CFPB vs ACH Processor Intercept EFT

By | Jun 7, 2016

ACH Processor for Payday Loan and Car Title Loan Lenders Charged by CFPB

Consumer Financial Protection Bureau, Plaintiff, v. Intercept Corporation [InterceptEFT],

d/b/a InterceptEFT,

Bryan Smith, individually, and as owner and president of Intercept Corporation,

Craig Dresser, individually, and as owner and CEO of Intercept Corporation Defendants

Alleged by the CFPB:

Defendants have failed to heed warnings from banks and consumers.

40. Defendants have ignored warnings from ODFIs and consumers that some of Intercept’s clients’ business activities were likely illegal or that debits were not authorized by consumers.

41. Intercept’s ODFIs have expressed concerns to Intercept, Smith, and Dresser about potential indicia of fraud by certain of Intercept’s clients, such as high return rates, discrepancies between the dates and amounts debited from consumers’ accounts compared to what the consumer had authorized, changes in lender names from the initial loan agreements with the consumer, and missing telephone scripts for ACH transactions authorized by phone.

42. For example, an ODFI complained to Defendants that one of its clients, an auto title lender, which was debiting varying amounts from consumers’ accounts multiple times, did not have the contractual right or proper consumer authorization to do so, stating that it was “not ok [for the] merchant to us[e] the ACH to ‘sneak’ attack a consumer’s account, [as] it will only draw regulatory attention.”

43. On numerous occasions, Smith and Dresser have been personally involved in responding to Intercept ODFIs when those banks expressed concerns about certain Intercept clients or transactions, including concerns about high transaction volumes, high return rates, loans being made to consumers in states where those loans were illegal, or  complaints from consumers that they had not authorized withdrawals.

44. If an ODFI raised concerns or terminated its relationship with Intercept, Smith and Dresser would find a new ODFI to process on behalf of Intercept for the same clients. As a result, Intercept had relationships with eight different ODFIs between 2008 and 2014, sometimes processing through three different ODFIs at the same time. Case 3:16-cv-00144-ARS Document 1 Filed 06/06/16 Page 8 of 269

45. For example, in at least once instance, Intercept entered into a short-term or trial period with an ODFI to process a limited number of transactions through the bank, and then, instead, ran millions of dollars of ACH transactions through the bank, generating high volumes of returns in disputed transactions.

46. The ODFI was initially reluctant to do business with Intercept due to Intercept’s projected transaction volume and historical return rates for certain clients. Defendant Dresser responded to these concerns by urging the bank to continue processing for a trial period, stating that what made Intercept successful was its willingness to do business with companies that others would not, including companies that were not considered “clean business.”

47. The ODFI continued to express concerns about the number of returns generated by Intercept’s ACH transactions, which exceeded the terms of their trial period, stating
that the bank was receiving thousands of returns per day. The bank further warned Defendants that the return percentages were so high they could trigger an audit.

Here’s a link to the complete Complaint and Civil Action: CFPB vs ACH Processor Intercept EFT

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Google Blows Up Payday Loan Industry. Lending Club Impact

By | May 11, 2016

Hey PaydayLoan Biz Fan,

Google update and Lending Club implodes? This means total upheaval in our industry:
From Google today:

“To enforce the policy, those seeking to market financial products through Google’s sprawling advertising network will be required to disclose the length of the loan and the annual interest rate before they will be allowed to place ads. In addition to the broad payday loan ad ban, Google will not display ads from lenders who charge annual interest rates of 36 percent or more in the United States. The same standards will apply to sites that serve as middlemen who connect distressed borrowers to those lenders.”

My immediate interpretation? 

* Google = total hypocracy! Google Ventures provided $14 million dollars to Sasha Orloff at Lendup – a payday lender – back in 2013!

* A tremendous opportunity for those of us with the creativity build-out alternative marketing channels enabling small dollar loan consumers to solve their temporary financial challenges and to tell Google and Facebook to F%%$$ off. MassRoots is doing it for cannabis. Gun sales continue to thrive via new strategies as well.

* Lead generators are toast for now. Witness T3 leads. They were experiencing bad times long before this latest Google policy change.

* Brick-n-mortar operators move up the food chain and are in “the catbird seat.” Location, signage, branding, offline marketing, mobile phone friendly websites, blogging… is more important than ever. B & M valuations headed up for this cycle. Suddenly, the guy or gal consumed with running their store(s) no longer needs to dissect Google’s PPC strategy.

This new Google initiative doesn’t mean payday loan ads will no longer appear. It simply means the 1st 4 ads at the top of Google search results will not contain sponsored ads.

Anyone with a brain knows the single-payment PDL product has been phasing out.The new mantra is “personal loan,” installment loan,” “line-of-credit…” These holier than thous will never succeeed in shutting down financial services products that millions of consumers want and need!

On another front, Lending Club imploded yesterday. Their CEO got caught with his hand in the cookie jar. What’s this mean for us? Lendup loaned out $1 Billion dollars in the 1st quarter of this year! This was off-balance sheet money. Now, Lendup, Prosper, OnDeck, Kabbage, Avant… the “FinTech’s” will have a hell of a time offloading, securitizing and enticing the “capital” to their lending platforms. Although they have a tendency to appeal to 620 and higher FICO scores, they generate leads and funnel them to PDL lead generators and direct lenders. Competition from them is on the decline; at least for the forseeable future.

One more time: DISRUPTION = OPPORTUNITY. Seize the day! Lending money to consumers and small businesses will not go away!

Will car title loans get the shaft from Big Brother Google as well? http://www.AutomobilePawn.com

Finally, I want to thank Google for making it easier for ENOVA to make money in the payday/small dollar lending space. Enova started as CashNetUSA back in the 90’s. They have a HUGE data base of borrowers that probably doubled in value after this Big Brother action by Google. I own a lot of ENOVA shares :-)

Comment? jer@TrihouseConsulting.com

Was this email forwarded to you? Get my alerts on the PDL and title loan industry here:
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Jer@TrihouseConsulting.com 702-208-6736
Knowledge Store:
http://www.PaydayManual.com/
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Why We Teach Entrepreneurs How to Make Money Lending Money

By | Apr 5, 2016

Why We Teach How to Make Money by Lending Money

By: Jer – Trihouse Consulting

Jer Trihouse Consulting

Jer Trihouse

Jer and Team Trihouse have taught thousands of entrepreneurs the correct way to identify, evaluate, negotiate, perform due diligence on, finance, turn-around and operate payday loan, car title loan, and installment loan businesses; the business of making money by lending money. Some people think we’re nuts for doing this, but the truth is that we’re far from crazy.

We make money doing it and so can YOU

Beginning in 1998, everyone  – and I mean EVERYONE – has paid money for our Manuals, “Bibles,” consulting assignments and phone consultations. This includes mom and pop startups, hedge funds, VC’s, tribes, franchises and every vendor serving our industry.

This is NOT B.S.

Everyone in the small dollar credit industry knows our CEO, “Jer” and the Trihouse Team. And, we can honestly say, the only complaints we’ve ever heard is that sometimes we don’t respond fast enough and Jer can be too blunt and direct [like using the term “loan shark”]. We are NOT sorry folks! We are BURIED!! The business of making money by lending money is fast paced, ever changing and when done correctly, HIGHLY profitable!

[Note: here’s a link to Jer quoted in The Wall Street Journal and here’s another to Bloomberg.

We learn too

Imagine how great it is to receive daily phone calls from payday loan operators, car title lenders and vendors who want to talk about their successes, their failures, their challenges, their industry, their fears, their profits… It’s AMAZING how much we continue to learn every day about the business of lending money!

payday loan marketing graphic wrap

We Teach You How to Make Money Lending Money

We receive  inbound phone calls  and emails DAILY enabling us to tap into a huge knowledge base about what is and isn’t working in the small dollar credit space. It’s like being on the front lines, in the trenches all over the USA, Canada, AU… hearing first hand about new strategies, new tactics, legislation, new lending products and vendor offerings BEFORE anyone else. This is a HUGE advantage for us and our clients.

We make money with this knowledge and share it with our clients.

Vendors offering ACH, same day funding, Image Cash Letters (ICL), debit card programs, call center services, direct mail programs, loan management software, collection solutions, marketing programs, etc. come to us FIRST! Why? Because they know we’re at the top of the food chain. We have an email list of thousands of payday loan and car title loan enthusiasts. We have our hand on the pulse of the lending industry. Vendors want to bounce ideas off us. You have a new solution for lenders? How do you get the word out? Buy a booth at one of the annual industry conventions? Pitch it to us! If it flys, we can intro it to the ENTIRE INDUSTRY IN ONE FELL SWOOP! IMMEDIATELY!!

It’s our hobby and we enjoy it

When we started writing and talking about the business of lending money, it was back in an era when there were no books on the topic. We had great fun writing about what we did all day, and it gave us not only pleasure, but was also a form of therapy. It was, in many ways, like keeping a diary. Over time, the books, courses and boot camps became our hobby, and the folks who invested in them became like members of our family. Many of the guys and gals we’ve worked with over the past decade still keep in touch. One friend with stores in Canada calls me every year from Mexico where he spends his winters running his payday and car title loan stores via the Internet!

We are not trying to own every payday loan, car title loan, or installment loan company in America

For those who think that we should want to buy all the loan companies ourselves, I think we can prove the insanity of that concept with some simple math. The payday loan industry generates roughly $50 billion dollars per year in revenue and between $4B and $6B in fees. WE DO NOT HAVE THE RESOURCES TO OWN THIS MARKET.

It’s estimated there are 40+ million U.S. residents who get a small dollar loan each year. There are several publicly traded small dollar credit lenders having hundreds of millions of dollars in annual revenue. [Disclosure: We own stock shares in several including ENOVA.] There are roughly 18,000 brick-n-mortar lenders in the USA. We have equity in some stores and in a few Internet portfolios plus stock positions in Enova and others. Hitting ownership of 100 stores would be a miracle, a GIANT pain in the ass, not a practical goal and would ruin my life-style. [Anyone who has ever called me knows that half the time I’m kayaking around the harbor in Newport Beach, Calif. or goofing off at some exotic location at one of the industry conventions.] We are happy with our holdings, but equally happy for everyone else who enters the small dollar credit space. There is more than enough to go around.

By training others on how to run and value payday, installment and car title businesses, we spare ourselves from idiots who ruin the market

93% of the small dollar credit lenders out there are good folks running a legitimate operation and treating their customers fairly. Then, there are the idiots who make our lives miserable. They abuse our customers. They attempt to avoid paying taxes. They push the envelope and bring unwarranted regulatory attention to all of us. This doesn’t have to be the situation but it occurs in all industries.

Everytime I hear about some payday loan borrower paying $2000 in fees on their payday loan and still owe the $500 principal it infuriates me! Why do this? IT’S GREEDY! And this creates havoc in our industry.

The media loves this stuff! How many more times will I have to read about some greedy payday loan or car title lender taking advantage of a borrower? How many more CFPB fines will be levied against an Internet lender? [Of course, we all know these lenders often simply settle because it’s cheaper than fighting the issue even when the charges are unfair. But that’s the subject of another Post.]

We all know about Scott Tucker and the $1.2B clawback the FED’s are pursuing against him. This situation is the exception not the norm. A payday or car title lender who operates within the rules can still make serious money. And this opportunity will continue to be the reality. Average folks NEED MONEY! Someone has to lend it to them. Lacking this, we’ll live in a very nasty environment.

If  our government makes it unprofitable to lend money to consumers and business, armageddon will occur. The rest of us will have to try and solve the mess created by these idiots. We want people to know how to correctly start and improve small dollar credit companies for our own selfish reasons.

Many of those we train bring us deals

Another HUGE side benefit to teaching, training and providing a marketplace for payday loan, installment loan and car title loan operators is that people we train often bring us deals and opportunities. This has been a source of great deals for our portfolio, as well as a way for these individuals to make a lot of money. This is a win/win that is a direct result of our teaching hobby.

Conclusion

While our day “job” will always revolve around managing and adding to our portfolio of payday loan , car title loan, installment loan and whatever the next iteration of lending products appear [Fintech, merchant cash advances…], our night job of writing and teaching about the small dollar lending industry has been equally enjoyable. We find this to be a great hobby, and have no plans to ever scale back on it.

Comments WELCOMED! Jer@PaydayLoanIndustryBlog.com 702-208-6736

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Payday Loan Business Startup

By | Apr 1, 2016
Make Money Lending Money

Make Money Lending Money

It’s INCREDIBLE how PROFITABLE and POWERFUL a consumer lending business can be!

Simply put, lending is the best possible business you can be in.

Why? Your inventory is cash and credit. It’s not roses or fruit rotting. It’s not cars depreciating. It’s not selling your accounting or car repair service over and over again while you pray you don’t receive a bad Yelp review!

YOUR inventory is MONEY! And EVERYONE needs MONEY!

Call these loans payday loans, installment loans, line-of-credit, cash advances, FinTech…

Whether you’re focused on starting or improving as a lender via the store model, the Internet model, or a combination of the two, we pledge to bring you the latest news, solutions, legislative developments, vendor offerings and more.

Some of our topics in the past have included collection techniques, software, the Internet, store selection, man-loading, identity validation, alternative payday loan methods, the Credit Services, Organization Texas-Ohio (CSO/CAB) Model, loan management software (LMS), industry conventions and much, much more.

Our latest ramblings are available here: http://www.PaydayLoanIndustryBlog.com

If you’re relatively new to the payday loan industry and are in need of solid, thorough payday loan knowledge, we recommend you consider investing in our 400+ page How to Start a Payday Loan Training “Bible” available in a printed or Adobe Acrobat version.

We print and ship our latest version of this Manual to you in a 3-ring binder with a CD containing sample contracts, disclosure forms, APR calculation formulas & examples, laws, statutes, fee structures and more for your state or province. You may review the contents of our Payday Loan Training “Bible” here:
http://www.PaydayLoanIndustryBlog.com/courses Note that our “Bible” covers both the Internet Model and the Store Model. Additionally, we thoroughly cover the various licensing models including state, province, offshore, tribe and Texas/Ohio CSO/CAB.

The payday loan industry is an extremely dynamic, profitable niche. We made our entry into it in late 1997. Today we operate stores and websites in addition to consulting. We are not simply three guys who write books! We are Lenders, consultants and conduits for payday loans, car title lending installment lending and scrap gold businesses.

Email us Jer@TrihouseConsulting.com with ANY questions or requests for help. You may also call us at 702-208-6736. (PDT)

We look forward to helping you make substantial profits in the Payday Loan Industry.

Follow us for immediate updates: Twitter Facebook Google+

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CFPB: Good News for Payday Loan Borrowers and PDL Companies: PDL Complaints Decline 12%

By | Mar 11, 2016

By: Jer Trihouse
Jer - Trihouse

David Lazarus, the author of a hit piece in The Los Angeles Times, calls the collaboration of both Republican and Democratic lawmakers on a payday loan bill “a bizarre display of bipartisan cooperation to cripple the Consumer Financial Protection Bureau.” This statement is folly!

“The bill would delay federal regulations for payday lenders by two years. It also would allow states to adopt more lenient rules for the industry.” The States should have the ultimate say in regards to credit access for their residents! What do the bureaucrats in D.C. know about this topic? Zip!!

“Wasserman Schultz is joined by eight other Democrats in co-sponsoring the legislation alongside twice as many Republicans.” Finally, both sides of the aisle are working together on SOMETHING!

Wasserman Schultz’s spokesman, Sean Bartlett, said the legislation “is about preserving the shared goal of implementing strong consumer protections while also preserving access to affordable lending for low-income communities.”

Obviously, these Democrats and Republicans who are working together on this payday loan legislation are more in touch with their constituents then Richard Cordray, the head of the CFPB in Washington!

The CFPB’s own “Winter 2016 Complaint Report” reveals payday loan complaints declined 12%. Of the total 20,887 complaints received by the CFPB, 409 were in regards to payday loans. That’s .019%. [Here’s a link to their actual Report.]

“Under preliminary requirements unveiled last year, lenders would have to determine upfront if a borrower can repay the loan.”  This statement is ridiculous! Payday loan lenders don’t go to the FED and get 1% money – like BANKS do. We’re lending OUR OWN MONEY. If our borrower cannot pay us back, we’re OUT OF BUSINESS! STUPID!

Stupid things payday lenders doOur loans are not collateralized. All we have is the consumer’s promise to pay us back. In Wasserman Schultz’s state of Florida, which Lazarus attacks, a resident of Florida borrows $100 and pays back $110.00 two weeks later. That’s it! No subterfuge. Unlike bank NSF fees, this $10/%100 fee structure is plainly visible on the walls and in every consumer contract in English and Spanish in 18 point fonts!

The author is in Los Angeles, Calif. Has he ever bothered to actually visit a payday loan store? Doubtful. The State of California passed its own payday loan laws in 1997. We charge $17.65 per $100 borrowed. So… customer borrows $100 today, they pay us back $117.65 in two weeks. Sign on the dotted line, prove to me you can pay me back my money, show me you have a checking account and you’re approved. In and out in 10 minutes. SIMPLE! And that’s exactly what my customers want.

I congratulate these bipartisian ELECTED representatives for at least taking another look at the draconian measures the CFPB beaurocrats are attempting to do in restricting a wide spectrum of financial products to U.S. consumers!

Finally, I suspect all of these measures will soon be moot. Silicon Valley, Austin, London… launch new FinTech companies weekly. Orchard, Avant, Lendup, Prosper, JP Morgan, and on and on are rapidly changing the consumer and small business loan offerings available. The bureaucrats simply cannot keep up!

Need help? Jer – Trihouse Consulting: PDL, Installment & , Title Loans 702-208-6736. Teacher… Lender… Resource… Answers…
Jer – Trihouse/LinkedIn
Jer@TrihouseConsulting.com

 

Consumer Confidential: Why is a group of lawmakers working to undermine tighter rules for the payday-loan industry?

In a bizarre display of bipartisan cooperation, a handful of Democratic lawmakers have joined Republicans in trying to cripple the Consumer Financial Protection Bureau. The question is: Why? Most notably, Florida Rep. Debbie Wasserman Schultz, who also serves as chairwoman of the Democratic National Committee, is co-sponsoring the deceptively titled Consumer Protection and Choice Act, which… Continue Reading >>

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