Lending Company Challenges Constitutionality of CFPB Authority

Even though government organizations and groups are formed with a mission to serve the American people, there are times when those groups overstep their boundaries. Of course, the folks in charge of these organizations and those who support said government groups usually don’t like it when individuals or businesses challenge the authority of governmental organizations. But in order to keep the powers that be honest, in check and accountable, there are times when the powers have to be challenged.Consumer Financial Protection Bureau

Such is the case with a lawsuit that sees a business challenging the constitutionality of the Consumer Financial Protection Bureau’s power. This trial is the official case of PHH Corp. versus the CFPB. It is just getting underway, and will be heard in the U.S. Appeals Court for the District of Columbia. This case will likely drag on for a while, but legal experts expect to get a ruling on this case before the year ends.

PHH Corp is a lending company based in New Jersey. This company is working to get a $109 million penalty that the CFPB issued overturned. The penalty was issued back in June of 2015 with regard to PHH’s alleged violations of RESPA (the Real Estate Settlement Procedures Act.) This case is going to be one to watch, and will likely set a huge precedent due to the fact that it is the first time since the CFPB began – which was about 5 years ago – in which a company has issued a direct judicial challenge against a CFPB mandated penalty.

The CFPB first announced that it was taking action against PHH in the first quarter of 2015. The bureau sought a civil fine, victim restitution and an injunction to prevent PHH from violating in the future. In November of 2014, a judge said that PHH received kickback payments via reinsurance premiums that were paid to a company that is a subsidiary of PHH. The payments were given by mortgage insurers and the entire set up was found to be a RESPA violation. The judge ordered that PHH pay a $6.4 million penalty for their part in these things.

PHH did what any company would do, and appealed this ruling. This prompted the Director of the CFPB, Richard Cordray to both deny the appeal and to up the penalty to a whopping $109 million. Cordray said the original ruling was not correct because it did not account for the payment methods on mortgage premiums. The CFPB even went on record with allegations that PHH had been receiving kickbacks for these types of deals as far back as the 1990s.

The lawyers for PHH Corp. stated, “Never before has so much authority been consolidated in the hands of one individual shielded from the president’s control and Congress’s power of the purse.” These lawyers immediately filed a petition with the court of appeals, and claimed that the CFPB was abusing its considerable power. As a result, we are now witness to a case where a company has boldly gone where no other business has, and is actually making a legal case that challenges not only the power that the CFPB has, but also the constitutionality of the organization as a whole.

Cordray and the CFPB have made their fair share of enemies over the years. Currently, there are even Republican and Democrat leaders working hand-in-hand to prevent the bureau from enabling new short term lending restrictions in the near future. As such, this case will likely go down in the history books as a case of lending companies getting fed up with the CFPB and finally exercising their rights to do something about it.

Walmart Sets Sites on Easing Shopping Burdens for Millions of Underbanked Consumers

Walmart has long been known as a retail outlet that offers great prices on millions of different items. The low prices on goods that this company offers surely helps to make shopping easier for consumers from all walks of life. Now, though, Walmart has launched a new mobile payment system that may well prove to make shopping even easier for the underbanked consumers in the United States. This new mobile payment system is called Walmart Pay, and it may help to make the world’s most popular store even more popular. And more than that, Walmart Pay may help the company to edge out the popular Apple Pay payment system, due to the fact that Walmart is refusing to accept Apple Pay in any of its locations.300px-2008-08-28_Black_Friday_shoppers_at_Wal-Mart

Walmart’s senior vice president, Daniel Eckert – the guy responsible for all of the retail giant’s financial services – is also making moves to entice the people he describes as “cash customers” via Walmart Pay. Cash customers are also known as unbanked and underbanked consumers. These folks make up nearly 28 percent of all consumers in the United States, according to data that was recently released by the Federal Deposit Insurance Corp (FDIC.)

Walmart figures that by enticing the cash customers, they will be targeting roughly 40 million shoppers. Some of these people really don’t have a bank account at all, while others rely on alternative financial services on a regular basis. Walmart has already been known for offering its reloadable prepaid cards, the popular MoneyCards that have been available for some time. This product was offered via a joint effort between Walmart and Green Dot. Now, people can add these types of prepaid cards to their Walmart Pay online wallets, instead of linking the cards to traditional debit/credit cards or bank accounts.

Eckert said, “In the context of mobile payments, the existing wallet solutions out there limit customers as they work on the latest and greatest hardware and devices, and with credit and debit cards. We needed to find a different way.” Eckert went on to state that Walmart regulars are “over-indexed” with regards to the adoption of smartphone usage. There may be 28 percent of those folks without traditional bank account access, but 75 percent are routine smartphone users. These people often use their cell phones to receive money and send money via texting services.

Walmart Pay is operable with all Android and iOS devices, even as far back as the earliest generation of iPhones from Apple. Eckert said, “We’re the only retailer to offer a mobile wallet that gives that much access,” obviously very proud of this new initiative by his company. This mobile wallet will be rolled out soon. It starts its pilot in Northwest Arkansas, near stores that are close to the Walmart home base of operations in Bentonville.

Walmart’s endeavor into the mobile payment game comes with the relatively new form of technology rapidly gaining ground with American consumers. Some experts have forecasted that the total value of mobile payments in the United States will increase by roughly 210 percent in 2016. By the time 2017 rolls around, data indicates that about 50 percent of Americans will be routinely making payments with their smartphones and other mobile devices. Walmart may not always be the first company to come to mind when you think about the technological “cutting edge”, however with the introduction of Walmart Pay, it looks like the retail company is on the fast track to the future of mobile payment offerings.

Warren Continues to Stand in the Way of Dodd-Frank Reform

Making much needed changes to the landmark Dodd-Frank Bill would go a long way in helping to provide protection to consumers in the United States. Why is it that Liz Warren continues to prevent this type of reform from taking place?

Congress has been doubling its efforts to provide a budget arrangement that would help to prevent a government shutdown. Part of these efforts could and very well should be to come up with an amendment to the Dodd-Frank Bill that would help to provide much-needed reform. To get this done, the congress will have to get past the current objections to said amendment that have come from Senator Elizabeth Warren, herself.

Experts say that Warren should do all that she can to welcome an amendment to help reform Dodd-Frank, being as it would help to provide better protections to consumers; a cause that she has long been a champion of. Particularly, she has said that she wants to usurp the power of big banks in order to provide more power and stability to both consumers and smaller banks. Dodd-Frank has, indeed, helped to take away some of the power that the biggest banks have traditionally held. A complete overview of all of the ways this has happened is much broader than can be covered in a single article. One example, however, helps to describe how important this point is. The increased supervisory power that Dodd-Frank gave to the Federal Reserve Bank allows it to have a huge amount of control over what is described as “systematically important financial institutions. This control includes whether or not employees should be disciplined or even fired.

This extraordinary amount of power allows the Fed to get in far too deep with regards to the process of capital allocation. This is the very backbone of the United States economy. This could move our country from allocating capital strictly based on political sway and could help to take away the power of big banks and other systematically important financial institutions.

However, smaller banks have suffered a lot more than the bigger banks because of Dodd-Frank. These banks are drying up at double the rate that they were prior to the bill coming into play. Between October of 2000 and July of 2010 there were 242 banks that failed. But from then until the end of 2014 – a period that is less than half that length of time – there were 242 banks that failed. The big reason that so many small banks continue to fail is due to the burden that Dodd-Frank regulations have put on them. There are nearly 850 pages of regulations that these smaller financial institutions must contend with in order to stay in business. There are now more than 20,000 additional pages of regulations, and only 247 of the 390 that are currently required have been officially finalized. Staying on top of all these regulations requires the help of lots of lawyers. Big banks may be able to afford all of that legal assistance, but the smaller institutions simply cannot.

The bottom line is that if Warren really fancies herself to be a champion of the people, with regards to financial issues, then she must step up to the table and help in getting the new amendment passed. Failure to do so will wind up in more small banks going out of business and will ultimately mean that American consumers have even fewer banking options to choose from in the future. The ball is now in her court; experts hope that she will do the right thing and help to get the new reforms in place.

Subprime Credit Card Company Ordered to pay back Millions by CFPB

One subprime credit card company learned a tough lesson at the hands of the Consumer Financial Protection Bureau (CFPB) recently. The CFPB has officially ordered the subprime credit card company, one Continental Finance Company LLC based out of Delaware, to refund nearly $2.7 million in illegally filed credit card fees. The CFPB found that the company was issuing “free harvester” subprime credit cards that did not reveal the truth about fees and winded up making consumers responsible for illegal charges. The company was also ordered to pay a $250,000 civil penalty fee.direct_payday_loans_pros_cons1

CFPB Director, Richard Cordray had this to say about this turn of events, “Continental Finance misled consumers and charged them illegal fees. These excessive fees are especially harmful because the cards were targeted to consumers with subprime credit who are often economically vulnerable. We will act to protect people who are wronged in this market.”

A full copy of the order from the CFPB can be found at the following link:

Continental Finance Company, LLC markets credit cards that are targeted at customers with low credit scores. Continental cards usually offered customers extremely low credit limits and forced people to pay high fees upfront. These types of credit cards are often called “free harvester credit cards.” Nearly all free harvester cards are targeted at people with credit problems, people who are economically vulnerable and folks who have limited access to options other than these types of credit cards because of their troubled credit histories. The company reportedly does business with credit unions and banks to issue these credit cards.

Back in 2009, Congress passed CARD (the Credit Card Accountability, Responsibility and Disclosure act) to provide improved consumer protection against unfair credit card billing policies and procedures. This law included a provision for free harvester cards to help consumers with additional protections from predatory credit cards with high fees that must be paid up front. As an example of how these cards work, someone might get a credit card with a $350 limit and have to pay in excess of $75 in fees during the first year of opening the account.

Continental offered these credit cards – the Matrix Card, the Cerulean Card and the Verve Card. The people who signed up for these credit cards typically got $300 limits, but had to pay up front fees of $75, which made these cards immediately meet the 25 percent fee limit that is spelled out in the CARD Act. Continental then went on to charge some customers additional fees over the course of the next 12 months. The additional fees pushed the accounts to exceed the fee caps placed on these types of subprime credit cards.

The charges against Continental Cards

The CFPB reported the following violations:

Continental intentionally misled customers about the credit cards. The marketing materials used indicated that consumers would only have to pay monthly fees if they chose to use paper billing.

Continental charged illegal credit card fees. The paper statement fees were in direct violation of a ban on credit card companies requiring fees of more than 25 percent of the total credit limit during the first year of account activation.

Account insurance was misrepresented. Continental provided some cardholder agreements that security deposits that were provided by consumers from certain cards would be insured by the FDIC. This is not true, as for some time many of the funds were not insured by the FDIC.

Some creditors get away with these kinds of misdeeds for years. These days, however, there is a higher level of scrutiny and some lenders that engage in shady practices are paying very high penalties as a result. Continental seems to have found this out the hard way.

This entry was posted on March 19, 2015, in Featured.

Tips for Young Women on Paying Down Debt

With the gender salary gap getting smaller all the time young women today are making more money than before. With the increase in salary, there is a chance that young women today can end up in more debt than ever before. Here are some tips to help all the young women who have debt work toward paying it off.

Of course you need to work on paying off any debt you have, from say student loans. What you need to do when working to pay off debt is to make your regular payments every month. On top of that you need to figure out what debt that has the highest interest rate and pay more toward that debt. Then keep doing this until all of your debt is paid off.

Debt Snowball

Debt Snowball (Photo credit: LendingMemo)

Most experts agree that if you are looking to add some debt to what you already have, say you want a new car or are planning on buying a home, then you need to be careful. The experts recommend that if possible try to keep your payments on your debt be no more than about fifteen percent of your monthly income. This way you will still have money for the other bills you have, other necessities, and still have some money to put into various savings accounts.

Another tip that most experts agree on is that if you have credit cards you need to keep your balance low. While credit cards are able to help you to build credit, if used inappropriately used they can ruin your credit too. To get the best out of your credit card experts say that you should keep your balance at no more than twenty percent of your credit limit. This way you are not ruining your credit with huge bills, and you are still working at building up your credit.

If you can, you should pay more than your minimum monthly balances. Doing this will help you to pay off your debts faster. This also looks good on your credit score. It will also help you in the future should you want to take out a loan. The bank will see that you try to stay out of debt and make larger payments and they will feel confident that you will be able to pay the loan back. After all banks like loaning money to people who do not need it so they can be sure they will be paid back.

Young women today need to watch out for debt. They need to work on getting rid of any and all debt they have once they are out of school and in the real world. It does not have to be overwhelming when you are working on paying off your debt, but if you do not work at it, you could end up in an overwhelming financial situation.

More Women Are Now Lead Breadwinners in Their Households

There was a time when men went to work and women stayed home and took care of the house. That time is long gone. Now more and more women are not only entering the workforce, but are becoming the lead breadwinners in their households.

It has been estimated that 40 percent of all the households in America have women as the lead or only breadwinners. Just 53 years ago in 1960 this was only 11 percent. This is a big increase in half a decade, a sure sign that the times are changing.

These women vary from highly educated women to single mothers who are living barely over the poverty level. There is no real distinction between groups of women who are taking over the role of lead breadwinner in their homes. It is something that is crossing all the lines.

Lathe operator machining parts for transport p...

Lathe operator machining parts for transport planes at the Consolidated Aircraft Corporation plant, Fort Worth, USA (1942). (Photo credit: Wikipedia)

Women are feeling more empowered now than ever. They are taking control of their financial life and showing it by being the lead wage earning or the sole wage earner in their home. Traditional roles have flipped, and some men are staying home to take care of the children and the household now while women go back to work.

This is also showing the next generation of women that they do not need to rely on a man for income. They are able to go out there and make their own way and be able to provide for themselves. It sends a positive message to girls everywhere that they can do it too.

There are some that worry that this will take a toll of some sort on those with a family. While others say with economic times that can be uncertain it is best to get as much income as possible in the event one or both spouses loses their job. This way the family can go on living until a new job is found. There are kids who have lived in home where both parents have gone to work for some time now and they have turned out just fine, so those who are worried may not have much of a reason to.

With more and more women becoming the lead or only breadwinner in their home it will be interesting to see what the next generation of women do in the workforce. More and more will likely strive to do the same. It could mean a whole new take on how we look at women in the workforce and the role they play at home as well. Of course only time will tell this for sure, but it will be interesting to watch as it unfolds.

After Being around For Five Years, Groupon Seems To Have Changed Its Image

It has been a crazy, up and down five years, but five years nonetheless since we saw Groupon for the first time.  It was a new way to get coupons; get a discount by purchasing things in bulk as a group with random people online.  It may have seemed odd to some, but it worked, and it worked well.  Looking back from where it was to where it is now it is clear to see that over the past five years, whether intended or not, Groupon’s image has changed.

Groupon Redesign

Groupon Redesign (Photo credit: dklimke)

The website is based in Chicago and for its fifth anniversary it released a new website that seems to be more refined and grown-up.  The website is not all it upgraded for its anniversary however, both the app for the android smartphone and the iPhone have received upgrades as well.  All of these changes have been made in an effort to make it easier for the consumer to get daily deals.  Eric Lefkofsky, Groupon’s new CEO has recently said in a statement that “In just five years, Groupon has grown from a daily deal website to a true online marketplace with a tremendous mobile following.”

Groupon has over 400 million sold deals done already in only the first five years that the website has been up and running.   50 million mobile apps have been downloaded since Groupon introduced the mobile app.  The company has over 500,000 retailers that it works with to bring the consumer the best deals that it can.

You can get such varied things on this website that it keeps people coming back.  You want to get a manicure; you can find a Groupon for it.  If you want to go somewhere you can probably find a deal with Groupon.  With so many different retailers available, this brings many people back to see if what they want to do is a Groupon offer first so they know if they whether or not they can get a better deal.

This website looks to have a bright future, especially with the new sophisticated changes that it has recently made.  The popularity of this website will most likely continue to grow and with it we may even see the number of retailers who want to be a part of it, grow too, but of course only time can tell what will happen.  What we can tell now is that Groupon has made some great changes to a website and app that offers great deals.

Amazon Is Helping the Postal Service

When the internet really took off and became popular it hurt the postal service.  You could now email someone and they could get your letter almost immediately instead of having to wait days, and if your email account was free, you would not have to pay to send that letter.  Now things have changed, the postal service and the internet have become friends and Amazon has given the friendship even more to help hold it together.

Full eagle logo, used in various versions from...

Amazon is a big company that many people use to purchase merchandise online.  As the holidays are coming up, Amazon is seeing more and more orders and they want to make sure those orders reach their destinations in a timely manner, and they want it to be convenient for their customers.  With that in mind, Amazon went to the United States Postal Service, and has convinced them to deliver Amazon packages on Sundays.

This will do more than provide additional convenience to Amazon’s customers.  This will help out the United States Postal Service in a time when they have been considering dropping Saturday deliveries because of money worries.  This will give the employees more hours, which will help them make the holidays special too as their checks will be larger than they otherwise would have been.

At first glance one could say that this is just an attempt by Amazon to drum up more business, but once you start actually looking at what is going on, from the ordering down to delivery this is much more.  In addition to making online shopping and shipping easier for the consumer, having the USPS deliver Amazon packages on Sundays will actually help the economy.  Having the post office deliver the packages on Sunday will help attract more people to Amazon and may make those who shop on it buy more than if they went to the store.  This means those who work for Amazon will have more orders to process, fill, and ship out.  It also means that those who work for the post offices all over the country will have more hours too.

This is not some stunt Amazon is pulling for the holidays just to make money.  Yes, they will make money, that is just the way things work, but they will also be helping people all over get more hours of work, maybe even a job, and thus a better holiday season.  They are also making things more convenient for the customer.  So one has to ask, what could be better than getting your shopping done on Amazon when you know all of this?