Will the scamming ever stop?! Stories about new methods being used to rip off businesses or steal money from consumers on the Internet or the phone have been running rampant lately. In fact, several CFSA members have recently alerted us to different scams that are affecting both their businesses and consumers alike.

In response to these scams, CFSA has recently added a new section to its website to assist both member companies and payday advance customers in handling these situations. You can check out this information by clicking here and soon CFSA will feature a homepage “Consumer Alert” button for customers who want to stay informed.

Advance America’s CEO Patrick O’Shaughnessy on healthy competition within the short-term credit market, whether from banks or non-bank providers:

“I believe consumers benefit from having multiple options.

We’ve recently seen activity from both depository and alternative financial service providers as they focus on developing strategies to better serve their customer short-term credit needs.

…

Loan services reports since August 2010, when new rules took effect that prohibit banks from automatically enrolling customers in overdraft plans for debit cards or ATM transactions. The overall opt-in rates for such plan has grown to exceed 77%. This high opt-in rate clearly demonstrates large consumer demand for short-term credit and that consumers regard overdraft as a safety net and not as a penalty.”

To read more from AEA’s earnings call transcript, click here.

Go show your support for access to credit by attending the following event in Kansas City tonight. Communities Creating Opportunities (CCO) is hosting an event at Union Station to discuss ways to fight foreclosures, “predatory” lending, and what they call “other problems”.

The free event will be from 6:30 to 8:15 p.m. Parking will be available in the Union Station garage. Participants can register online at opportunitynow.eventbrite.com.

There’s no question that consumers, and advocates alike, have balked at Bank of America’s new $5 debit card fee. But instead of just bolstering opinions and staying angry, many have left the banking giant, making it a win-win for local credit unions and community banks.

One example is a local southwest Florida community bank that is offering to pay consumers $5 per month to open a checking account instead of charging for debit transactions. According to Bank Technology News, in just a couple of days, it’s become the most successful promotion in the bank’s two-year history, and the institution partly has the bad mood of consumers to thank.

“We’ve gotten dozens of account openings per day,” says Trevor Burgess, CEO of the bank holding company, which introduced the $5 reward program last Tuesday.

Great tid bit out of a New Hampshire story today about what happens when policymakers look to legislate legitimate lenders out of business:

That doesn’t means that such lending doesn’t go on here, via the Internet. Indeed, the Banking Department has received so many complaints against unlicensed lending that it assigned its new attorney to just handle that. In other words, the department spends as much time and energy chasing unlicensed lenders as it does regulating the licensed ones.

A great stat for you: The payday advance industry has an incredibly low rate of consumer complaints. State regulators confirm that in 2009, out of 110 million transactions, there were only 1,012 complaints submitted against payday lenders.[1]

Congrats to the Online Lenders Alliance for a successful conference this week in Denver (that’s where we were this week, listening to all the latest developments in technology and innovation in the online space). While we’re giving a round of applause to OLA, we also want to hand it to Charles Hunter of Borrow Smart Alabama for his editorial in the Birmingham News.

In response to an article that ran last weekend, Mr. Hunter said this:

“The News used the loaded word “predatory” to describe the short-term lending industry and said lenders “force people who are least able to pay into a cycle of debt.”

For years, the industry has been trying to determine why anyone, particularly well-educated and worldly journalists, would have this unfounded impression the short-term lending industry is exploitative in any way. Perhaps this perception remains from the years before the passing of the 2003 state law that regulates the payday loan industry and protects consumers from cyclical debt.

Before that time, there were some “loan sharks” out there who did, in fact, live up to the reputation the industry can’t seem to shake. This misperception might also stem from media reports over the years stirred up by industry opponents using PR tactics to further their political agenda.

But here’s the punch line: It’s just not true. In this case, perception is not reality. The reality is that hardworking Alabamians occasionally need to borrow a couple hundred dollars to serve an urgent need. They are more than willing to pay the one-time fee of 17.5 percent the law allows to borrow that money.

I challenge the members of the City Council and The News to walk into any payday loan store in Birmingham and talk to a few customers. Take out a loan, perhaps. Don’t just believe what you read or what you hear. Find out from real people who use our products. I think you’ll be surprised by the truth.”

And we just wanted to applaud you.

Once again we’re seeing generalizations about payday lenders in one news story that came out earlier this week. Unlike companies that are licensed by the state, such as CFSA members, unlicensed and unregulated lenders, including those located offshore, are not subject to state examination, compliance standards, or the formal complaint process.

There’s no doubt that less access to legitimate, regulated loans will drive consumers to unscrupulous offshore providers that are in effect, beyond the legal reach of U.S. authorities. A proliferation of online pharmacies portends the future of short-term loans if consumers lack state-based, regulated credit options.

A 60 Minutes’ nine-month investigation called “The difficult fight against counterfeit drugs,” which aired March 10, 2011, detailed how counterfeit prescription drugs manufactured outside of the United States were sold through “rogue internet sites, often posing as legitimate pharmacies.” According to the report, “Thirty-six million Americans are estimated to have bought their medicines from these sites, many searching for quality drugs at a better price. Some sites pretend to be from Canada because Canada is known for safe, inexpensive medicines.”

CFSA believes that appropriate state regulations provide strong protections for consumers, while ensuring continued access to choices for short-term credit needs. That same principle should apply in cyberspace. Customers who choose to get a payday advance online should not forfeit any of the protections they would receive from a regulated, store-front lender.

The Senate Banking Committee’s Subcommittee on Financial Institutions and Consumer Protection held a hearing Tuesday, according to the American Banker,  just days before the full committee was scheduled to vote on the nomination of Richard Corday to be the Bureau’s first director. Although the witnesses talked about the wealth gap and discriminatory lending practices, the subtext of the hearing and the issue on everyone’s mind was the CFPB.

As far as alternatives go and the need for more clarity and transparency in disclosure agreements, the following was a key quote from a representative from Pew Charitable Trusts:

Susan Weinstock, Pew Charitable Trusts: “Unfortunately, the checking accounts in our study did not meet this standard. We found a median of 111 pages of disclosure documents…The banks often used different names for the same fee or service; put the information in different documents, different media, or different locations in a document…Many of these documents are not user-friendly, with much of the text densely printed, difficult to decipher, and highly technical and legalistic.”

We believe that CFSA’s Best Practices should be considered as a blueprint for responsible lending within the payday advance industry, and can be adopted for most short-term financial products. Provisions include: Full disclosure of fees, truthful advertising, right to rescind, appropriate collection practices, including no criminal action, and a requirement to be licensed in each state where the company does business.

Raj Date, the acting head of the Consumer Financial Protection Bureau (CFPB), weighed in on the BofA $5 debit card fee controversy for the first time yesterday, according to an LA Times blogpost. Though he did not directly mention Bank of America’s new $5 monthly debit-card fee, Date said that banks often are murky about how much they charge customers and suggested the agency might move to simplify checking account disclosures.

“Different banks charge different fees. Different fees are applied under different terms and conditions. Different banks give different names to the very same fee,” Date said. “Ideally, consumers would have a simple way to evaluate checking account costs.”

The Senate Banking Committee voted along party lines today to push Richard Cordray’s nomination to lead the new Consumer Financial Protection Bureau ahead, although Republicans have vowed to block his confirmation, according to the New York Times.

The panel voted 12-to-10 to approve Cordray’s nomination.

“We are simply seeking common-sense changes,” Mr. Shelby, the committee’s ranking minority member, said in a statement after the vote. “Today’s vote by the Senate Banking Committee was premature. No nominee for the director of the Bureau of Consumer Financial Protection should receive consideration until the Democrats are ready to stop playing politics and work with us to make the bureau accountable. It’s their choice.”