Senate Votes to Overturn “Fake Lender” Rule
With a 52-47 bipartisan vote in the Senate earlier this month, Congress moved one step closer to over-turning the Office of Comptroller of the Currency’s anti-consumer “fake lender” rule, which allows predatory lenders to evade state interest rate laws simply by putting a bank’s name on the paperwork. Advocates applauded the Senate action and urged the House to act soon.
Three Republicans – Senators Cynthia Lummis (R-WY), Susan Collins (R-ME), Marco Rubio (R-FL) – joined with all Senate Democrats in support of the Congressional Review Act (CRA) resolution. The House now has until the end of this legislative session to vote on the measure, but advocates are pressing the House to act quickly.
“The bipartisan vote in the Senate shows the importance of repealing the OCC fake lender rule now because it is doing active harm right now, defending a predatory business model that destroys small businesses, homes, and lives,” said National Consumer Law Center Associate Director Lauren Saunders. “Congress must act because it could easily be two years or more before the rule could be repealed through rulemaking, and small businesses and families devastated by COVID, especially in Black and Brown communities, cannot wait.”
A broad, bipartisan cross-section of experts and officials have called on Congress to repeal the fake lender rule. They include a bipartisan group of 25 state attorneys general, concerned it would effectively gut their state usury laws. The Conference of State Bank Supervisors, National Association of Consumer Credit Administrators, National Association of Federally-Insured Credit Unions, Credit Union National Association, and many other groups also support Congress overturning the rule.
This broad support, as well as the bipartisan Senate vote, “shows bipartisan disapproval of the harmful rent-a-bank model that is being used by predatory payday and installment lenders to make triple-digit interest rate loans that are illegal across the country,” said CFA Financial Services Outreach Manager Rachel Gittleman. “Now, the U.S. House of Representatives must act to protect consumers, especially small business owners, still reeling from the fallout from the COVID-19 pandemic,” she added.
Groups Urge Further DOL Action to Strengthen Advice Rules
A diverse group of 30 organizations and 10 individuals submitted a letter to the Department of Labor (DOL) earlier this month outlining additional steps the Department should take to strengthen the rules governing retirement investment advice.
The groups voiced strong support for guidance issued by DOL in April, clarifying the steps firms must take to comply with the rules. “By staking out a tough stance on the obligation to mitigate conflicts of interest, the Guidance sends a strong message that the Department is committed to doing all it can, within the limits of the Exemption, to ensure that workers and retirees receive appropriate protections when they turn to investment professionals for retirement investment advice,” the letter states.
The letter notes, however, that, “Guidance can only take us so far.” It outlines the additional rulemaking that is needed to “close legal loopholes that would otherwise enable firms to evade appropriate application of the fiduciary duty, and to ensure that the duties set forth in the Exemption actually reflect and implement the strong fiduciary standard set forth in ERISA.” DOL has indicated that it is considering rulemaking along these lines.
“With new leadership at the Department of Labor, we have an opportunity to finally achieve the strong protections retirement savers need and deserve when they turn to financial professionals for advice about their retirement investments,” said CFA Director of Investor Protection Barbara Roper. “The recently issued guidance is an excellent start.”
Roper cautioned that, with some industry groups adamantly opposed to any rules that provide meaningful protections to investors, the DOL still has a tough fight ahead to achieve its regulatory goals. “Our letter should send a strong message that there is a diverse group of organizations prepared to support DOL in this effort,” she said.
Bill Would Address Infant Sleep Product Hazards
With a strong showing of support from consumer and safety groups, two high-ranking members of the House Energy and Commerce Committee – Rep. Tony Cárdenas (D-CA) and Rep. Jan Schakowsky (D-IL) – introduced legislation earlier this month to address hazards related to infant sleep products.
The Safe Sleep for Babies Act was introduced following several reports of infant deaths tied to inclined sleep products and crib bumper pads. The legislation would add both crib bumpers and inclined sleepers for infants with an inclined sleep surface greater than ten degrees to the list of banned hazardous products under the Consumer Product Safety Act.
Numerous deaths have been linked to crib bumpers and infant inclined sleep products. The American Academy of Pediatrics has long recommended that babies sleep on their backs on a flat, firm surface without any other bedding or restraints. A study from the U.S. Consumer Product Safety Commission (CPSC) notes that many researchers believe the most common risk factor for sleep related deaths in infants is rolling into crib bumpers in their sleep area.
In 2019, CPSC issued recalls of two reclined sleepers, but other inclined sleep products remain on the market, “which could falsely signal that they are safe to parents, grandparents, and guardians,” warned CFA Legislative Director and General Counsel Rachel Weintraub. She urged “quick passage of this legislation to protect our infants from these known hazards.”
Groups Support Debt Collection Improvement Act
CFA has joined with 87 other public interest, legal services, consumer, labor, and civil rights organizations in supporting legislation to reform the debt collection system. The groups wrote to members of the House this month in support of H.R. 2547, the “Comprehensive Debt Collection Improvement Act.”
“Debt in collection can wreak havoc on consumers, subjecting them to harassing debt collection calls and potential lawsuits,” the groups wrote. “Despite the enactment of the federal Fair Debt Collection Practices Act (“FDCPA”) in 1977, debt collection remains a frequent source of complaints to the Consumer Financial Protection Bureau, Federal Trade Commission, and other state and federal agencies.”
The legislation, which is a compilation of eight individual bills, would address these concerns by:
- Prohibiting the use of confessions of judgment as an unfair credit practice that eliminates notice and the right to be heard;
- Prohibiting certain abusive collection practices directed at service members, including threats to reduce rank or revoke security clearance;
- Requiring discharge of private student loans due to total and permanent disability;
- Prohibiting collection of medical debt for the first two years and credit reporting of debt arising from any medically necessary procedures;
- Requiring debt collectors to obtain consent before using electronic communications and provide written validation notices;
- Amending the FDCPA to expand and clarify coverage, including extending coverage for all federal, state, and local debts collected by debt collectors;
- Adjusting statutory damages in the FDCPA for inflation and indexing them to inflation in the future; and
- Clarifying FDCPA coverage for non-judicial foreclosures.
“These reforms have been needed for a long time, but the financial stresses caused by the COVID-19 pandemic have highlighted the need to protect consumers from unfair and abusive debt collection practices,” said CFA Director of Consumer Protection and Privacy Susan Grant.
Wisconsin Organizations Launch Automatic Savings Campaign
A broad coalition of organizations in Wisconsin have launched the statewide Wisconsin Saves Automatic Saving Initiative to encourage millions of Wisconsinites to establish emergency savings accounts through automated saving. This is a national pilot project being developed in Wisconsin to provide a model to be replicated in other states.
Recognizing many individuals were not fully prepared for the lasting economic impacts of the COVID-19 pandemic, Wisconsin Saves focuses on the role of employers in promoting saving for emergencies to their employees. The campaign encourages small- and medium-sized employers to promote to their employees the ease and benefits of saving automatically for emergencies through split deposit.
The effort is led by Wisconsin State Treasurer Sarah Godlewski, Wisconsin Department of Financial Institutions (DFI) Cabinet Secretary Kathy Blumenfeld, President and CEO of the Wisconsin Bankers Association Rose Oswald Poels, Wisconsin Women’s Business Initiative Corporation (WWBIC) President Wendy Baumann, and America Saves, the leading national campaign in promoting savings. This pilot is made possible with funding from Synchrony Bank.
“America Saves has long believed that employers can have a positive impact on the financial lives of their employees and that saving automatically using split deposit is a simple and very effective way to save,” said America Saves Senior Program Manager Carolyn Pemberton. “The pilot focuses on using the workplace as a channel to reach individuals because it is one of the best places to spread messages about financial well-being. Employees trust information provided to them by their employers about financial matters.”
Employers in all industries and locations in the state can sign up at autosave.wisconsinsaves.org to join this coalition. Participating employers will receive free resources to support their communication efforts and be included in statewide recognition. Anyone interested in more information can contact Pemberton at email@example.com.
Vehicle Shortage Wreaking Havoc on Car Buyer’s Pocketbooks
With record numbers of buyers venturing back into auto showrooms, and vehicle inventories way down, “it’s a seller’s market,” CFA Executive Director Jack Gillis warned in a recent press statement, and buyers will need to shop smart to avoid over-paying.
Vehicle inventory is down by about 30 percent which means car dealers have little incentive to negotiate on price. As a result, “The rule of thumb that nobody pays ‘sticker price’ for a new car has fallen by the wayside as dealers stick to the manufacturer’s suggest retail price (MSRP) on the vehicle label,” said Gillis. Instead, for some particularly popular vehicles in short supply, dealers are actually charging above sticker price.
Gillis’s advice on the best way to deal with this reality: “If you don’t need to replace your car right now, you should wait.” The widely reported computer chip shortage and other repercussions from the pandemic are expected to ease up by the end of the year or early 2022. “By waiting, you’ll have more electric vehicles to choose from, as well as the 2022 models with the latest safety features,” said Gillis.
For the many Americans who don’t have the luxury of waiting, CFA issued “Ten Tips on Saving in a Seller’s Car Market,” which include considering less popular models, shopping around online, widening your search to include more distant dealerships, avoiding the upgrades and extras, and more.