Category: Banking

07
Jul

Payday Loans vs Bank NSF and Overdraft Fees: Reported by CFPB

You think payday loan, installment loan and car title loan APR’s are high?

You want to know why banks, credit unions and so-called consumer advocates hate small dollar lenders?

Did you know the folks who initially funded the Center for Responsible Lending [CRL] launched a credit union – an entity treated as a non-profit?

Follow the money…

Payday Loan, Installment Loan, Title Loan APR's vs Banks

Payday Loan, Installment Loan, Title Loan APR’s vs Banks

Check this out! The USA’s 628 biggest banks reported – after being forced to by the FFIEC – $11.2 BILLION dollars in NSF and overdraft fees in 2015. [2015 is the first year banks having assets exceeding $1B were required to report this number!]

$11.2 BILLION is 8% of these bank’s net income.

The median bank fee was $34.00. However, because of the way bank algorithms work, 25% of bank customers paid $90 per instance [2013].

Average payday loan APR? Just under 400%

The average bank NSF fee? 1400%

Now, realize that these banks have virtually ZERO RISK! They are at the front of the line. Their account holder; their customer – must pay the bank/credit union or they put their customer in the ChexSystem data base and close their customer’s bank account.

And, let’s not forget that the banks borrow their money from the FED’s for approximately 1%. THIS IS NUTS!

[Note: If you would like a copy of the original CFPB Report in PDF format, email: Jer@PaydayLoanUniversity.com ]

60 of the reporting banks derived 20% of their net revenue from overdraft and NSF fees!

  • So… installment, car title and payday lenders must raise capital at average rates of 1.5% to 3%+ per month; typically with personal guarantees.
  • Assume the risks associated with launching a new business.
  • Overcome the challenges the search engines place on them.
  • Face the continued negative pummeling brought down on them by their competition: banks and non-profit credit unions.
  • Approve loans for consumers with zero collateral.
  • Face-off the FED’s regarding Operation Choke Point – we did get a nice victory on this matter recently 🙂
  • Keep their loan portfolios on their books [balance sheet lending] vs securitization by the big boys.
  • And a host of additional B.S. that comes with the territory.
  • Banks and credit unions HATE US because we are cheaper!!

Now mind you, we are not whining! Just asking for a level playing field – never going to happen – AND the realization by all parties that payday loan, car title and installment loans make a GREAT DEAL of sense for millions of consumers EVERY YEAR!

 

 

10
Jun

Payday Loan Operation Choke Point-Update

Operation Choke Point Lawsuit Update via Judge in District of Columbia.

Judge Kessler in the District of Columbia, denied a group of payday lenders allegedly affected by the Department of Justice’s (DOJ) controversial Operation Choke Point.

Banks for payday loan lenders.

Payday loan industry fails to demonstrate harm due to an inability to secure bank relationships.

“For example, the payday lender told the court that it received termination notices from 21 banks since 2013. But the company did not indicate how many banks it continues to have accounts or business relationships with leaving the court unable to conclude that they have been “cut off” from the system. ‘In sum, the fairest reading of Plaintiffs’ submissions is that, presently, they do have a right to hold bank accounts and otherwise access the banking system,’ the court wrote.”

Car title loan company

Start a PDL Business

The CFSA and additional payday loan plaintiffs requested the U.S. Court of Appeals for the D.C. Circuit to review their case.

Here’s a link to the “Opinion.”

Here’s a link to the original discussion appearing in JD Supra.

28
Nov

Bank Accounts for Payday Loan Lenders

Payday loan lenders and micro-lenders continue to suffer from “bank discontinuance” issues as a result of “Operation Choke Point” launched by the Obama administration in August 2013.

The Community Financial Services Association of America (CFSA) and Advance America said ” a preliminary injunction was needed to end the back-room campaign of coercion by the Federal Reserve, the Federal Deposit Insurance Corp, the Office of the Comptroller of the Currency, the CFPB [ruled unconstitutional by a D.C. Court]  and competitors masking themselves as so-called consumer protectionists.”

U.S. regulators are collaborating in an attempt to stop banks from offering banking services to micro-lenders in an effort to force consumers in need of emergency funding to beg, borrrow or steal when facing financial stress.

Nearly 50% of U.S. residents are unable to access $400 cash [Link to Federal Report] when faced with the need to fix their car to continue working, purchase a medical prescription for their child or a family member, turn on their heating or electricity…

Payday lenders, istallment lenders and additional small dollar lenders requested a federal judge for immediate relief! 

Jer Ayles-Ayler Trihouse Consulting

Jer TrihouseConsulting

The survival of mom and pop loan businesses is at stake!

It’s rumored that the big, multi-billion dollar online Fintech lending companies – SOFI, Lending Club, Prosper, Marcus, Avant, Enova… are adding additional pressure to wipe-out the small dollar lending industry; including the small independent store owners.

Advance America said its own situation became dire after five banks decided in the last month to cut ties, including a 14-year relationship with U.S. Bancorp, “putting it on the verge of being unable to maintain a bank account.”

The small lender national association injunction requests the federal court to “order the agencies to cease and desist from harming the reputations of Advance America and other CFSA members; from applying pressure on banks, encouraging them to terminate relationships with the banks and other CFSA members; denying CFSA members access to financial services; and from depriving members ability to pursue business.”

Instead of eliminating the “bad apples” of the payday industry, the agencies have “set about to choke off the life-sustaining financial oxygen that the entire industry, and millions of under-banked individuals, depend on.”

The CEO for CFSA, Dennis Shaul, stated that the results of Operation Choke Point for the payday loan, installment loan and micro-lending industry has been “dire.”

Mr. Shaul says that U.S. Bank has dropped its affiliation with several members, including Advance America, allegedly putting the company “on the verge” of being unable to maintain a bank account.

Another example by CFSA is thata smaller payday lender, DollarSmart Money Centers,  was forced to close when it lost all its banking services.

Here’s a link to the Injunction by the CFSA vs. the FDIC

Here’s a link to the Original Request

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25
Sep

PDL-Biz: 2:00 Minute Video Can Save You $2.8M Dollars.

Need money? GROWING your operation? Or, starting a new one? You need capital!

I have it!

Let me tell you my story.  And it’s not a story of triumph.  There is no happy ending here.

I was a computer guy and my computer business became a grind.  Razor thin margins kept getting thinner… and so much work.  I was tired of it.  And it wasn’t making great money.

The guy next door to my office was running a payday loan office.   I was amazed.  He was never there and he had only one really dumb – but very attractive – employee.  As I sat in my lonely and boring computer store, I’d see these people line up next door and borrow money.  The employee would come in very late.  Be gone for 2-3 hours for lunch.  And would leave early.

Yet, these customers kept coming back.  Sometimes 3-4 times per day.  There was obviously real demand here.  The owner decided he didn’t feel like running this business anymore, and the landlord for the building asked me if I would like to take over the location.

I jumped at the chance.  It couldn’t possibly be worse than trying to set up AOL for people that were 200 years old.

I got my Florida State deferred presentment license and opened up my first check cashing/payday loan store in 1998.   It was a beautiful time.  There was no CFPB, and State regulations were minimal.

I was earning amazing returns.   Very few collections issues.  Very little fraud.  It was the “golden age” of lending!

But my success was causing me problems.  I wasn’t that well capitalized.  I was quickly running out of money to lend.  People would ask to take out a loan. I would tell them to come back on Friday, after I had received some payments.  And sometimes, I didn’t have the money for them on Friday, so they’d come back on Saturday.

I was stuck.  I was turning away too many people. There weren’t many banking options available.  So I found a partner.  I offered up 50% of my 4 month old company for $150,000.00.  He agreed to lend the business the money and I thought that I had hit the jackpot.

Over the next 10 years, the one store grew to 5.  And our revenues were pretty great.  Then the partnership went bad.  We wanted to go in different directions. I called it the Internet 🙂

Eventually I sold my 50% of the loan business just to escape from the conflict and negativity.

Looking back, I realize that the investors’ original $150k had been so VERY expensive.   As the business grew, so did his salary, his expense account and his dividends.  I’m not disrespecting his investment.  Or the risk that he took.

When you’re starting out, you try and focus on not failing.  But you have to also consider what happens if you’re successful?  I hadn’t really put any limitations or contingencies for the growth of one store into a small chain.  Our small stores had low overhead and were very profitable.

From this business, the funding partner collected approximately $2.8 million dollars.  That was pretty awesome.

For him.

But not for me.

If I had other funding options at the time, it would have been amazing.

If I had the ability to arrange a combination of bank financing to grow my business, the difference in my results after 10 years of work?

Awesome!

Epic!!

It would have been life changing!!! I would have earned more than DOUBLE the income.  No partnership conflict and in total control of my company and my future.

So now, years later, I discover this unique and effective funding platform, I get really excited.  I have to share this with every guy that’s starting out.  Or growing.  If you have a half-way decent credit rating, this program can get you the funding you need.  

Holy CRAP!

Without giving up your precious equity.  And creating a platform for further growth, as you need it.

Remember?  Life changing.  Access to the capital you need without losing control?

So, I’m begging you.  IF you’re looking for some capital to grow your business, PLEASE fill out this short form and get in touch with me. [Click: Easy Form.]

My capital raising programs are so much better than seeking out private money at 20-30%, or giving up equity.

Here’s a 2 minute video to explain what I do.  Two minutes!  I WANT to save you $2.8 million dollars.

Can you afford NOT to invest 2 minutes to get serious money for your business?

With Jer at Trihouse, I’ve already successfully helped payday, title loan and MSB’s get money that makes sense! [And a few other industries as well.]

DO THIS! It costs you nothing and there is no obligation. Give your business a chance!

Click here: “Yes I’m interested!” Watch the 2 minute movie explaining everything.

After investing 2 minutes of your time, simply click the APPLY button at he bottom of the 2 minute movie page and I’ll get your money for you.

AGAIN, there is no cost or obligation to see where you are and what I can do for you.

Be awesome out there.  And don’t let anybody, or anything hold you back!

Sincerely,
Miro P. with Jer at Trihouse

Finally, to receive future updates from us, simply plug in your First Name and your email address. Then click on the “Subscribe Link” that you’ll shortly receive in your Inbox. No Spam and no Garbage. Spam is for jerks anw we are not jerks! Now go make some $$.

20
Apr

Bank Discontinuance: Anti-Money Laundering Compliance Program

Bank Discontinuance: Anti-Money Laundering Compliance Program“Bank Discontinuance” Issues and Strategies for avoiding this devastating occurrence in your small dollar lending business.

 NOTE: This document is intended to outline steps you can take to ensure that your compliance program is adequate. Perhaps you were sleeping? You somehow missed this:

Justice Department Hits Community Bank in Second Choke Point Case

by Victoria Finkle

MAR 10, 2015 5:04pm ET

WASHINGTON — The Department of Justice announced a $4.9 million settlement Tuesday with CommerceWest Bank over charges that the Irvine, Calif., bank knowingly worked with a third-party processor to make illegal withdrawals from consumer accounts.

The deal is the latest development in the law enforcement agency’s initiative to combat crime and consumer fraud through the banking system, known as Operation Choke Point. It’s the second case associated with the effort, which has come under fire in recent months from Republican lawmakers and the banking industry.

“CommerceWest Bank ignored a parade of red flags indicating that a third-party payment processor was defrauding hundreds of thousands of innocent victims,” said Benjamin Mizer, acting assistant attorney general of the Justice Department’s Civil Division, in a press release. “[W]e will hold financial institutions accountable when they choose unlawfully to look the other way while fraudsters use the bank’s accounts to steal millions of dollars from American consumers.”

The move is a win for government officials who have faced considerable pushback from bankers and lawmakers concerned that Operation Choke Point is chilling business activity for legal but controversial industries like gun dealers and payday lenders.

The Federal Deposit Insurance Corp. told banks in January that they should carefully evaluate the activities of businesses they contract with, but clarified that they don’t need…” READ MORE.

BANK SECRECY ACT (BSA)/ANTI-MONEY LAUNDERING (AML) COMPLIANCE PROGRAMS

INTRODUCTION

Given the importance of compliance with the anti-money laundering requirements to the protection of our financial system and our national security, MSBs that fail to comply with even the most basic requirements of the Bank Secrecy Act, such as registration with FinCEN if required, not only are subject to regulatory and law enforcement scrutiny, but also are likely to lose banking services that enable them to function.

Like other financial institutions subject to the Bank Secrecy Act, MSBs must assess the risks of their operations as a step in developing effective anti-money laundering programs. MSBs seeking to obtain or maintain account relationships with banking organizations should be prepared to provide information or explanation to their banking organizations about the risks associated with the services offered, the customer base, the markets served, and the locations of the money services business.

Department examiners will assess the adequacy of your AML compliance program to determine whether you have developed, administered, and maintained an effective program for compliance with the BSA and all of its implementing regulations.  Review of the MSB’s written policies, procedures, and processes is a first step in determining the overall adequacy of the BSA/AML compliance program.  The document provides guidance and elements for designing an effective MSB compliance program. The degree to which elements should be implemented are dependent upon the MSB’s risk profile.

ANTI-MONEY LAUNDERING COMPLIANCE PROGRAMS 

Each MSB is required by law to have an effective anti-money laundering (AML) compliance program.  An effective anti-money laundering program is one that is reasonably designed to prevent the MSB from being used to facilitate money laundering and the financing of terrorist activities.  The regulation requiring MSBs to develop and maintain an AML compliance program is contained in 31 CFR103.125.  Each program must be commensurate with the risks posed by the location, size, nature and volume of the financial services provided by the MSB.  For example, a large money transmitter with a high volume of business located in large metro area is at higher risk than a small check casher with a low volume of business located in a rural area.  Therefore, the large money transmitter would be expected to have Continue Reading..