cfpb hot topics in 2016

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Data accuracy/consumer disputes

The Military Lending Act

Regulatory trends in online lending

Regulators’ views on “Big Data”

Congressional “Access to Credit” agenda

Q&A session

Today’s Discussion Agenda


SpeakersGovernment Affairs and Public Policy

Liz OesterleSenior Director

Murray JohnstonDirector

Jeremy HancockDirector

Zack SmithManager

Tony HadleySenior Vice President


Consumer Financial Protection Bureau2016 rulemaking agenda

Short-term loans and deposit advance products

Notice of rule in February 2016

ArbitrationProposed rule expected in winter 2016

Debt collection Proposed rule inFebruary 2016

Minority and Women Owned Business Data

Proposed rule in September 2016

Credit Reporting Beyond November 2016


Data Accuracy and Consumer Disputes

Credit Reporting Agency

Data Furnisher

Data User


Data Accuracy and Consumer Disputes

Credit reporting complaints: Incorrect information

on a report (77%) Consumer reporting agency

investigation (8%) Inability to obtain report

and score (8%) Problems with credit

monitoring or identity protection services (5%)

Improper use of credit report (3%) 35%

Mortgages

Credit cards 7%

20%

Debt collectors

Bankaccount

Creditreporting

Other

35%8%

18%

12%

Complaints handled in 2014


Military Lending ActDepartment of Defense Final Rule

Expanded definition of covered loans

Safe Harbor through:

• DoD Database

• Nationwide Consumer Reporting Agency

MLAMilitary Lending Act

MLA STANDARDS

AFFECT

FINANCIAL PRODUCTS

CAPPED

MLA RULE INCLUDES

Payday loans

Vehicle title

Refund anticipation,

deposit advance and auto

installment loans

Unsecured open-end lines of credit

Credit cards

36%Military Annual Percentage Rate

All-inclusive rate, capturing fees,

charges and the sale of credit-

related products

No longer will banks require service members to:• Submit to mandatory

arbitration and legal requirements

• Waive the Servicemembers Civil Relief Act rights

• Provide a payroll allotment

• Allow continual refinance of a payday loan

• Provide a post-dated check

• Access a bank account or car title


Growth and lending models have caught the attention of regulators

Scoping by Treasury, CFPB, FDIC, FTC, States and Congress

Do online lenders enjoy a “regulatory arbitrage?”

FDIC’s Winter 2015 Supervisory Insights

Compliance with existing consumer protection laws are paramount

Online Marketplace LendingRegulators Seek More Information


Big Data

Policymakers examining how big data is used in:

► Marketing► Fraud► Credit Decisions

Policymakers warn: Be fair and follow existing laws

Regulators are focusing on technology, not just data

European Union General Data Protection Regulation Safe Harbor Privacy Shield


H.R. 347 – Facilitating Access to Credit Act of 2015► Would free CFPB-supervised credit bureaus to introduce next-gen

consumer education products into the marketplace by removing barriers required by the Credit Repair Organizations Act

H.R. 4172 and S. 2355 – Credit Access and Inclusion Act of 2015► Would remove regulatory barriers that prevent furnishing consumer

payment histories to credit bureaus for telecommunication, utilities and rental bills

H.R. 4211 -- The Credit Score Competition and Equal Access Act► Would require Fannie Mae and Freddie Mac to establishing a transparent

and open process for the validation and approval of credit score models

Congressional Access to Credit Agenda


Congressional Access to Credit AgendaAlternative Data

A May 2015 report from the CFPB estimates that there are roughly 45 million “credit invisibles” in the U.S.

Alternative data is payment information for: Rent Telecommunications (phone, cable and

wireless) Utilities (electric, gas, water)

Telecoms / Utilities report derogatory but not on-time payments, or the full file

Credit invisibles are consumers with no or “thin” credit files that cannot be scored


Fannie Mae and Freddie Mac underwriting guidelines require use of a specific branded credit score:

Pre-recession credit behavior Older software

Score competition would allow lenders to chose among alternative score models to:

Improve risk prediction with newer scoring technology/more granularity

Score more consumers

Congressional Access to Credit AgendaCredit score competition


Congressional Access to Credit AgendaCredit Building and Recovery through CROA Reform

Personalized Credit Education

Consumers are directed to Experian bythe disclosures on reports and scores, but

CROA’s misapplication stands in the way of further education when the consumer asks:

“How can I improve my score?”

What is the Credit Repair Organizations Act (CROA)?

Enacted in 1996 to protect consumers from“credit repair” scams

“Credit Repair”: Fraudulently representing to consumersthat an entity can remove accurate, but negative datafrom a consumer’s file. Often for an exorbitant fee.

3 business day waiting period

Onerous/scary consumer disclosure

Complete disgorgement offunds as remedy


Questions

Inside the Beltway:CFPB Hot Topics in 2016

cfpb hot topics in 2016

Government & Nonprofit