Links in “Payday Lending/Money Services Businesses”

FDIC, Federal Reserve and OCC are seeking a dismissal of a lawsuit by payday lenders accusing them of pressuring banks to terminate relationships with them. "Banks, not federal banking regulators, terminated those business relationships," said FDIC lawyers. [8/20/14]

Forster & Garbus, a debt collection firm in New York, has settled with the NY state attorney general who requires it to cease filing actions to collect on payday loans and to obtain written proof that loans aren't of the payday type before pursing collection. "Ignorance is no excuse," said the state's attorney general. [8/18/14]

The POSTAL Act of 2014 was introduced in July and would allow the US Postal Service to participate in several financial services. The white paper explains that 59% of post offices are in areas with one or no bank branches. The intention to render services to the underserved is not anticipated to create competition with banks, but rather to take a slice of pie from non-bank services such as payday lending. [8/8/14]

Department of Justice's "Operation Choke Point," a controversial program to make access to the financial system difficult for certain businesses, has been dealt a blow by the FDIC, which has withdrawn a list of merchant categories that it said warranted heightened attention by banks. The list, including payday lenders, debt consolidation firms, pornography businesses and others, had been misinterpreted, resulting in banks severing ties with legitimate businesses in those industries, according to the FDIC. [7/29/14]

Yes, ACE Cash Express is a payday lender, not a bank. But the $10 million settlement the CFPB came to with ACE portends some troubling trends that banks should keep an eye on, such as how the CFPB is using its UDAAP authority to apply the Fair Debt Collection Practices Act to all first-party debt collectors and how the CFPB continues to use enforcement actions to impose requirements rather than the "notice and comment" rulemaking process. [7/24/14]

Well, for one thing, it might bring a civil money penalty of $45,000 as money services business Mian knows too well. The institution failed to satisfy crucial BSA/AML reporting requirements such as filing CTRs for all currency transactions exceeding $10,000. [7/16/14]

Operation Choke Point, the controversial initiative targeting banks servicing payday lenders as well as other industries the administration deems problematic, is the subject of two House hearings this week. Both the House Financial Services Committee and the House Judiciary Committee are calling witnesses to appear. [7/14/14]

Federal Trade Commission settles with a Florida-based payday lender. According to the complaint, the defendant used consumers’ personal financial information it had collected through its websites on the pretense of helping them to get a loan to withdraw $30 from the bank accounts of tens of thousands of consumers, without authorization and without providing anything of value in return. [7/14/14]

The Consumer Financial Protection Bureau (CFPB) took enforcement action Thursday against ACE Cash Express, one of the United State's largest payday lenders. ACE Cash Express was charged with pushing payday borrowers into a cycle of debt through illegal debt collection tactics including harassment and false threats of lawsuits or criminal prosecution. ACE will pay $5 million in refunds and another $5 million as penalty for these violations. [7/11/14]

This week, Idaho's "Payday Loan Act" went into effect. Loans are restricted to 25% of borrower income or $1,000, and lenders are required to provide an extended payment plan over a 60-day period for borrowers who are struggling to repay their loan. [7/3/14]