FOR IMMEDIATE RELEASE: October 24, 2019

“It sends a terrible signal for the FDIC and OCC to support a predatory lender that used a bank to enable a destructive 120% APR loan.”

WASHINGTON, D.C. – Small business advocates, consumer groups, and civil-rights advocates today sent a letter to the Federal Deposit Insurance Corp. (FDIC) and the Office of the Comptroller of the Currency (OCC) criticizing the agencies’ decision to file an amicus brief supporting a predatory small business lender that used a bank to evade state interest rate laws so that it could make a 120% annual percentage rate (APR) $550,000 loan.

“In taking this position, the FDIC and OCC risk sending a green light for predatory lending when the agencies should be doing the opposite: making clear that the banks you supervise cannot rent out their charters to help predatory lenders make usurious loans that create debt traps for consumers or small businesses,” the letter stated. “It sends a terrible signal for the FDIC and OCC to support a predatory lender that used a bank to enable a destructive 120% APR loan. Supporting this type of subterfuge will only encourage banks to get involved with predatory products that put not only consumers and small businesses, but also the bank at risk.”

The groups urged the FDIC and OCC “to clamp down on the spreading use of banks by payday lenders and subprime business lenders to enable predatory, high-cost loans.”

The letter was joined by 21 groups, including Main Street Alliance, Small Business Majority, Americans for Financial Reform Education Fund (AFREF), the Center for Responsible Lending (CRL), and the National Consumer Law Center (NCLC).

World Business Lenders was the subject of a 2014 Bloomberg article,“Wall Street Finds New Subprime With 125% Business Loans,”  describing how the lender targeted struggling small businesses, sending many of them into bankruptcy, using many of the practices, and even the people, that fed the financial crisis.

The FDIC and OCC’s amicus brief on behalf of World Business Lenders was submitted in the case Rent-Rite Superkegs West, LTD. v. World Business Lenders, LLC, Adv. Pro. No. 18-1099 TBM (D. Colo.).

Contacts: 

National Consumer Law Center: Jan Kruse, jkruse@nclc.org

AFR: Carter Dougherty, carter@ourfinancialsecurity.org

CRL: Ricardo Quinto, ricardo.quinto@responsiblelending.org

Main Street Alliance: Sarah Crozier, Sarah@mainstreetalliance.org

Small Business Majority: Cassie Mills, cmills@smallbusinessmajority.org

Prolific robocaller Yodel Technologies seeks exemption for making over 77 million unwanted and illegal telemarketing calls using AI and prerecorded voice messages.

WASHINGTON – Yodel Technologies (Yodel) seeks to escape liability by petitioning the Federal Communications Commission (FCC) for an exemption for its “robot calls.” Using its “soundboard” technology to mimic a consumer’s interaction with a live caller, Yodel “leverages Artificial Intelligence to surface the best responses at the appropriate time.” After Yodel’s technology was used to assist NorthStar Alarm Systems in making nearly 78 million robot calls to sell home security systems, a federal district court in Oklahoma found Yodel and NorthStar liable for making these calls without the required consent from the called parties. Yodel is now petitioning the FCC for an exemption.

“If the FCC were to grant the petition in this case, the result would undoubtedly be an astonishing escalation in unwanted, unconsented-to telemarketing calls to the American public,” said Margot Saunders, senior counsel at the National Consumer Law Center. Saunders submitted comments to the FCC in opposition to Yodel’s petition on behalf of NCLC’s low-income clients and: Consumer Action, Consumer Federation of America, Consumer Reports, Public Knowledge, Public Citizen, and the National Association of Consumer Advocates.

Yodel Technologies LLC (Yodel) requests in its petition that any calls made with separate snippets of prerecorded voice, as distinguished from one continuous message with a prerecorded voice, should not be governed by the requirement for prior express consent for calls with a prerecorded voice under the Telephone Consumer Protection Act (TCPA). Yodel’s petition repeatedly maintains that the TCPA regulates only calls which are “entirely prerecorded.”

“As much as Yodel might wish it to be otherwise, the TCPA does not just regulate calls with one continuous prerecorded voice message, it regulates any telephone call which uses a prerecorded voice,” said Saunders. “Congress was quite clear in requiring that all calls with a prerecorded voice are only permitted with consent.”

The FCC has noted repeatedly that unwanted calls – including illegal and spoofed robocalls – are the top consumer complaint and its top consumer protection priority. Yet, if the FCC were to grant Yodel’s petition in this case, telemarketing calls made using soundboard technology would plague our landlines, further invading our privacy. “We strongly urge the FCC to deny Yodel’s requests,” said Saunders.

More information on NCLC’s extensive work on illegal robocalls is available at: http://www.nclc.org/issues/robocalls-and-telemarketing.html

WASHINGTON – On Thursday, the Consumer Data Industry Association (CDIA) sued the State of New Jersey over its new law requiring credit reports to be provided in Spanish and 10 other languages, claiming the law is preempted and a violation of the First Amendment. CDIA is a trade association for the credit reporting industry, the biggest players in which are Equifax, Experian and TransUnion. Consumer and civil rights advocates expressed outrage at the credit bureaus’ lawsuit.

“Nearly 26 million people in this country are limited English proficient,” noted Chi Chi Wu, staff attorney at the National Consumer Law Center. “Not only have the credit bureaus abysmally failed to serve them on a national level by providing credit reports in other languages, but now they are actively suing to invalidate New Jersey’s language access law. I’d expect this type of reaction from anti-immigrant groups, not multinational corporations.”

The credit bureaus’ actions are especially egregious given that the Department of Homeland Security’s newly adopted public charge rule requires consideration of an immigrant’s credit report and score (implementation of the public charge rule is on hold as a result of several preliminary court decisions, but the litigation is at the very early stages).

“The credit bureaus’ lawsuit makes it that much harder for immigrants if the public charge rule becomes effective,” explained Jennifer Brown, associate director of Economic Policy at UnidosUS. “Instead of helping immigrants by providing translated credit reports, the credit bureaus have joined the forces that seek to make immigrants’ lives worse.”

Seema Agnani, executive director of the National Coalition for Asian Pacific Americans Community Development stated, “Immigrants are the fastest growing population in many states, and our communities are engines of economic growth. The credit bureaus’ unreasonable refusal to take the simple step of providing translated credit reports to help that economic growth is bad enough, but actively suing so they aren’t required to provide translated credit reports is shameful.”

The credit bureaus’ lawsuit against New Jersey follows on the heels of a similar one against the State of Maine that seeks to protect domestic violence victims and consumers with medical debt. “The states have always filled in the gaps in federal consumer laws,” said Ed Mierzwinski, senior director for consumer programs at U.S. PIRG. “Their latest lawsuits show that the credit bureaus not only don’t care about state consumer protections, but don’t care about helping consumers at all, especially vulnerable groups like immigrants, domestic violence survivors and even medical debt victims.”

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Since 1969, the nonprofit National Consumer Law Center® (NCLC®) has worked for consumer justice and economic security for low-income and other disadvantaged people, including older adults, in the U.S. through its expertise in policy analysis and advocacy, publications, litigation, expert witness services, and training.

The National Coalition for Asian Pacific American Community Development (National CAPACD – pronounced “capacity) is a coalition of more than 100 local organizations that advocate for and organize in low-income AAPI communities to further the economic and social empowerment of low income AAPIs and equitable development of AAPI neighborhoods. The organization strengthens and mobilizes its members to build power nationally and further a vision of economic and social justice for all. www.nationalcapacd.org.

U.S. PIRG, the federation of state Public Interest Research Groups, is a consumer group that stands up to powerful interests whenever they threaten our health and safety, our financial security, or our right to fully participate in our democratic society. U.S. PIRG is part of The Public Interest Network. The Public Interest Network runs organizations committed to our vision of a better world, a set of core values, and a strategic approach to getting things done.

UnidosUS, previously known as NCLR (National Council of La Raza), is the nation’s largest Hispanic civil rights and advocacy organization. Through its unique combination of expert research, advocacy, programs, and an Affiliate Network of nearly 300 community-based organizations across the United States and Puerto Rico, UnidosUS simultaneously challenges the social, economic, and political barriers that affect Latinos at the national and local levels. For more than 50 years, UnidosUS has united communities and different groups seeking common ground through collaboration, and that share a desire to make our country stronger. For more information on UnidosUS, visit www.unidosus.org or follow us on Facebook, Instagram, and Twitter.

FOR IMMEDIATE RELEASE: October 16, 2019

National Consumer Law Center contacts: Lauren Saunders (lsaunders@nclc.org) or Jan Kruse (jkruse@nclc.org)

Washington, D.C. – Advocates at the National Consumer Law Center urged the public to check out a new online tool from the Consumer Financial Protection Bureau (CFPB) where consumers, workers, researchers, employers, and others can see prepaid and payroll card fee schedules and agreements, creating greater transparency into prepaid and payroll card. But some payday lender prepaid cards have apparently not been submitted to the database. Advocates also questioned why the CFPB did not publicize the new website or make it more user-friendly.

“The prepaid agreements database will provide a one-stop place for the fees and other account terms for prepaid agreements,” said National Consumer Law Center Associate Director Lauren Saunders. “Together with the new fee disclosure rules that went into effect earlier this year, this online tool will shine sunlight onto the sometimes opaque world of prepaid card fees and encourage competition that may help lower prices for consumers and workers.”

“Greater transparency is especially welcome for payroll cards used by employers to pay workers, as those fee schedules are not otherwise public and are difficult to compare from company to company,” Saunders continued. “Workers and employers can compare other options and put pressure on payroll card companies that charge high fees.”

“Unfortunately, some payday lender prepaid cards with overdraft fees are not in the database, apparently claiming that their accounts are ‘bank accounts’ so that they can avoid the rules that limit overdraft fees on prepaid accounts. The payday lender ACE Cash Express offers the ‘ACE Flare Account by MetaBank’ through the prepaid card company NetSpend, but the card may incur up to $100 in overdraft fees a month, which is not allowed under the CFPB’s prepaid card rule,” Saunders explained. “The CFPB should crack down on these fake payday lender bank accounts and insist that they comply with the prepaid card rules,” she added.

The Prepaid product agreements database is searchable by card issuer, product name, program manager, or other relevant party, as well as by term. Prepaid products can be narrowed by these types:

• Digital wallet/P2P
• Government Benefit
• GPR (General Purpose Reloadable)
• Payroll
• Prison release
• Refunds
• Student
• Tax
• Travels

Yet for some reason, the CFPB did not issue a press release or do anything to make the public aware of the new website. The database also requires consumers to scroll through the entire set of terms and conditions for each prepaid card rather than allowing them to simply click on the short form or long form fee disclosures.

For more information on NCLC’s extensive body of work on prepaid debit and payroll cards, visit: https://www.nclc.org/issues/prepaid-debit-cards.html

Related NCLC Resources

• Issue Brief: New Protections for Prepaid Cards and Accounts, Mar. 28, 2019
• Issue Brief: New Protections for Payroll Cards, Mar. 28, 2019
• Issue Brief: New Protections for Government Benefit Prepaid Cards, Mar. 28, 2019
• Report: Rating State Government Payroll Cards, November 2015
• Report: Payday Lender Prepaid Cards: Overdraft and Junk Fees Hit Cash-Strapped Families Coming and Going, July 2015
• Reports: Unemployment Compensation Prepaid Cards (2011, 2013, 2017)

FOR IMMEDIATE RELEASE: October 11, 2019
National Consumer Law Center contacts: Lauren Saunders (lsaunders@nclc.org) or Jan Kruse (jkruse@nclc.org)

Washington, D.C. – Advocates at the National Consumer Law Center applauded news that California Governor Gavin Newsom late yesterday signed into law AB 539, a bill to stop outrageous interest rates that payday lenders in California are charging on their larger, long-term payday loans, but warned that the payday lenders are already plotting to evade the new law.

“California’s brand-new law targets payday lenders that are charging 135% and higher on long-term payday loans that put people into an even deeper and longer debt trap than short-term payday loans,” said Lauren Saunders, associate director of the National Consumer Law Center. “Payday lenders will exploit any crack you give them, and in California they are making loans of $2,501 and above because the state’s interest rate limits have applied only to loans of $2,500 or less. Clear, loophole-free interest rate caps are the simplest and most effective protection against predatory lending, and we applaud Assembly member Monique Limon for sponsoring and Governor Newsom for signing this law.”

Under the new law, which will go into effect January 1, 2020, interest rate limits will apply to loans of up to $10,000.

At the same time, Saunders warned that California needs to be vigilant about enforcing its law and should push back against the payday lenders’ plans to evade the law through new rent-a-bank schemes. Banks are generally not subject to interest rate limits, and in rent-a-bank schemes, the payday lender passes the loan briefly through a bank that has little to do with the loan. In recent earnings calls, several of the largest, publicly traded payday lenders in California told investors that they were planning to use banks to help them continue making high-cost loans. Some courts have blocked these schemes, and litigation is pending in other states challenging these arrangements.

“It’s outrageous that predatory lenders in California, including  Curo (Speedy Cash), Elevate (Rise and Elastic) and Enova (NetCredit) are blatantly announcing plans to use rent-a-bank schemes so they can continue their predatory ‘business-as-usual’  with loans of 135% or more that California has just outlawed with bipartisan support,” said Saunders. “The attorney general, the Department of Business Oversight, and private litigators need to let the payday lenders know that they will fight to stop this evasion and uphold the law that protects Californians from predatory lending.”

“I also call on the federal banking regulators—especially the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC)–not to let banks enable payday lenders’ predatory ways,” Saunders added. At least two FDIC-supervised banks are currently helping payday lenders avoid interest rate limits in other states, and in January, a coalition of 88 groups called on the FDIC to crack down on that practice. Currently, no national banks (which are supervised by the OCC) are engaged in rent-a-bank lending, but the payday lender Curo told investors that it was in talks with MetaBank, a national bank that has a history of working with payday lenders.

NCLC Related Materials

Report: Misaligned Incentives: Why High-Rate Installment Lenders Want Borrowers Who Will Default, July 2016

Fact Sheet: State Annual Percentage Rate (APR) Caps for $500, $2,000, and $10,000 Installment Loans, March 2019

Op-Ed: Rent-a-bank schemes trample voters’ and states’ rights by Lauren Saunders, Feb. 8, 2018

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