR) — Americans have filed a record number of complaints to the Consumer Financial Protection Bureau during the pandemic.  The thousands of reports include issues with deferred student loan and mortgage payments.

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FTC Announces Staff Reports on Car Buying and Financing Experience, Results of Auto Buyers Study

Two new staff reports from the Federal Trade Commission highlight some of the challenges and confusion consumers can face in buying and financing a car, particularly relating to charges for add-on items after the initial price negotiation that can lead to them paying more than expected.

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Rep. Waters Slams CFPB Chief For ‘Betraying Consumers’

The chairwoman of the House Committee on Financial Services unleashed a withering attack on the Consumer Financial Protection Bureau (CFPB) on Thursday (July 30), accusing the agency of failing to protect consumers during the COVID-19 pandemic and accusing its director of committing “a betrayal of consumers.” U.S. Rep. Maxine Waters (D-CA), according to an advance copy of remarks prepared for delivery at a hearing on the CPFB’s COVID-19 performance, said she “would like to welcome Director Kraninger to what I hope will be her last appearance before this Committee as CFPB director.”

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Oral Testimony of Director Kraninger Before the House Financial Services Committee

Chairwoman Waters, Ranking Member McHenry, and Members of the Committee, thank you for this opportunity to provide you with an update on the CFPB’s important work. I appear before you as the country is engaged in a national conversation on racial inequality and confronting the unprecedented pandemic. Today, I would like to discuss both topics with you.

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Banks Must Adopt APIs for Business Lending or the Fintechs Will Win

During the early PPP rollouts, fintech lenders using advanced technology saw client acquisitions soar. Many traditional institutions, where business lending remains largely manual, relied on 'sweat equity' and legacy tech to handle the challenge. The pandemic period may prove to be the make-or-break time for true digitization in banking.

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GDP shrinks by record amount in second quarter amid virus lockdowns

The U.S. economy shrunk at a seasonally adjusted annualized rate of 32.9 percent during the second quarter of 2020 as the first wave of the coronavirus pandemic spurred an economic collapse of record-breaking speed and size, the Commerce Department reported Thursday.

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States’ lawsuit alleges OCC rule enables ‘rent-a-bank’ schemes

New York, California and Illinois sued the Office of the Comptroller of the Currency over a new rule making it easier for banks to sell loans to acquirers in states with interest rate caps, alleging the change will increase predatory lending.

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Industry Events

NCUCA 6th Annual Conference

October 28 - 30 , 2020
LendIt Fintech USA – Virtual

Save 15% with our Discount Code: DC15%

Javits Center, New York
New York
September 30 - October 01 , 2020

LendIt Fintech Europe 2020 – Virtual

LendIt Fintech Europe

Hilton London Angel Islington 53 Upper Street
London , N1 0UY, UK
October 19 - 20 , 2020


Auto Finance Summit 2020 – Virtual

Royal Media

Wynn Las Vegas
3131 S Las Vegas Blvd , Las Vegas, NV 89109
October 20 - 22 , 2020