Asset Building Program and Partners Recommend Best Practices for TANF Payment Card Contracts

WASHINGTON, DC – Earlier this week, New America’s Asset Building Program, the Center for Law and Social Policy (CLASP) and the California Reinvestment Coalition (CRC), submitted a letter urging the Consumer Financial Protection Bureau (CFPB) and Administration for Children and Families at the U.S. Department of Health and Human Services to provide guidance to states about best practices for their contracts with Electronic Benefit Transfer (EBT) vendors, so that families accessing public assistance can do so safely and with fewer fees.

Currently, families participating in the Temporary Assistance for Needy Families program (TANF/cash assistance) often must pay significant fees and surcharges to withdraw their benefits at an ATM. In California, fees charged to recipients of TANF and other public assistance programs added up to $19 million in 2012, according to a new report from CRC. Since families’ average monthly grants are only a few hundred dollars, these small fees can have a significant impact on their ability to make ends meet.

“Some benefit payment card contracts appear cheap to the states because the real costs are passed on to recipients in the form of fees,” said Elizabeth Lower-Basch, Policy Coordinator and Senior Policy Analyst with CLASP. “This memo offers recommendations on how states can protect recipients’ interests in contracts with benefit card providers and make sure taxpayer funds are going to needy families—not banks.”

“For families living on the brink, small expenses add up fast,” said Aleta Sprague, Policy Analyst with the Asset Building Program. “Reducing EBT fees and connecting more striving households with safe, affordable bank accounts are two strategies that would help taxpayers get the most from their investment.”

“States must protect taxpayer investments in safety net programs so they can support families and children, not private corporate profits,” said Andrea Luquetta, CRC’s Policy Advocate. “In the face of constant cuts to these critical programs, we cannot continue to allow nickel and diming fees to casually drain family resources at ATMs and check cashers. We have to give families as much opportunity as possible to put every safety net dollar to work.”

Specific best practices the groups recommend include:

  • permitting a certain number of fee-free withdrawals per month
  • providing clear and accessible information about fees and surcharges
  • ensuring protections against theft and fraud
  • permitting and encouraging direct deposit to a bank account as a less expensive and more convenient alternative to receiving benefits on a state-issued card

To read the full brief, “Recommended Standards for TANF Payment Card Contracts,” please click here.

Without Bank Financing, Will Payday Lenders Become a Thing of the Past?

Editor’s note: The CFPB, a federal agency, has proposed new rules for payday, car title, and high-cost installment lenders.

 

BUT, they need to hear from consumers- that means you! We have an easy-to-use page where you can weigh in- it only takes a minute and will help bring about important consumer protections with these loans. Please share a line or two in the comments box about why you care about this issue and want to see strong federal reforms.

PS: You do NOT have to be a payday, car title, or installment borrower to sign the petition.

 

The payday loan industry can’t seem to stay out of the headlines this year. Today, American Banker reports (Fifth Third, Capital One Cut Off Payday Lenders) that Capital One and Fifth Third are cutting off access to financing for payday lenders.

This comes on the heels of a Washington Post article about Wells Fargo possibly cutting off financing to a Minnesota payday lender (Banks to payday lenders: Quit the business or we’ll close your account).

As payday loan enablers cut off the financing that allows these lenders to stay in business, it becomes more difficult for them to continue offering abuse loans.  Bank of America has already announced plans to “not renew” relationships with current payday lenders, while Chase floated a trial balloon about cutting off lending to payday and other lenders last fall.

However, it’s important to note that some other high-cost, abusive lenders are still getting access to financing from big banks.

For example, as Adam Rust points out on BankTalk, (World Acceptance Doubles Down, As if to Shrug off the CFPB’s CID) banks are still financing other high-cost lenders, like World Acceptance.  Banks including Wells Fargo, Bank of America, and Capital One are still providing financing to this lender.

If you haven’t read it yet, the CFPB’s latest report on payday lending paints a very ugly picture of the industry and how it treats its customers.  The CFPB’s analysis found:

  • Over 80% of payday loans are rolled over by taking out another loan within 14 days. This finding contradicts industry claims about the loans being an important service for people who have one-time emergencies.
  • Half of all loan sequences are at least 10 loans long.
  • For more than 80% of payday loan borrowers, the last loan size is the same size or larger than the first loan in the sequence.
  • For borrowers who are paid monthly and who use payday loans, 58% receive monthly government benefits such as Supplemental Security Income (SSI), Social Security Disability, or retirement benefits. These borrowers are also disproportionately likely to stay in debt for 11 months or longer.

To read the report, visit: CFPB Data Point: Payday lending

Another Payday Lender Is Caught For Illegal Debt Collection

Editor’s note: The CFPB, a federal agency, has proposed new rules for payday, car title, and high-cost installment lenders.

 

BUT, they need to hear from consumers- that means you! We have an easy-to-use page where you can weigh in- it only takes a minute and will help bring about important consumer protections with these loans. Please share a line or two in the comments box about why you care about this issue and want to see strong federal reforms.

PS: You do NOT have to be a payday, car title, or installment borrower to sign the petition.

 

The Federal Trade Commission announced a new settlement today with a payday lending operation that includes  Payday Financial LLC, also Payday Financial, LLC, Great Sky Finance, LLC, Western Sky Financial, LLC, Red Stone Financial, LLC, Financial Solutions, LLC, Management Systems, LLC, 24-7 Cash Direct, LLC, Red River Ventures, LLC, and High Country Ventures, LLC.

Under the settlement, the operation and it’s owner will pay almost a $1 million fine for as part of a settlement related to charges related to their unfair and deceptive tactics they used to collect on payday loans, including forcing people to travel to South Dakota and appear before a tribal court that did not have jurisdiction over their cases.

From the FTC press release:

Under the terms of the settlement, Martin A. Webb and his companies have agreed to a $550,000 civil penalty for violating the Credit Practices Rule – which prohibits payday lenders from requiring borrowers to consent to have wages taken directly out of their paychecks in the event of a default. Following a partial judgment in favor of the FTC in September 2013, the defendants surrendered $417,740 in ill-gotten gains stemming from their prior practice of attempting to garnish consumers’ wages without court orders.

In addition to the monetary payment imposed on the defendants, the settlement prohibits them from further unfair and deceptive practices, and bars them from suing any consumer in the course of collecting a debt, except for bringing a counter suit to defend against a suit brought by a consumer.

 

 

Screening of Fleeced Documentary about Elder Abuse in Sacramento April 15th

Fleeced1

As part of the Housing California conference, several organizations are sponsoring a screening of Fleeced: Speaking Out Against Senior Financial Abuse that will also include a panel discussion and audience Q&A.

The event will be held on Tuesday, April 15th, from 5:30 to 7:00pm at the Sacramento Convention Center, in Room 304. Space is limited. To RSVP, please contact Maya Abood: maya@calruralhousing.org, (916) 443-4448

Building Awareness of Elder Financial Fraud and Abuse
Older adults are the fastest growing population in the U.S., and one of five older Americans is the victim of financial fraud and abuse The economic cost of older-adult financial fraud and abuse is estimated at $2.9 billion annually, but those are only the cases that are reported. The damage to the emotional and physical health and well-being of the victims and their families takes a significant toll as well.

FleecedThe Film
Fleeced is a new documentary produced by the National Community Reinvestment Coalition (NCRC), which tells the story of older adults and their families who were victimized by different types of financial scams and abusive financial products. These individuals and their families transform from victims to advocates speaking out for others. Fleeced includes expert commentary from financial fraud and abuse prevention experts as well as national aging leaders and community advocates.

Who Should Attend?
Older-adult service providers and advocates, senior housing developers and operators, banks and financial institutions, legal services attorneys, federal, state, and local government agencies, elected officials and staff.

Keynoters
Roger Dickinson, Assembly Member, District 7
Lora Connolly, Director, California Department of Aging

Panelists
Annette Smith, Tenant Organizer, Lyn Roc Tenants Association, Rocklin (featured in film)
Heidi Richardson, Program Specialist, Sacramento County Adult Protective Services
Paulina Gonzalez, Executive Director, California Reinvestment Coalition
John Moon, District Manager, Community Development, Federal Reserve Bank of San Francisco

This screening is sponsored by:

The National Community Reinvestment Coalition

The California Reinvestment Coalition

The Elder Financial Protection Network

California Coalition for Rural Housing

You can watch a trailer for Fleeced by clicking on this link.

If you’d like to print or share a 1 page flyer for the screening, click on this link: http://bit.ly/fleecedmovie

 

As Fewer People Overdraft, Banks Are Raising Overdraft Fees

Consumerist take on the media overdraft fee hitting a record high of $30 each.

Consumerist

(James Callan) (James Callan) If you’re still opted-in to overdraft “protection” — which protects you by slapping huge fees on every purchase you make beyond the available funds in your account — you should probably opt out, as the costs associated with this lucrative system are on the rise.

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