A recent opinion piece in The Huffington Post (“New Name for Payday Won’t Fix It,” 08/29/12) is riddled with inaccuracies about the payday loan industry and the millions of Americans who turn to our product to manage financial obligations that come due before their next paycheck.

To be clear, CFSA does not advocate for H.R. 6139. And to be even clearer, H.R. 6139 does not include the payday loan product or any credit product with a term of 30 days or less.

CFSA member companies have long operated in a highly regulated environment – at both the state and federal level – and we believe such regulation is effective, balancing credit availability and consumer protection.

Lawmakers have acknowledged that consumers understand a payday advance is for short-term use. Just as a taxi is great for a short trip across town, it wouldn’t be economical on a journey from Los Angeles to Boston.

In fact, a payday advance can be the best option for short-term credit. It’s safe, reliable, and often less expensive than other alternatives, which include unregulated loans, overdraft usage, bounced checks, late payments to credit card companies, and utility reconnection fees.

Payday lenders provide a valuable service to American consumers, who can then keep their families and the economy moving forward. That’s a service we’re proud to offer.

The CFPB has received some interesting letters in response to their request for comment on larger participants in the nondepository markets.  One of the most unique letters that we’ve seen is the one submitted by the group Tech Progress.  The letter, which was featured in the Huffington Post last week, suggested that the CFPB not only include traditional nonbank financial institutions in this group of “larger participants,” but that they oversee search engines and related online advertisers as well.

In particular, Tech Progress’ Founder Nathan Newman asks that the new agency look into services that provide online marketing for financial services based on behavioral targeting.  Newman states that “the issue of behavioral targeting — delivering ads to individual consumers based on their demographic profile or search patterns — opens up whole new areas of potential abuse.”  Newman’s biggest strife with the behavioral targeting industry is that too much of the process is hidden for the public.  Rather than calling for significant regulation of these services, Newman is first asking for more transparency in the process. He argues that, “just publicizing how much revenue search engines like Google make from the financial industry will highlight their key role in the financial world.”

Interesting commentary from HuffPo on the Bloomberg Businessweek cover story re: Elizabeth Warren.

I’m going to generously assume that the weird, critical, slam-book-style bubbles that dot the cover of the July 11-17 issue of Bloomberg Businessweek, touting an Elizabeth Warren cover story, are simply an interpretaive way of sending up Warren’s myopic critics, and not the magazine itself commenting on a woman whose most fervent desire is for ordinary Americans to have intelligible loan and credit-card agreements.

All the same, seeing Warren’s picture dotted with epithets like “smug” and “entitled” and “know-it-all” causes a tiny secretion of bile to churn in my bowels. Ask a woman what the barb “know-it-all” means to her, and I’m guessing you’ll hear back something like, “It means I kept using my brain even after no one wanted to fuck me anymore” — to bastardize a line from Tina Fey.

A recent study says that banks are expected to lose up to $14 billion from the reduction of interchange fees.

So how are they going to make up for the loss revenue? The likely candidate: Offloading more costs onto consumers.

A CardHub.com analysis finds that large banks will make up for lost revenue by increasing monthly fees and minimum balance requirements and making debit card reward programs less appealing.

According to a study released this week by the National Bureau of Economic Research, many American not only have a financial plan in place, but a “sizable” number are confused about the terms they committed to.

And it seems Americans are also ignorant of their financial ignorance. Although many haven’t mastered basic economic concepts, such as inflation, nearly 40 percent of gave themselves high scores when asked to rate their own financial literacy. Just 14 percent rated their knowledge level three or worse on a seven point scale.

Other key points of interest:

• The average American family has very little financial breathing room
• Almost half of the population has trouble covering monthly expenses.
• And just over half of the population lacks a household rainy-day fund that could cover three months of living.
• Nearly 30 percent of American have no savings account at all. Nearly that same share have at least four credit cards.

HuffPo’s Bryce Covert put a piece out today discussing the “outrageous tactics” of rogue debt collectors—even so much as referring to them as “organized crime” syndicates. And we agree.

CFSA put out the following statement in March, where our chairman said:

“It is simply wrong to pursue criminal complaints against consumers who have defaulted on personal debt,” said D. Lynn DeVault, board chair of the CFSA. “Lenders should be working with their customers to figure out a solution. Our members offer borrowers an extended payment plan at no extra cost to the borrower and adhere to CFSA Best Practices which prohibit any criminal recourse.”

Not to mention what two of our Best Practices say verbatim:

7. A member must collect past due accounts in a professional, fair and lawful manner. A member will not use unlawful threats, intimidation, or harassment to collect accounts. CFSA believes that the collection limitations contained in the Fair Debt Collection Practices Act (FDCPA) should guide a member’s practice in this area.

8. A member will not threaten or pursue criminal action against a customer as a result of the customer’s check being returned unpaid or the customer’s account not being paid.

The debate over legislation in the New York Senate that would allow check cashing businesses to make small loans is heating up. After passing through the NY Senate Banks Committee last week, Amy Traub of the Huffington Post responded to the news with a cautionary editorial warning the people of New York about the dangers of payday lending.  While Traub has obviously already made up her mind about the issue, the bill’s sponsor, Rep. Hugh T. Farley, offers a different perspective on the legislation:

State Senator Hugh T. Farley of Schenectady, claims to “provide consumers with additional options and choices” by permitting check-cashing businesses to make small loans.

It won’t be long before we see where the rest of the New York state legislators fall in this debate.

We’re all aware of the new bill in Illinois, but the Huffington Post doles out the latest on small-dollar loan initiatives in the Dodd-Frank Act:

Title XII of the Act “encourage[s] initiatives for financial products and services that are appropriate and accessible for millions of Americans who are not fully incorporated into the financial mainstream.” Specifically, the Act will incentivize financial institutions to offer low-cost, small-dollar loans that serve as safe alternatives to payday loans.