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Federal Reserve Study on Online Lending is not Legit

They say that you can use studies and statistics to prove anything that you want; regardless of whether what you are trying to prove is even legitimate. Such is the case with a recent study that the Federal Reserve did with regards to consumer dissatisfaction with online lenders. According to this study only about 15 percent of small business borrowers reported being satisfied with online loans they were approved to get. Here’s the kicker – that statistic doesn’t even accurately reflect the data collected in this study. But people are now being hit with headlines about how much small business owners detest online lending. The thing is, though, that it’s just not true. And the study is pretty much bogus from all appearances.payday-online

The stat that we just mentioned is actually a representation of how many people were satisfied versus dissatisfied. You can check this out by looking at the study’s footnotes. So, the 15 percent is actually a net satisfaction metric that indicates more borrowers were satisfied with their experiences with online lenders than dissatisfied. If you do the math, this statistic actually shows that more than 50 of borrowers reported being satisfied. Banks did score higher than online lending companies in this report, but with as unscientific as this study was it is difficult to tell if that statistic is bogus or on the level.

An Unscientific Study by the Federal Reserve

The Federal Reserve puts a lot of interesting information in the footnotes and fine print of their study. If you cut through all of the confusing information, here is what it really says:

Businesses get contacted via email from organizations that serve the small business community in participating Federal Reserve Districts.

The data are not statistical representations of small businesses.

By its own admission, the authors at the Fed are very clearly stating that the data was not random – in other words the data is biased and not representative of real world statistics. The report even opens up by saying, “Our hope is that this report contributes to policymakers’ and service providers’ understanding of the business conditions, credit needs, and borrowing experiences of small business owners.”

We can now see that the metrics used in this study don’t mean anything in the real world. But they are still being cited continuously. A report that the US Treasury published a few months ago even makes a direct citation of the 15 percent satisfaction metric. It’s a standard case of bad information being created and published and then running amuck.

So what’s next? Now that this bogus study is being quoted and used all over the place, how do we get to the truth of the matter at hand? We are now at a point where critics and supporters of the online lending industry are even starting to buy into the bogus statistic about only 15 percent of small businesses being satisfied with online lending. This conclusion has never been reached by a legitimate study. No one is looking at the fine print from the Fed’s report. Hopefully, people within the industry will begin to look closer at these types of reports to see if what is being represented is truthful. When powerful agencies, like the Fed are able to get away with pushing what are essentially biased reports to the general public, it is easy to understand why so many people are up in arms about the online lending industry. If those folks would actually look at the facts, however, they’d find out that more small business owners are satisfied than dissatisfied with the online lending industry. It seems that is not the kind of true story, however, that the Fed wants the public to know about.

New Limitations on what Debt Collection Agencies are allowed to do

There could be no national economy without debt. Owing money is one of those things that is just a part of life. However, personal debt can get out of control and people may find it difficult to pay back the money that they owe to creditors. This is where debt collection comes into the equation. And it turns out that the people of this country are having some very big problems with debt collections companies. There are over 6,000 of these companies in the country and some of them use aggressive collections tactics in order to reclaim money that people owe.

There have been so many complaints about debt collections companies that the CFPB is proposing new rules that are designed to help bring this industry under control a bit, while providing some much-needed relief for American consumers who are struggling with repaying their debts.credit card debt

There are more than 130,000 people who work in the debt collection industry and those folks bring in over $13 billion each year. This industry has become more complex over the past few years. Some creditors will sell outstanding debts for pennies on the dollar. Third party debt collection firms purchase these debts and often use some very shady tactics to get their job done.

Chiming in on the current state of debt collections in the United States the CFPB Director, Richard Cordray said, “Often debt collectors are motivated to go to almost any lengths to try to extract as much as they possibly can from the debtor. This is because they are typically paid based on the amount they collect, the relationship may be fleeting, and the more distant risk of being called to account later may not outweigh the immediate urgency of getting paid today.”

If Cordray and the CFPB get their way, here are some of the things debt collectors will not be able to do in the future:

  • Collect on debts that do not exist. Some consumers have been hit up by debt collectors for money that they don’t even owe. This happens sometimes due to error and sometimes due to fraud on the part of debt collections companies. The CFPB has proposed that collectors will have to verify that a debt exists prior to beginning any collections actions.
  • Demanding payment without letting consumers know their rights. Debt collectors often rely on using confusing statements when they contact people. Debt collections companies will often only let people know their rights via cryptic, legalistic language the most people cannot understand. The CFPB wants to make these types of communications more transparent and easy to understand for consumers.
  • Endlessly harassing people to repay. Some collections agencies will call and even email people non-stop. They seem to think that the more they annoy people the more likely it is that they will be able to collect. The CFPB has proposed that limits be put on how many times debt collections agencies are allowed to make contact with consumers. The proposed limit is 6 times per week that agencies are allowed to contact people. This applies to phone calls, email or even letters sent to people.

The best way to avoid the hassles of dealing with debt collectors is to avoid getting in so much debt that you cannot repay what you owe. However, sometimes that is impossible, and sometimes you may not even really own money, but still wind up getting hassled by debt collectors. These new limitations should help people to avoid the potential nightmare that can happen when dealing with the worst kinds of debt collections companies.

Consumer Financial Protection Bureau looks to be Further Complicating Consumer Complaint Process

It looks like the CFPB is looking to add another layer of complexity to its customer dispute/complaint process. When this change goes through, consumers will have to wade through a two part online process that will ask consumers to give a rating to how a company handles complaints and to even log a wordy description that supports their dispute.

The CFPB is looking to get comments from the public about a recent request that came in as part of the Paperwork Reduction Act. This request would give people the chance to submit feedback on how the companies they are logging disputes against handle complaints internally. The Bureau plan on doing this with the addition of a survey and a free text section which allows consumers to describe their experience prior to the closing of a complaint.Consumer Financial Protection Bureau

The agency gave notice of this the first week of August. As of now, it is being called the Company Response Survey. It is slated to take the place of the dispute function that is currently in use and allows people to submit positive or negative feedback while they are filing complaints. The feedback will be looked at and any personal information will be removed prior to it getting officially published on the complaint database that the CFPB currently oversees.

This survey will ask consumers to rate how the company handles complaints via a one to five scale, while also including an opportunity for people to describe why they are giving the rating that they are. The CFPB published a Federal Register notice that stated, “Positive feedback about the company’s handling of the consumer’s complaint would be reflected by both high satisfaction scores and by the narrative in support of the score. Negative feedback about the company’s handling of the consumer’s complaint would be better supported and more useful to companies than the current ’dispute’ function.”

The CFPB will share the performance feedback information with the companies that respond to complaints to defend/represent its complaint handling process. Additionally, the CFPB will use this information to provide information to enforcement, supervisory and regulatory work that has a relation to the consumer financial products and services industry. The CFPB said that this survey is building on the foundation of a request that was submitted in 2015, and that it will allow the agency to stay centered on “… ways to highlight consumers’ positive experiences with financial service providers.”

The original CFPB consumer complaint database was launched to the public in 2012. The Bureau officially added complaints about debt collection to the database the following year. In the summer of 2015, they added complaint narratives to the growing database. This feature lets consumers share the experiences that they have had by using their own words. Since the database has been publicly available, debt collection companies have been the entities that seem to respond to the most complaints quickly. The CFPB published data that indicated that debt collection companies responded to about 93 percent of complaints logged in a timely manner.

It is worth noting that mortgage company complaints and complaints about credit card companies have made up a bulk of the consumer disputes received so far. Alternative financial service complaints have been few and far between. This is worth being aware of, being as the CFPB has seemed to focus a lot of its efforts on policing providers of alternative financial services, when it seems to be the traditional financial institutions that have generated the most complaints from consumers since the official launching of this database.

How to buy a Cell Phone on eBay and Avoiding Common Online Purchasing Mistakes

There was a time when having a cell phone was simply a luxury. Things are not like that anymore. Let’s face it, getting by in today’s world without a phone is like trying to travel on an interstate highway without a car. However, purchasing a new phone off of the shelves of a retail store, or from the mobile phone coverage provider of your choice can be downright expensive. There are more affordable methods of getting your hands on a phone – even some of the latest/greatest models – is a little easier than you might think. In fact, it is possible to use one of the most popular websites in the world to do just that.cellphone

Unless you haven’t been paying attention or have never been online before, you probably know all about eBay. This online auction site has been doing business for years, and allows individuals and retailers to sell their stuff to people from all over the world. Some items are sold via a true auction – people bid on the items, and the highest bidder wins – others are available via a “Buy it Now” button that allows you to make an instant purchase. You can find about anything you might imagine on eBay, and can often get great deals. Smart phones are some of the most popular selling items on eBay, but you have to use the right approach to get the phone you really want at a good price.

Smart Tactics to Buy a Cell Phone on eBay

Here are some tips that should help you to find the right phone at a price that can’t be beat:

  • Invest some time in reading the seller’s feedback. People rate the folks that they do business with on eBay. Read through reviews and look for any negative comments. Some people just post negative stuff for minor issues, but look for any signs that indicate that the phone you are considering purchasing is coming from a less than reliable resource.
  • Do your homework on the phone you want. Go online and look up the specs and features of the phone you plan to buy. Copy and paste some of that information into a text file, and then send the seller a message asking specific questions you have about the phone they are selling. If you don’t get a quick, thorough and correct answer, or the seller tells you they simply don’t know the answer, it’s time to move onto another listing from a different seller and repeat the process.
  • Once you are satisfied with the feedback the seller has, and you get solid answers to your questions, you can begin to bid on the phone you want. You will have to be the highest bidder to win, unless they are willing to let it go via “Buy it Now.”
  • Check the phone out once you get it. If there is a problem, contact the seller. Most people want to avoid negative feedback, so they will work with you to smooth things out. If the seller doesn’t want to work with you, or the phone you get is broken or not as described, you can always start a dispute, and eBay will work with both sides to get the issue resolved amicably.

The Real Reason to buy on eBay

There are lots of great phones in eBay auctions right now. The biggest reasons to do so are to save money on the phone and to get a better plan from your preferred coverage provider. It is so much more affordable to get a pay as you go plan for a phone you own than it is to roll the price of a new phone into the actual voice/data plan from the top providers. If you’re serious about finding the best method of how to buy a cell phone on eBay, these tips should get you moving in the right direction.

How Complaints Make Their Way to the Consumer Financial Protection Bureau

As a taxpayer, you have the right to know about services that are available to you. And even though the Consumer Financial Protection Bureau (CFPB) is in a bit of hot water with elected officials, business owners and private citizens right now, you should know a bit about how this government “consumer protection” group actually works. One of the most well-known things that the CFPB does is keeping track of consumer complaints about financial services and products. Here’s the thing – even if you never plan on submitting a complaint to this organization, you should be familiar with how the process works. After all, the CFPB is operating on a nearly limitless budget, and that is in no small way thanks to the tax dollars you fork out every year.

The WebsiteYury_Pen-Divorce

To start a complaint that will get filed in the CFPB’s consumer complaint database, you visit consumerfinance.gov. There is a link on the main page to file a complaint. Once you click on the link, you’ll be on a site that collects basic information. There are two main categories used to get a complaint into the database: Loans or Products and Services. The Loans category includes mortgage, student loan, vehicle loans, payday loans or other loans that you can choose from. The Products and Services category includes Bank Accounts, Credit/Prepaid Cards, Credit Reporting, Debt Collection, Money Transfer/Virtual Currency or Other Financial Service. Getting a registered complaint started is easy enough, you just choose from one of the category links that we just told you about.

Diving Deeper into Consumer Complaints to the CFPB

When you choose the topic that best suits your needs, you are taken to a new web page. You get basic information about how the process works, and a button to get started. Once you start, you have to fill in a text box with a description of your issue. You can also opt in or out of having the CFPB publish your description on their website. You also get the option to choose from different descriptors related to your issue. Website visitors can choose the proper descriptors and then continue. This takes people to the page where they fill in text about the resolution they’d like to see. After that page is submitted, you get to a page where it asks for basic contact information. Some fields are optional, but you must put in your name and an email address to continue the process. Depending upon what your complaint is about, you will be taken to yet another page that asks for specific information, like account numbers, company names and even a place to attach related documents.

When you have everything filled out, you get a chance to review all the information prior to official submission. Once that is done, the CFPB can – presumably – begin looking into the incident and taking action. Whether or not that happens immediately, a couple of days later or even months later is not so easy to figure out. However you do get a tracking number, so you can come back to the site to see where your complaint stands.

All in all, it is easy enough to log a consumer complaint to the CFPB. We have seen that the bureau does take action on some complaints. It also uses the data it collects to produce reports, so the government and taxpayers know what the organization has been up to. If you have a consumer complaint and have not been able to get it taken care of on your own, it may be worth a shot to log an online complaint. But even if you never use this government website, you at least understand how the process works.

Vets and Military Families Forced to Deal with Debt Collectors and Mortgage Issues

Since the Consumer Financial Protection Bureau is in charge of protecting consumers from financial misdeeds, it should come as no surprise that this group collects and tracks consumer complaints. When all the complaints from consumers are considered for calculations debt collection continues to be the type of issue most often reported to the CFPB. The organization recently released a couple of reports that show which consumers are the most at-risk for these types of issues and the businesses that are involved in debt collections actions.

Going back to March 1st, the CFPB revealed that California, Florida, New York, Texas and Illinois are the states that combine to account for in excess of 40 percent of all the complaints logged since summer of 2011. In Florida almost 60 percent of the complaints from state residents can be traced to three major metro areas – Tampa, Orlando and Miami.

Here is something that is really troubling to a lot of people – military veterans and their families continue to be the most at-risk for debt collection issues. And that is even when compared to the rest of the population. When tabulating the complaints that have been logged by folks in the military community, debt collection issues come in at about 46 percent of all complaints filed by military personnel and/or their immediate family members. If you want to compare this stat with the overall numbers, the CFPB states that these types of complaints account for 26 percent of total complaints collected thus far.

It seems that debt collection issues are not the only concerns that military families have. Mortgage complaints come in second place for complaints logged by this group, at about 15 percent. Many service members find themselves coming home from deployment and have also reported complaints about fraudulent credit report activity and identity theft instances.

So, what kind of companies are responsible for the steady amount of debt collection actions in the United States? The CFPB complaints have indicated that Encore Capital Group, based out of San Diego and Portfolio Recovery Associates, based out of Virginia are two of the biggest debt collection companies in the United States, and they have been mentioned most frequently in complaints logged to the CFPB. Each of these companies were mentioned in more than 100 complaints each month, from October to December of 2015.

Is the CFPB doing anything about all of the complaints it receives? The bureau says that it took enforcement measures against the firms mentioned for actions that include deceptive debt collection practices and debt purchasing. In fact, Portfolio Recovery Associates was fined $8 million and ordered to repay about $19 million to consumers. The company also had to cease collection actions on about $3 million worth of debts. Encore Capital, meanwhile, was ordered to stop their collection efforts on nearly $125 million in debts, to repay consumers $19 million and they also had to pay a hefty $10 million fine.

Since so many people have a vested interest in taking care of military members and their families, it will be interesting to see if the CFPB actually takes any direction action to focus on the unique financial challenges that many military families seem to be dealing with. If there are debt collection agencies out there that are continually targeting military personnel for harassment, for example, then the CFPB needs to step in and use its considerable power to provide a bit of relief for those who have taken it upon themselves to defend this country as a way of life. It really is the right thing to do.

How to Save Money on Monthly Food Bills without Depriving You or Your Family

When you think about the bills you pay every month, you probably think about the mortgage/rent, car payments, utilities and maybe even your cable TV bill. People often forget about how much they pay to simply stay nourished. Yep, you need to consider your expenses at the grocery store to be a monthly bill, even if the amount varies from one month to the next. This is true for everyone who wants to save money. Lots of people will refinance their homes, purchase lower priced cars or even go without certain luxuries in order to save money. But very few people ever consider enacting an action plan to save money on groceries/food each month.Wheatland_Iowa_Grocery_Store

Just thinking about cutting back on food costs often causes people to panic. Food is not just something that we eat to survive; we have hard wired emotional ties to the foods that we eat. As such, people often think that if they try to cut corners on their grocery bills they will wind up depriving their families. No worries, though, there are some very simple things you can do to save money on food costs without feeling deprived or feeling like you are not providing your family with the foods they need and enjoy.

Replace Soda and Junk Food with Healthier Options

A soda every now and then is good, but drinking soda every day is expensive, and may also lead to health problems. Water is a much better choice, more affordable (especially if you drink tap water) and should be your primary source for hydration. Even if you buy just a 12 pack of soda each week, you could save close to $20 a month by cutting it from your shopping list. And you can replace cookies, chips and other junk food with healthier alternatives. Some say that it costs more to buy produce, but you can purchase a bunch of bananas for less than $2.00, while a package of cookies can cost upwards of $5.00. You don’t have to cut out all junk food, but eliminating it from your weekly shopping list can help you to save quite a bit of money on groceries.

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This is a no-brainer, but people seem to ignore it – stop eating out at restaurants (even fast food joints) and start preparing more meals at home. You can purchase a lot of staple food items in bulk at stores, like Sam’s or Costco. By doing so, you pay less per serving, and are able to prepare lots of great recipes at home. YouTube is filled with great, affordable recipes that you can use to start cooking more at home. And if you have a family, make it a joint effort. You’ll be able to reduce the workload and spend some time together. Save those restaurant trips for special occasions, and you’ll be able to enjoy those expensive meals more; knowing that you’ve been stashing away money that you used to blow on eating out.

Save the Money – Actually Save it!

If you follow these tips and save money on food expenses be sure to actually save it. Don’t blow the extra cash that you have on other things. Instead, put that money directly into your emergency savings fund. And if you haven’t started a fund yet, a month’s worth of using these tips to save money at the grocery store is a great way to save up a “seed” amount of money to get your savings going full steam ahead!

Consumer Lending Industry from the Perspective of Former Regulators

The free market is supposed to be based on consumers being able to freely participate in it along with healthy competition. Notice we said “supposed to be.” Yes, our free market system is still chugging away, but it could stand to have a few swift kicks to get moving as it ought to be. According to information released from the FDIC, about 92 million Americans are either underbanked or unbanked entirely. Some of these consumers don’t have access to lines of credit, and may not even have the financial savvy it takes to find viable options to credit. While all of this is going on, it seems that regulators are having a field day; making it even more difficult for financial service providers to offer alternative services to people and for consumers to get access to much-needed loans. Many small lending companies are the only providers that some consumers have access to or are willing to do business with. Regulations that may very well shut down the small consumer lending business may well help to make competition virtually non-existent and may actually work to lower consumer participation rates.Banks Being Scrutinized By Regulators for Payday-Like Loans

Even former regulators understand that sweeping changes to the small dollar lending industry is going to cause problems for many consumers. The people that utilize these types of financial products don’t need lines of credit for tens of thousands of dollars. No, these are the consumers who need a hundred dollars or maybe a few hundred in order to repair their car or to take care of emergency medical costs. The traditional banks are simply not willing to offer the types of smaller dollar, shorter term loans that people need for these kinds of expenses, which leaves millions of Americans scrambling for help when emergency expenses arise.

Back in 2008, only around 30 banks offered consumer loans for less than $2,500. Since then, larger banks, like U.S. Bank and Wells Fargo have stopped their lines of small dollar loans because of all the new regulatory pressures that lenders must deal with. Since that happened, the situation for unbanked/underbanked consumers has gone downhill fast. Consider the fact that 54 percent of African Americans are currently underbanked/unbanked. Some of these folks run into brick walls when they need to get access to fast money for emergency expenses, but don’t have the options that many other Americans enjoy. Because many unbanked people have poor credit histories, they have no choice but to seek out alternative financial service providers. It is either that, or they have to take their luck with selling belongings, or worse yet, dealing with loan sharks.

Every consumer, including the unbanked and underbanked, need to have access to small dollar loans. And the lenders that provide these types of financial services need to do business in a way that allows them the ability to be profitable and successful. Upcoming small dollar consumer loan regulations may take away the ability for some of the most underserved financial participants in this country to gain access to emergency funds. And the regulations may drive legitimate lending operations completely out of business.

More than a few former financial regulators and watchdog group members have chimed in on this subject, with many of them saying that the proposed regulations coming down the pipeline are sure to spell financial disaster for many underbanked/unbanked households in this country. These warnings seem to be going completely unnoticed, as the Obama administration continues to utilize resources, like the CFPB, to put undue pressure and scrutiny on both small dollar lending companies and the people who depend on these types of loans to survive.