A Word of Caution on Buy Now, Pay Later

 From NewsBreak:

The U.S. Public Interest Research Group (U.S. PIRG) issued a report analyzing complaints made to the Consumer Financial Protection Bureau (CFPB) on Buy Now, Pay Later products. The report contained key findings that create cause for concern around these products.

In a press release, PIRG warned of the hazards of using such products - offered by companies such as AfterPay, Sezzle, Klarna, Affirm, and others.

“There’s no such thing as a free lunch. Or free airline tickets. Or free appliances. But it isn’t hard to get the latter two with no money down these days with the proliferation of ‘Buy Now, Pay Later’ plans,” said Ed Mierzwinski, the senior director of U.S. PIRG Education Fund’s consumer program. “Many of these installment plans, often advertised as ‘free’ to the consumer if all payments are made on time, aren’t run by the company you buy your furniture or electronics from. Instead, they’re managed by third-party financial firms -- known as fintechs -- and some claim they aren’t subject to credit card consumer protections.” 

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Consumers Beware: OppFi Loans is Breaking the Law

 From NewsBreak:

The Chicago Sun-Times reports that online lender OppFi engaged in a shadow lobbying campaign to overturn Illinois’ new Predatory Loan Prevention Act (PLPA) which caps interest rates on payday loans at 36%.

Pritzker Signs Predatory Loan Prevention Act

The Illinois law knocked out of business those who dealt in auto-title and personal loans, payday advances and other forms of finance whose interest rates are well into the triple digits, often 400% and higher. It caused big trouble for Chicago-based Opportunity Financial, which does business as OppFi.

While online lenders like OppFi often use a “rent-a-bank” strategy to circumvent state rate caps, the Illinois law prevents OppFi from using that tactic in Illinois.

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$30 Billion a Year in "Junk Fees"

 From NewsBreak:

Today, the Consumer Financial Protection Bureau (CFPB) issued a request for information on late and junk fees charged by banks and credit cards. The move is an effort to begin the process of designing protections for consumers in the credit and banking industries.

In making the announcement, the CFPB indicated that industry reform could save consumers billions of dollars each year.

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Protecting Consumers from Big Tech

 From NewsBreak:

While the Consumer Financial Protection Bureau (CFPB) has opened an inquiry into so-called “Big Tech” payment systems, consumer groups are offering comments aimed at boosting consumer protections.

The U.S. Public Interest Research Group (PIRG) summarized its concerns in a recent blog post.

As PIRG, in our joint comment with the Center for Digital Democracy, told the CFPB, “the Big Tech firms have a corporate surveillance business model that has widely different goals than those of publicly chartered and regulated financial institutions; their model is antithetical to fair consumer treatment generally, but which is especially true when financial matters are at stake.”

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On the Risks of Cash-Advance Apps

 From NewsBreak:

Adam Hardy writes in Money.com that a number of cash-advance apps are suggesting they offer a viable alternative to payday loans but may instead offer a similar product in a more tech-friendly package.

Hardy reviews the policies and practices of apps such as Dave, Earnin, and Brigit and finds that:

“. . .consumer experts warn their fees are just as bad as — if not worse than — traditional payday loan APRs, with rates that can easily top 300%. And, they say, the apps can actually trigger overdraft fees.”

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Regulatory Board May Take Action on Overdraft Fees

 From NewsBreak:

At a speech to the Consumer Federation of America this week, acting Comptroller of the Treasury Michael Hsu outlined some key reforms his agency sees as necessary when it comes to banking — particularly around overdraft fees.

The speech comes as Capital One announced an end to the practice of collecting overdraft fees. Additionally, as American Banker reports, JPMorgan Chase is making some key changes to its overdraft fee policies.

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A Call for Banking Reform

 As one major bank — Capital One — announced an end to the practice of charging overdraft fees, a leading consumer group is issuing a call for federal action to end the practice at all banks.

Americans for Financial Reform (AFR)is calling on the Consumer Financial Protection Bureau (CFPB) to use data from a study it conducted to draft rules that would essentially prohibit overdraft fees.

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Should Banks End Overdraft Fees?

 Advocates at Consumer Federation of America (CFA) are calling on banks across the nation — especially the biggest banks with the greatest reach — to end the practice of charging fees for overdrafts. The push from CFA comes a day after Capital One announced it will stop charging the fees.

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