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    CONSUMER FINANCIAL PROTECTION BUREAU UNVEILS STUDENT LOAN ‘PAYBACK PLAYBOOK’ TO PROVIDE BORROWERS WITH PERSONALIZED SNAPSHOT OF REPAYMENT OPTIONS

    Thursday, April 28th, 2016

    FOR IMMEDIATE RELEASE:
    April 28, 2016

    CONTACT:
    Office of Communications
    Tel: (202) 435-7170

    CONSUMER FINANCIAL PROTECTION BUREAU UNVEILS STUDENT LOAN ‘PAYBACK PLAYBOOK’ TO PROVIDE BORROWERS WITH PERSONALIZED SNAPSHOT OF REPAYMENT OPTIONS
    Prototype Disclosures Outline Path to Affordable Payments for Borrowers Trying to Avoid Debt Distress

    WASHINGTON, D.C. — Today the Consumer Financial Protection Bureau (CFPB) unveiled the student loan Payback Playbook, a set of prototype disclosures that outline a path to affordable payments for borrowers trying to avoid student debt distress. The Payback Playbook provides borrowers with personalized information about their repayment options from loan servicers so they can secure a monthly payment they can afford. The Payback Playbook would be available to borrowers on their monthly bills, in regular email communications from their student loan servicers, or when they log into their student loan accounts.

    “Millions of consumers needlessly fall behind on their student loan debt, despite their right under federal law to a payment they can afford,” said CFPB Director Richard Cordray. “The Payback Playbook, which has grown out of our joint work with Illinois Attorney General Lisa Madigan and her colleagues, is designed to help ensure student loan servicers provide personalized information, tailored to the borrower’s individual situation. This will help these borrowers take action, stay on track, and steer clear of financial distress.“

    View the Payback Playbook prototypes at: http://files.consumerfinance.gov/f/documents/201604_cfpb_student-loan-playbooks-website.pdf

    About 43 million Americans owe student loan debt, with outstanding debt estimated at $1.3 trillion. The Department of Education offers numerous plans to borrowers with federal student loans that help make payments more affordable. These include options that let borrowers set their monthly payment based on their income. Repayment plan options for federal loans have expanded in recent years, but record numbers of student borrowers continue to struggle with debt. One out of four student loan borrowers are currently in default or scrambling to stay current on their loans, despite the availability of income-driven repayment options for the vast majority of borrowers.

    According to a government audit, 70 percent of federal Direct Loan borrowers in default earned incomes low enough to qualify for reduced monthly payment under an income-driven repayment plan. These findings and the continued problems reported by student loan borrowers raise serious concerns that millions of consumers may not be receiving important information about repayment options or may encounter breakdowns when attempting to enroll.

    Prototype Student Loan Payback Playbook
    The first-of-its-kind prototype student loan Payback Playbook outlines repayment options for consumers who may be struggling to keep up with their monthly payment or trying to choose among dozens of plans. The Payback Playbook that most borrowers receive from their servicer will help cut through the clutter by clearly presenting three personalized repayment options. Struggling borrowers who have missed a payment or are at risk of default will receive a Payback Playbook that provides a single option with personalized instructions written in plain language describing how to lower their monthly payment. The proposed Payback Playbook features will include:

    • Personalized payment options: The Payback Playbook would require servicers to provide personalized information tailored to borrowers’ specific circumstances that show what their payments will be under different repayment plans. This information would include the number of payments over the life of the loan, monthly payment amounts, and whether payments will change over time.
    • No fine print: The Payback Playbook describes each option using clear, straightforward language that makes it easier for borrowers to understand the different plans, pick one that fits their financial situation, and stay on track.
    • Real-time, up-to-date information: The Payback Playbook provides borrowers with updated information when their plans or circumstances change so they can keep on top of their payments.  This includes how much longer they need to make payments until their loan is paid off or forgiven.

    The Payback Playbook is available online and the public can provide feedback on these prototype disclosures through June 12, 2016. In the coming months, the Department of Education plans to finalize these disclosures, informed by the public feedback shared with the Bureau, to ensure that student loan servicers provide the information borrowers need to obtain monthly payments they can afford. The Department of Education, working with the CFPB, plans to finalize and implement these disclosures as part of the new vision for serving student loan borrowers announced earlier this month.

    The public can weigh in starting April 28, 2016 on the Payback Playbook prototypes at: www.consumerfinance.gov/payback-playbook

    A copy of the CFPB public request for information is available at: http://files.consumerfinance.gov/f/documents/201604_cfpb_rfi-regarding-student-loan-borrower-communications.pdf

    In a related action, the Bureau today also released a new action guide to help military borrowers navigate their student loan repayment options and take advantage of special consumer protections designed to help men and women in uniform manage their debt while serving our country.

    Reforming Student Loan Servicing
    The CFPB’s development of the prototype Payback Playbook was informed by the ongoing work of state law enforcement agencies and a public inquiry last year. The inquiry identified widespread concerns about  student loan servicing practices. Servicers are a crucial link between borrowers and lenders. They manage borrowers’ accounts, process monthly payments, and communicate directly with borrowers. When facing unemployment or other financial hardship, borrowers may contact student loan servicers to enroll in alternative repayment plans, obtain deferments or forbearances, or request a modification of loan terms.

    The CFPB’s inquiry into the practices of student loan servicers received more than 30,000 comments from student loan borrowers, servicers, policy experts, and consumer advocates, describing widespread servicing failures that can drive student loan borrowers into default. Consumers reported miscommunication from servicers that caused distress, increased costs, and prevented borrowers from obtaining affordable payments. Also, some borrowers trying to avoid default reported falling prey to debt relief scammers that charge illegal upfront fees while promising to enroll borrowers in free federal consumer protections, including income-driven repayment plans.

    The Bureau has made it a priority to take action against companies that are engaging in illegal student loan servicing practices. Earlier this year, the CFPB announced that its oversight work ended a range of illegal practices at certain student loan servicers, as identified by the Bureau’s supervisory program. The CFPB will also continue to monitor the student loan servicing market and intends to explore potential industry-wide rules to increase borrower protections. Today’s announcement builds on an interagency framework for market-wide reform announced in September 2015 in coordination with the Department of Education and Department of the Treasury.

    “The Obama Administration continues to look for ways to make college more affordable and accessible for all families. A college degree is one of the best investments a student can make in his or her future, and it remains the clearest path to the middle class,” said U.S. Secretary of Education John B. King Jr. “We want student borrowers to know that they have the support they need to manage their debt and navigate the options available to them to pay back their loans.”

    Student Loan Initiatives from the Department of Education and the Department of the Treasury
    Today, the Department of Education and the Department of the Treasury, in consultation with the Bureau, also announced further actions aimed at protecting student loan borrowers:

    • Student loan borrowers’ rights and expectations: The administration, in consultation with the Bureau and informed by work with Illinois Attorney General Madigan and other state law enforcement officials, has released a series of new student loan borrower rights and expectations. This provides a framework to help ensure borrowers with loans owned by the Department of Education are treated fairly and that the student loan repayment process sets these borrowers up to succeed. The Bureau continues to emphasize that no consistent, market-wide federal standards exist for conduct of student loan servicers. With this framework, the agencies have taken another step toward improving the delivery of service for millions of student loan borrowers.
    • Strengthening student loan credit reporting: The administration, in consultation with the Bureau, is working with the credit reporting industry to develop guidance for servicers, lenders, and others that furnish data to the credit reporting companies. This effort will help determine how best to report student loan data to ensure that credit reporting for student loans fairly, consistently, and accurately reflects repayment activity. The Department of Education will implement this effort in the months ahead.

    Student loan borrowers can get more advice on student loan repayment options by using the CFPB’s Repay Student Debt tool. This interactive resource offers a step-by-step guide to navigate borrowers through their repayment options, especially when facing default. Student loan borrowers experiencing problems related to repaying student loans or debt collection can submit a complaint to the CFPB. More information is at http://www.consumerfinance.gov/students.

    ###

    The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov.

    CONSUMER FINANCIAL PROTECTION BUREAU TAKES ACTION TO HALT ILLEGAL DEBT COLLECTION PRACTICES BY LAWSUIT MILL AND DEBT BUYER

    Monday, April 25th, 2016

    April 25, 2016

    CONTACT:
    Office of Communications
    Tel: (202) 435-7170

    CONSUMER FINANCIAL PROTECTION BUREAU TAKES ACTION TO HALT ILLEGAL DEBT COLLECTION PRACTICES BY LAWSUIT MILL AND DEBT BUYER
    CFPB Bars Law Firm, Debt Buyer from Churning Out Illegal Collections Lawsuits and Imposes $2.5 Million in Penalties

    WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) today ordered the debt collection law firm Pressler & Pressler, LLP, two principal partners, and New Century Financial Services, Inc., a debt buyer, to stop churning out unfair and deceptive debt collection lawsuits based on flimsy or nonexistent evidence. The consent orders bar the companies and individuals from illegal practices that can deceive or intimidate consumers, such as filing lawsuits without determining if debts in question are valid. The orders also require the firm and the named partners to pay $1 million, and New Century to pay $1.5 million to the Bureau’s Civil Penalty Fund.

    “For years, Pressler & Pressler churned out one lawsuit after another to collect debts for New Century that were not verified and might not exist,” said CFPB Director Richard Cordray. “Debt collectors that file lawsuits with no regard for their validity break the law and violate the public trust. We will continue to take action to protect borrowers from abuse.”

    Pressler & Pressler is a New Jersey-based law firm that collects consumers’ debts for creditors through lawsuits and other means. New Century Financial Services, also based in New Jersey, buys and collects defaulted consumer debts and hands off those accounts to Pressler & Pressler for collection. To collect alleged debts on behalf of New Century and others, Pressler & Pressler filed hundreds of thousands of lawsuits against consumers.  Sheldon H. Pressler and Gerard J. Felt, partners of the firm, each participated in the firm’s debt collection litigation practices.

    The CFPB found that to mass-produce these lawsuits, Pressler & Pressler used an automated claim-preparation system and non-attorney support staff to determine which consumers to sue. Attorneys generally spent less than a few minutes, sometimes less than 30 seconds, reviewing each case before initiating a lawsuit. This process allowed the firm to generate and file hundreds of thousands of lawsuits against consumers in New Jersey, New York, and Pennsylvania between 2009 and 2014. The CFPB found that the respondents violated the Fair Debt Collection Practices Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, which prohibits unfair and deceptive acts or practices in the consumer financial marketplace. Specifically, the CFPB found that Pressler & Pressler, the firm’s named partners, and New Century Financial Services:

    • Made false or empty allegations about consumer debts: The CFPB found that the firm, the named partners, and New Century filed lawsuits against consumers without sufficient basis. Neither the firm nor New Century reviewed documents supporting the validity of debts.
    • Filed lawsuits based on unreliable or false information: Some consumers had previously challenged the validity or accuracy of the debts, but the firm or New Century did not obtain or review information to justify their claims. The firm and New Century also filed suits and collected debt knowing that some account portfolios targeted for lawsuits contained unreliable or false information.
    • Harassed consumers with unsubstantiated court filings: The CFPB found that the firm, the named partners, and New Century filed collection suits generated mainly by automated processes that relied on summary data. The firm won the vast majority of the lawsuits by default when consumers did not defend themselves, even though neither Pressler & Pressler nor New Century had verified that the debts were actually owed.

    Enforcement Action
    Under the Dodd-Frank Act, the CFPB has the authority to take action against institutions or individuals that engage in unfair, deceptive, or abusive acts or practices. The CFPB also has authority over debt collection practices under the Fair Debt Collection Practices Act. The CFPB orders require that Pressler & Pressler, the firm’s named partners, and New Century Financial Services must:

    • Stop filing lawsuits with unsubstantiated claims: Pressler & Pressler, the named partners, and New Century cannot file lawsuits or threaten to sue to collect debts unless they obtain and review specific account-level documents and information showing the debt is accurate and enforceable.
    • Ensure accurate court filings: The firm, the named partners, and New Century may not use affidavits as evidence to collect debts unless they accurately describe relevant facts including that the individual executing the affidavit has personal knowledge of the debt, or, if not, has reviewed documentation related to the debt. The firm must also keep an electronic record showing it is following proper procedures.
    • Pay civil penalties: The firm and the named partners must pay a penalty of $1 million to the CFPB’s Civil Penalty Fund. New Century must pay a penalty of $1.5 million.

    The CFPB’s order against Pressler & Pressler and the named partners is available at: http://files.consumerfinance.gov/f/documents/201604_cfpb_consent-order-pressler-pressler-llp-sheldon-h-pressler-and-gerard-j-felt.pdf

    The CFPB’s order against New Century Financial Services is available at: http://files.consumerfinance.gov/f/documents/201604_cfpb_consent-order_new-century-financial-services-inc.pdf

    Federal Trade Commission warning re debt collection scams

    Thursday, April 21st, 2016

    Bogus debts, bogus collections

    At the FTC, we sue abusive debt collectors and try to do right by people who’ve been harmed by unlawful practices. But we also try to protect people from being harmed in the first place. That’s exactly why I’m here: to warn you about debt collectors calling about debts that the FTC knows are bogus.

    The bogus debts supposedly are payday loans from these companies: USFastCash, 500FastCash, OneClickCash, Ameriloan, United Cash Loans, AdvantageCashServices, or StarCashProcessing. The companies are real, but if you’re hearing from anyone other than those companies, the debts are fake and you don’t need to pay.

    Sometimes, if they can’t collect money owed to them, companies sell lists of those debts to debt collectors. But, in this case, we know that didn’t happen. The company that processed and serviced loans from these companies told the FTC that it never sold any customer or account information to debt collectors. Their lawyer even filed alegal declaration saying that.

    Even so, we’ve still heard about abusive calls from debt collectors claiming to be collecting money owed to the companies listed above – and we already know that’s not true. But we also know that many of the people who have been called never even had a loan with those lenders in the first place – so the debts themselves also are bogus.

    What to do if you get a call from a debt collector who says you owe money to one of those companies? You have rights. Ask for avalidation notice, which says what you owe and to whom. After you get it, consider sending a letter saying that you don’t owe the debt. If you’re getting debt collection calls, check your free credit report atannualcreditreport.com. If a debt you don’t recognize shows up there, follow the instructions to dispute the debt. And, as always,report any problems to the FTC.

    CONSUMER FINANCIAL PROTECTION BUREAU FINDS HALF OF ONLINE PAYDAY BORROWERS RACK UP AN AVERAGE OF $185 IN BANK PENALTIES

    Wednesday, April 20th, 2016

    FOR IMMEDIATE RELEASE:
    April 20, 2016

    CONTACT:
    Office of Communications
    Tel: (202) 435-7170

    CONSUMER FINANCIAL PROTECTION BUREAU FINDS HALF OF ONLINE PAYDAY BORROWERS RACK UP AN AVERAGE OF $185 IN BANK PENALTIES
    Repeat Debit Attempts Add Steep, Hidden Cost for Borrowers Yet Typically Fail to Recover Payments

    WASHINGTON, D.C. — Today the Consumer Financial Protection Bureau (CFPB) issued a report that found that attempts by online lenders to debit payments from a consumer’s checking account add a steep, hidden cost to online payday loans. Half of online borrowers rack up an average of $185 in bank penalties because at least one debit attempt overdrafts or fails. And one third of those borrowers who get hit with a bank penalty wind up having their account closed involuntarily. The study also found that despite this high cost to consumers, lenders’ repeated debit attempts typically fail to collect payments.

    “Taking out an online payday loan can result in collateral damage to a consumer’s bank account,” said CFPB Director Richard Cordray. “Bank penalty fees and account closures are a significant and hidden cost to these products. We are carefully considering this information as we continue to prepare new regulations in this market.”

    The report is at: http://files.consumerfinance.gov/f/201604_cfpb_online-payday-loan-payments.pdf

    Payday loans are typically marketed as a way to bridge a cash flow shortage between paychecks or other income. Also known as “cash advances” or “check loans,” they are usually high-cost loans that can offer quick access to money. Payment is usually due in full on the borrower’s next payday, although some lenders offer installment loans or longer-term loans with payments typically timed to coincide with the consumer’s next payday.

    Today’s report is based on data from an 18-month period in 2011 and 2012 that looked at online payday and certain online installment loans made by more than 330 lenders. It is a continuation of the CFPB’s reports on payday loans and deposit advance products, some of the most comprehensive studies ever undertaken on the market. Previous reports have raised questions about the lending standards and loan structures that may contribute to the sustained use of these products.

    Today’s report examines the ways that online lenders attempt to recover their money by debiting a consumer’s checking account. Online lenders often use an automated network to deposit the loan proceeds into borrowers’ checking accounts. They collect money by submitting a payment request to the borrower’s depository institution through the same system. Borrowers facing financial difficulties are often hit by multiple, costly debit attempts. If a debit attempt fails, lenders often follow up with repeated attempts against a consumer’s account. Many lenders also split a single payment into multiple smaller debits in the hopes that the consumer’s account will contain enough money to fulfill one of the attempts. They can do this, for example, by submitting three $100 requests on a day the borrower is due to pay $300.

    When an account lacks sufficient funds, the bank or credit union may fulfill the debit and charge the consumer an overdraft fee or the debit attempt could fail and the bank or credit union will reject the payment request and charge a non-sufficient funds fee. The typical fee for both overdraft and non-sufficient funds was $34 in 2012. If the debit attempt is rejected, the lender may also charge the borrower a late fee, a returned payment fee, or both. Negative account balances are a significant contributor to involuntary account closures at many banks and credit unions.

    Today’s study found that bank penalty fees and account closures are a significant, hidden cost of online payday and payday installment loans. The study further found that some lenders repeatedly submit payment requests to consumer accounts even though debit attempts typically do not generate more income. Specifically, the report found:

    • Half of online borrowers are charged an average of $185 in bank penalties: One half of online borrowers have at least one debit attempt that overdrafts or fails. These borrowers incur an average of $185 in bank penalty fees, in addition to any fees the lender might charge for failed debit attempts.
    • One third of online borrowers hit with a bank penalty wind up losing their account: A bank account may be closed by the depository institution for reasons such as having a negative balance for an extended period of time or racking up too many penalty fees. Over the 18-month period covered by the data, 36 percent of accounts with a failed debit attempt from an online lender ended up being closed by the depository institution. This happened usually within 90 days of the first non-sufficient funds transaction.
    • Repeated debit attempts typically fail to collect money from the consumer: After a failed debit attempt, three quarters of the time online lenders will make an additional attempt. Seventy percent of second payment requests to the same consumer’s account fail. Seventy-three percent of third payment requests fail. And, each repeated attempt after that is even less likely to succeed.

    Today’s report will help educate regulators and the public about how the payday and installment lending markets work and about the behavior of borrowers in the market. The CFPB has authority over the payday loan and payday installment loan markets. It began its supervision of payday lenders in January 2012. In November 2013, the CFPB began accepting complaints from borrowers encountering problems with payday loans. Last month, it began accepting complaints about online marketplace lenders.

    Last year the Bureau announced it was considering a proposal that would prohibit payday lenders and similar lenders from making more than two unsuccessful attempts in succession on a borrower’s checking or savings account. The Bureau is expecting to issue a proposed rule later this spring.

    Fiat Financial

    Saturday, April 9th, 2016

    Please contact us if Fiat Financial Money Center is attempting to collect money from you.