CFPB’s New Consumer Protection: Restrict Forced Arbitration

By Renato Rocha, Policy Analyst, Economic Policy, UnidosUS

The same week we announced our new name—UnidosUS—the Consumer Financial Protection Bureau (CFPB) issued a final rule that prohibits financial contracts from having forced arbitration clauses with class action bans. In effect, the new rule restores the right of consumers to come together in court by prohibiting class action bans, giving consumers a way to unite and hold corporations accountable for systemic misconduct.

Forced arbitration is a rigged system. Often, forced arbitration requires consumers to take a dispute to a private arbitrator chosen by the company, rather than exercise their right to have their complaint heard before a court. Given the association between the company and the arbitrator, forced arbitration causes considerable unfairness to consumers.

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Treasury’s Financial Regulation Report: A Wall Street Wish List

By Renato Rocha, Policy Analyst, Economic Policy Project, NCLR

This week the U.S. Department of the Treasury released a report to the president that outlines recommendations to rollback critical safeguards, including consumer protections that were put in place in the wake of the Great Recession. The Treasury report comes less than a week after the U.S. House of Representatives passed the Financial CHOICE Act, legislation that would deregulate financial institutions and expose our entire economy to a heightened risk of instability.

The Treasury’s proposals are straight from a Wall Street wish list, as the proposals effectively  gut the Consumer Financial Protection Bureau (CFPB).

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Latinos Overwhelmingly Support Consumer Protection

By Renato Rocha, Policy Analyst, Economic Policy Project, NCLR

In less than six years since opening its doors, the Consumer Financial Protection Bureau (CFPB) has brought transparency to the remittance industry, stopped credit card companies from adding on products that consumers never agreed to, and required mortgage lenders to ask applicants for proof of their income before making home loans. Its creation is one of the most important accomplishments of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

Despite the CFPB’s hard work on behalf of American families, efforts are underway to dismantle the agency. One such attempt is the “Financial Choice Act of 2017,” House Financial Services Committee Chairman Jeb Hensarling’s vehicle to de-regulate the financial industry and dismantle the CFPB.

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Flashback Friday: The Payday Rule

By Marisabel Torres, Senior Policy Analyst, Economic Policy Project, NCLR

What a difference a year has made for consumers. A year ago today, consumer advocates celebrated the Consumer Financial Protection Bureau (CFPB)’s release of a proposed rule to reign in the worst abuses of payday, car title, and other high-cost debt trap lending schemes. For too long, predatory businesses targeted communities of color and other consumers who had limited access to credit with loans and promises of quick cash to help make ends meet. Because these businesses have been unregulated, they have gotten away with charging exorbitant fees and structuring their loan products to keep consumers in a cycle of debt. After hearing the countless experiences from consumers who were victims of these debt traps, the CFPB, an agency that was established with the sole mission of keeping the financial marketplace transparent and fair, stepped in and proposed a rule to stop these harmful practices.

Fast-forward to today: Congress stands poised to not only roll back the CFPB’s ability to regulate these businesses, but the very existence of the CFPB is threatened by an upcoming vote on the Financial CHOICE Act, H.R. 10. This legislation—dubbed the WRONG Choice Act by consumer advocates—will undo years of positive regulatory work intended to make sure payday lenders and other bad actors stay off the market, and that we don’t face the same conditions that led to the Great Recession.

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Trump’s First 100 Days: Weakening Consumer Protections for Student Loan Borrowers

By Amelia Collins, Policy Analyst, NCLR

The president proposed an ambitious student debt plan during the campaign last year. He called student loan debt an “albatross” hanging on the necks of borrowers, proposed a generous and streamlined repayment plan, and stated that the government shouldn’t “profit” off its student loan program. However, instead of using the first 100 days of his presidency to follow through on these promises, President Trump and Secretary of Education Betsy DeVos have rolled back crucial consumer protections for our nation’s 40 million student loan borrowers.

Let’s set the stage.

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D.C. Circuit Court Decision Is a Victory for Consumers

By Renato Rocha, Policy Analyst, Economic Policy Project, NCLR

Yesterday, the United States Court of Appeals for the D.C. Circuit agreed to rehear a case, PHH Corp. vs. CFPB, that would have seriously weakened the efficacy of the Consumer Financial Protection Bureau (CFPB).

Last October, a three-judge panel attempted to make it easier to remove the director of the consumer agency, allowing the president to fire the director at will. The full federal appeals court decided that it will revisit the issue at a hearing in May, effectively scrapping this earlier decision, and allowing the CFPB’s structure to continue as Congress intended.

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Three Key Findings on Hispanics with Debt in Collection: Results from CFPB’s Recent Survey

By Renato Rocha, Policy Analyst, Economic Policy Project, NCLR

Photo: Pictures of Money

Debt collection in the Latino community is a critical consumer protection issue for one of the nation’s largest and fastest-growing communities.

Latino families need access to affordable credit but have been historically excluded or discriminated from accessing safe financial products. The FDIC’s 2015 Survey of Unbanked and Underbanked households indicated that a result of this persistent economic injustice is that Latinos and other consumers who have been outside the financial mainstream are vulnerable to financial shocks, such as health-related expenses or job loss. Having been sidelined from affordable products, Latinos have little choice but to turn to more expensive credit to pay for their expenses. For example, 39 percent of Hispanic households used an alternative financial product (such as a payday loan) in 2015, compared to just 17 percent of White households.

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How Congress Intends to Rollback Protections for American Workers

By Amelia Collins, Policy Analyst, NCLR

Photo: Roman Boed

Starting this week, the 115th Congress began work dismantling public protections for American workers, consumers, and families. NCLR has a history of being active in the regulatory process with significant success. This includes a final overtime rule that will benefit two million Latino workers, and a rule ensuring that retirement advisors make decisions in their client’s best interest. These rules will help millions of Latinos and other workers get more for their hard work.

So why would Congress want to eliminate these and other crucial protections? Well, some say that regulations cost the economy jobs and stymie growth. However, recent economic trends suggest otherwise:

  • The economy is on a record of 75 consecutive months of job growth.
  • Unemployment is down to 4.7% from a pre-recession peak of 10%, and wages are rising.
  • Median household income increased in 2015 and poverty rates fell, with the Latino poverty rate being the lowest since 2006.

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CFPB on a Roll—Next Up: Abusive Debt Collection Practices

By Renato Rocha, Policy Analyst, Wealth-Building Initiative

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Photo: Sean MacEntee

Having proposed a rule last month to protect consumers from the payday lending debt trap, the Consumer Financial Protection Bureau (CFPB) has its next target on the debt collection industry. With the passage of the Federal Debt Collection Practices Act (FDCPA) nearly 40 years ago, Congress set out to eliminate abusive debt collection practices. It held that unfair practices lead to personal bankruptcies, marital instability, job loss, and invasion of privacy. Not until the enactment of the Dodd-Frank Act in 2010, however, was a federal agency authorized to issue comprehensive regulations to implement the FDCPA. In an effort to protect and improve the financial well-being of consumers, the CFPB today outlined new debt collection rules.

Since the passage of the FDCPA, the debt collection industry has experienced dramatic growth. Currently, debt collection is a multibillion-dollar industry made up of a network of first- and third-party collectors, debt buyers, collection law firms, and millions of affected consumers. Approximately 70 million people (one in three consumers) has a debt in collection. Thousands of collection firms exist, generating about $14 billion in revenue.

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Learn How to #StopTheDebtTrap at Our Annual Conference in Orlando

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We’re going to Orlando this year for the 2016 NCLR Annual Conference. While the Sunshine State has many attractions to offer its visitors and residents, payday loans are not among them.

Readers of our “Truth in Payday Lending” series may recall a report that NCLR released with the Center for Responsible Lending that examined the failure of a state law that was designed to curb the negative effects of payday loans. The report shows payday lenders have stripped a staggering $2.5 billion in fees from Floridians since 2005. In 2015 alone, their shady lending practices yielded more than $300 million for the industry.

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