CFPB

Richard Cordray to step down from CFPB post before end of month

WASHINGTON, D.C. - 

It was reported by CNBC and other news outlets early Wednesday afternoon that director of the Consumer Financial Protection Bureau Richard Cordray would be stepping down from his position by the end of the month.

The news first surfaced in an email sent out by Cordray himself, announcing his plans. This new comes just a few weeks after President Trump signed H.J. Res. 111, which nullifies the Consumer Financial Protection Bureau's rule prohibiting the use of a pre-dispute arbitration agreement to prevent a consumer from filing or participating in certain class action suits.

Today, CFPB Director Richard Cordray sent an email to all CFPB staff announcing his plans to step down. When SubPrime Auto Finance News reached out to the CFPB on Wednesday, representatives said they did not have further comment at this time.

In the email written to his colleagues, Richard Cordray said, "I wanted to share with each of you directly what I have told the senior leadership in the past few days, which is that I expect to step down from my position here before the end of the month." 

He went on to share that it has been the "joy" of his life to have the opportunity to serve as the first director of the CFPB. 

"Together we have made a real and lasting difference that has improved people’s lives, notably: $12 billion in relief recovered for nearly 30 million consumers; stronger safeguards against irresponsible mortgage practices that caused the financial crisis and hurt millions of Americans; giving people a voice by handling over 1.3 million complaints that led to problems getting fixed for vast numbers of individuals, and creating new ways to bring financial education to the public so that people can take more control over their economic lives," Cordray said. 

That said, he made a note of pointing out that more work still lies ahead. 

Immediately after the news broke, statements from finance associations started surfacing, as well. The American Financial Services Association (AFSA) was one of the first.

“While not always agreeing with Director Cordray’s decisions and rationale for those decisions, we wish him well in his future endeavors,” Chris Stinebert, president and chief executive officer of AFSA, said. ““We appreciate his dedication to the interests and the protection of consumers. Unfortunately, his decisions were not always completely developed and created undue burden on consumers’ access to credit, which curtailed lending to the consumer that the Bureau is mandated to protect.”

AFSA said it “looks forward to working with Cordray’s successor in the protection of consumers and providing safe, affordable access to credit in communities across the United States.”

Mayer Brown Consumer Financial Services partner and former CFPB official Ori Lev also released a statement shortly after the news broke, noting that while he also didn’t always agree with Cordray’s “aggressive enforcement approach,”  the public servent “worked tirelessly” on behalf of America’s consumers.

Consumer watchdog group Allied Progress responded to the news of Cordray resigning from the CFPB later this month with an air of wariness towards President Trump’s process as he chooses a replacement for Cordray.

Allied Progress executive director Karl Frisch had this to say: “The CFPB’s mission has never been about one person or one administration. Its statutory mission is to protect consumers from the type of reckless practices that led to the economic collapse of 2008. That’s why a vast majority of Americans from across the political spectrum support the CFPB and the important work it does to protect them from the worst practices of big banks, credit card companies and other financial predators.

“Moving forward, President Trump will have the opportunity to nominate a new director. He has a choice. Will he pick a champion of consumers in the mold of Richard Cordray or a champion of big banks and Wall Street? His rumored short list is not encouraging. That’s why Allied Progress will fight to ensure that the next director follows the law and continues to hold powerful financial institutions accountable for fraudulent activities and abusive practices,” Frisch concluded.

As for what’s in store for the future,  according to Lev, of Mayer Brown Consumer Financial Services, we will just have to wait and see.

“It is unlikely that today’s announcement will have any immediate impact on pending CFPB litigation. Once a new director is named by President Trump – either on an acting basis under the Federal Vacancies Reform Act or on a permanent basis after Senate confirmation – the new director may review pending litigation to determine if he or she wishes to continue to take the same legal positions the agency has been taking,” he said.

“It wouldn’t be surprising if the agency backed off some of its more aggressive legal positions. In the interim, defendants in such cases will likely seek to delay proceedings pending new CFPB leadership," Lev concluded. 

Stay tuned to further coverage from SubPrime Auto Finance News as this news develops.

TransUnion acquires FactorTrust

CHICAGO - 

The company that deemed itself an alternative credit bureau now is a part of what traditionally has been one of the Big 3 credit history providers.

Late on Tuesday, TransUnion announced the acquisition of Used Car Week sponsor FactorTrust, a provider of alternative credit data, analytics and risk scoring information that can empower auto finance companies and other lenders to make more informed decisions while possibly increasing financial inclusion to a wider population of consumers.

The acquisition closed on Tuesday, and financial terms were not disclosed, according to a news release shared by TransUnion.

TransUnion highlighted the acquisition reinforces the company’s position as a provider of consumer reporting models that capture a wide range of positive payment behaviors.

Officials mentioned the addition of FactorTrust’s short-term and small dollar lending data to TransUnion’s suite of credit solutions gives lenders the information they need to offer responsible borrowers a broader range of credit products, supported by TransUnion’s robust data security, technology and customer service infrastructure.

The companies explained short-term and other small dollar loans are the largest category of consumer credit obligations not currently part of nationwide credit reporting agency databases. In many cases, historically underbanked consumers have selected short-term loans because an insufficient credit history left them with few options.

Officials went on to point out the breadth of data offered through TransUnion’s purchase of FactorTrust will provide finance companies and other lenders with a more comprehensive view of consumers’ financial obligations and payment performance, expanding consumer choice.

“Access to credit is the building block of a strong American middle-class economy,” said Jim Peck, TransUnion’s president and chief executive officer. “With the acquisition of FactorTrust, we will be able to capture a wider variety of positive data that can be a stepping stone to building consumers’ credit profiles, helping people access credit and, ultimately, improve their standard of living.”

TransUnion leadership also highlighted that adding small dollar loan data to its credit reporting framework also positions the company to help customers streamline compliance with the Consumer Financial Protection Bureau’s new small dollar lending rule. The rule is designed to protect consumers from securing short-term and balloon-payment loans without the ability to repay according to the terms of the agreement.

With visibility into consumers’ traditional and alternative credit obligations, TransUnion contends that it will be able to provide all of the data lenders need to comply.

Meanwhile, the acquisition continues what has been a robust couple of years for FactorTrust.

Back in November 2015, FactorTrust closed on a $42 million investment led by ABS Capital Partners, a late-stage growth company investor, and MissionOG, an early to growth stage investor. Since that financial resource injection, FactorTrust added a former top official at the CFPB to its board of directors and made multiple appearances on the Inc. 5000 list that recognizes growth.

And now, FactorTrust is a part of TransUnion.

“Joining TransUnion is a great match for FactorTrust,” FactorTrust CEO Greg Rable said. “We share a commitment to serving consumers and customers with the highest ethical and compliance standards.

“Our products complement TransUnion’s slate of online and batch solutions, and our combined data will expand options for consumers and lenders,” Rable went on to say.

Now with FactorTrust as a part of its portfolio, TransUnion reiterated how the acquisition reinforces the company’s long history of market innovations that promote financial inclusion.

A pioneer in trended data, TransUnion believes its CreditVision Link Scores are the only scores in the market that combine directional trended data and alternative credit data, such as payment history and small dollar lending. CreditVision Link Scores allow lenders to score more than 60 million more people versus traditional models, and are proven to accurately score more than 90 percent of applicants typically returned as no-hit or thin-file.

FactorTrust’s short-term and small dollar loan data extends this inclusiveness.

“FactorTrust is a strong addition to TransUnion’s business,” said Steve Chaouki, executive vice president of TransUnion’s financial services business unit. “FactorTrust’s approach to complete tradeline reporting aligns with TransUnion’s business model, and the inclusion of more alternative data in financial institutions’ credit and underwriting decisions will enable our customers to better segment risk, allowing them to serve a broader set of customers across the credit spectrum.”

RISC makes comprehensive repossession lot inspection reports available

PALM SPRINGS, Calif. - 

The leadership at Recovery Industry Services Co. (RISC) heard panel discussions and networking dialogue from industry participants during Used Car Week about the importance of compliance for third-party vendors. The situation reinforced why RISC rolled out its latest offering on Tuesday.

RISC’s Lot Inspection Service includes current reports on more than 1,500 recovery companies that collectively operate more than 3,000 recovery storage lots nationwide. Together, RISC estimated these lots store more than 95 percent of the repossessed vehicles recovered throughout the United States each year.

“Regardless of a lenders assignment strategy, annual inspections can be difficult to schedule, perform and maintain. In turn, the repossession company gets inundated with inspection requests from forwarders and lenders taking valuable time away from repossessions they need to perform,” RISC founder Stamatis Ferarolis said.

“This coupled with variations in reports drove the initiative for RISC to perform and maintain standard lot inspections across the country,” Ferarolis continued.

RISC’s Lot Inspection Service includes:

—Office inspection
—Vehicle security
—Key storage and security
—Personal property security
—IT security

Ferarolis emphasized that two industry problems are solved with this solution.

First, the finance company can be alleviated from managing this portion of the vendor vetting process mandated by the Consumer Financial Protection Bureau.

Second, the recovery agency is relieved of the burden of having multiple lenders inspect the same lot.

“RISC’s Lot Inspection Service saves time and resources for all parties,” Ferarolis said, “and provides the lender with a single source to quickly, and economically, gain access to current, comprehensive lot inspections on every lot in which a consumer’s vehicle may be stored.”

Inspectors must complete Inspector Education, RISC’s proprietary training program. This training was developed specifically for repossession lot inspectors to ensure an objective report of the property. Each report is accessible online so it is easy for lenders to gather the necessary documentation required by auditors or third party regulators such as the CFPB.

Between now and the end of the year, finance companies can take advantage of RISC’s free vendor compliance analysis. This vendor analysis will provide the lender with a snapshot of their vendor’s compliance status, which will include information on lot inspections as well as business license, insurance, background checks and other vital compliance data.

To sign up and get your free analysis, go to www.riscus.com

Trump’s signature nullifies CFPB arbitration rule

WASHINGTON, D.C. - 

President Trump followed through this week by signing H.J. Res. 111, which nullifies the Consumer Financial Protection Bureau's rule prohibiting the use of a pre-dispute arbitration agreement to prevent a consumer from filing or participating in certain class action suits.

The final step in the process of canceling the rule that received sizable support in the House but needed Vice President Pence’s action to break a tie in the Senate drew one more round of cheers of industry organizations and supporters.

“The CFPB’s rule was never about protecting consumers; rather, it was about protecting trial lawyers and their wallets,” Consumer Bankers Association president and chief executive officer Richard Hunt said.

“The bureau’s own study backs that up and proves trial lawyers would have been the real winners had this rule gone into effect,” Hunt continued.

“I would like to thank the administration and those in Congress who worked to ensure consumers have the necessary tools to receive relief without going through costly, drawn-out class action proceedings,” Hunt went on to say.

Also applauding the development was Jason Oxman, CEO of Electronic Transactions Association (ETA), which represents more than 500 companies worldwide involved in electronic transaction processing products and services.

“Arbitration is a simpler, flexible, faster and a more confidential process than turning to the courts to settle issues between consumers and financial companies,” Oxman said.

“As the CFPB noted in their own study, and as Treasury confirmed it its report, the majority of consumers who filed arbitration disputes did far better financially than those filed in class-action,” he continued.

Despite a last-ditch plea from CFPB director Richard Cordray, Trump used his power of the pen to nullify the rule the bureau finalized back in July.

“In signing this resolution, the president signed away consumers’ right to their day in court,” Cordray said in a message sent to SubPrime Auto Finance News. “This action tips the scales of justice in favor of Wall Street banks less than ten years after they caused the financial crisis.

“By blocking our arbitration rule, this action makes it nearly impossible for ordinary people to stand up for themselves against corporate giants like Wells Fargo and Equifax,” he continued.

“Now more than ever, it is critical that the Consumer Bureau remains a strong check on financial companies. Consumers who believe they have been wronged should contact us with their complaints,” Cordray went on to say.

One of the architects of the CFPB — Sen. Elizabeth Warren of Massachusetts — vehemently defended the rule and the bureau’s efforts when the Senate debated the Congressional Review Act resolution that eventually halted this regulation.

“Make no mistake: Anyone who votes to reverse this rule is saying loud and clear that they side with banks over their constituents — because bank lobbyists are the only people asking Congress to reverse the rule. Every other organization — all the ones that represent actual human beings, not banks — want the rule to be saved,” Warren said during a speech on the chamber floor.

“And even if there are instances in which arbitration is a better option for consumers than a class action lawsuit, the CFPB rule doesn't prevent consumers from choosing arbitration.  The rule simply says that consumers should also have the freedom to go to court if they prefer it,” Warren added later.

“I’ll tell you one thing: when it comes to what’s right for consumers, I listen to servicemembers, veterans, seniors, consumers, and small businesses — not bank lobbyists. When a bunch of bank lobbyists tell you they know what's best for consumers, hang onto your wallets,” she went on to say.

CFPB’s 7 principles for consumer-authorized financial data sharing and aggregation

WASHINGTON, D.C. - 

The Consumer Financial Protection Bureau recently offered its assessment regarding a potential information path auto finance company collectors and recovery professionals might use during the skip-tracing process to mitigate delinquencies and potential charge-offs.

The CFPB outlined seven principles for when consumers authorize third-party companies to access their financial data to provide certain financial products and services. Bureau officials insisted these principles are intended to help foster the development of innovative financial products and services, increase competition in financial markets and empower consumers to take greater control of their financial lives.

The principles discussed by the bureau included:

—Access
—Data scope and usability
—Control and informed consent
—Authorizing payments
—Security
—Access transparency
—Accuracy
—Ability to dispute and resolve unauthorized access
—Efficient and effective accountability mechanisms

The CFPB acknowledged many companies, including “fintech” firms, banks and other financial institutions, get authorization from consumers to access their account data that reside in separate organizations to provide a variety of products and services. These include fraud screening and identity verification, personal financial management, and bill payment.

Bureau officials concede such products and services could help consumers make smarter spending, savings and investment decisions and live their lives more efficiently and effectively. The bureau said it has been studying consumer-authorized data access and issued a Request for Information in 2016 to gather feedback from wide range of stakeholders.

The CFPB noted that it received feedback from large and small banks and credit unions, their trade associations, aggregators, “fintech” firms, consumer advocates and individual consumers.

“The Consumer Bureau recognizes that while consumer-authorized data sharing promises great benefits to consumers, there are many consumer protection challenges to be considered as these technologies continue to develop,” officials said. “The Consumer Bureau advocates strongly for consumer control of the consumer’s data and transparency.

“At the same time, the Consumer Bureau emphasizes the importance of data security and privacy. Based on the Consumer Bureau’s 2016 Request for Information, as well as other stakeholder outreach, the Consumer Bureau understands that some key industry stakeholders are working on improvements to consumer-authorized data access. These improvements relate to the agreements, systems and standards involved in consumer-authorized data access,” they continued.

The CFPB insisted that it will continue to closely monitor developments in this market and will also continue to assess how these principles may best be realized.

The bureau pointed out these principles do not establish binding requirements or obligations relevant to the agency’s exercise of its rulemaking, supervisory or enforcement authority. In addition, officials added that they are not intended to alter, interpret or otherwise provide guidance on existing statutes and regulations that apply in this market.

Lastly, although the bureau emphasized that it stands ready to facilitate constructive efforts or to take other appropriate action to protect consumers, the principles are not intended as a statement of the bureau’s future enforcement or supervisory priorities.

“These principles express our vision for realizing an innovative market that gives consumers protection and value,” CFPB director Richard Cordray said.

The complete report is available here.

UPDATED: Pence’s tiebreaking Senate vote halts CFPB’s arbitration rule

ORLANDO, Fla., and WASHINGTON, D.C. - 

While the agency director expressed his disappointment, dealerships and auto finance companies can breathe a big sigh of relief; Congress has stopped the Consumer Financial Protection Bureau’s arbitration rule.

With Vice President Pence casting the deciding vote late on Tuesday night, a Congressional Review Act resolution gained approval in the evenly divided U.S. Senate, overturning the CFPB arbitration rule prohibiting the use of class action waivers in arbitration clauses.

The U.S. House of Representatives voted to abolish the CFPB’s rule in July. The Congressional Review Act states that once the resolution is passed by both chambers of Congress and signed by the president, the rule under debate is repealed and substantially similar rules can only be reissued with specific legislative authorization.

Industry cheers came from the industry not only near Capitol Hill, but also by those leaders gathered for the Fall BHPH Conference hosted by the National Alliance of Buy-Here, Pay-Here Dealers — especially from the National Independent Automobile Dealers Association.

NIADA chief executive officer Steve Jordan emphasized how the action put the interests of consumers ahead of class action lawyers

”We are pleased the Senate recognized the fallacy behind the CFPB’s ill-conceived arbitration rule and took action to defend the interests of the very consumers the bureau is supposed to protect,” Jordan said in a statement shared first with SubPrime Auto Finance News. “This rule was nothing more than a boon to class action lawyers levied on the backs of America’s hard-working consumers.”

“Arbitration has proven to be a faster, less expensive and more effective means of resolving consumer disputes than class-action lawsuits,” Jordan continued. “And consumers who receive an award in arbitration almost always receive more than they would in a class-action lawsuit, a point proven by the CFPB's own research.”

Meanwhile, back inside the Beltway, CFPB director Richard Corday called the Senate development ​"a giant setback for every consumer in this country. Wall Street won and ordinary people lost." 

In a message sent to SubPrime Auto Finance News, Cordray continued by saying, "This vote means the courtroom doors will remain closed for groups of people seeking justice and relief when they are wronged by a company. It preserves a two-tiered justice system where banks can have their day in court but deny their customers the same right. It robs consumers of their most effective legal tool against corporate wrongdoing.

"As a result, companies like Wells Fargo and Equifax remain free to break the law without fear of legal blowback from their customers. I urge President Trump to stand with consumers and veto this resolution," Cordray went on to say.

NIADA and its membership actively advocated against the rule — including at its recent National Policy Conference — encouraging the Congress to take the action voted on yesterday.

The association explained that the rule, which took effect Sept. 18, was meant to steer more consumer disputes into class-action litigation rather than arbitration, which benefits class-action lawyers at the expense of the consumers, especially those who are the most-credit challenged.

According to the study on which the CFPB said it based the rule, 87 percent class action cases provided no benefit to the consumers involved, and in the ones that did, the average payout was a mere $32. The trial attorneys, meanwhile, recouped millions of dollars in fees. Financial relief for consumers in arbitration cases averaged more than $5,000.

And arbitration is up to 12 times faster and is less expensive than litigation, according to the research.

The Senate resolution, which is identical to a resolution that passed the House of Representatives in July, now heads to the White House where President Trump has indicated he will sign it.

NIADA senior vice president of legal and government affairs Shaun Petersen, who along with Jordan are among the industry leaders set to speak during Used Car Week, praised Senate leadership for Tuesday night’s action.

“We applaud Senator (Mike) Crapo and Senator (Mitch) McConnell for their efforts to shepherd this resolution through the Senate chamber,” Petersen said. “Their leadership in getting this resolution passed ensures consumers will continue to reap the benefits of arbitration while preventing the inevitable increase in credit costs that would have come.”

And the organizations that primarily are associated with finance providers applaud the Senate actions, too.

“We’re pleased to see the Senate has chosen to side with consumers instead of trial attorneys when it comes to arbitration,” American Financial Services Association president and chief executive officer Chris Stinebert said in a statement sent to SubPrime Auto Finance News.

“Class action lawsuits take years to be heard, clog the courts, and result in comparatively small payouts for consumers,” Stinebert continued. “By contrast, disputes settled by arbitration result in quick decisions and pay-outs for consumers that average higher than class action settlements.”

The Consumer Bankers Association shared a similar reaction.

“The Senate acted to protect consumers with this vote,” CBA president and CEO Richard Hunt said. “Overturning the CFPB’s arbitration rule ensures consumers retain the tools they need to receive relief without going through long, drawn-out, costly court proceedings — where no one benefits except trial lawyers. The CFPB’s own study even verifies arbitration is more effective when it comes to helping consumers.

“This rule was ill-conceived, based on an incomplete study and did not fulfill the Bureau’s goal of protecting consumers,” Hunt continued.

“We thank (Senate Banking Committee chairman Mike Crapo) for his work in the U.S. Senate as well as (House Financial Services chairman Jeb Hensarling) and Congressman (Keith) Rothfus for their efforts in the House of Representatives on this important consumer matter,” Hunt went on to say.

Like NIADA, CBA officials pointed out the bureau’s own study shows the average consumer receives $5,400 in cash relief when using arbitration and just $32 through a class action suit. The trial lawyers managing these cases, however, have received approximately $424 million, an average of more than $1 million per case.

Before the vote tally arrived late on Tuesday, five national organizations including AFSA and CBA along with a coalition of associations located throughout Texas filed a legal challenge on Sept. 29 to the CFPB’s arbitration rule.

The vote also came just ahead of the U.S. Treasury Department releasing a report on Monday that examined the CFPB’s arbitration rule. The Treasury report delves into the analysis CFPB used to prohibit mandatory arbitration clauses.

Treasury officials explained their report outlined important limitations to the data behind CFPB’s rule and explained that CFPB did not appropriately consider whether prohibiting arbitration clauses would advance consumer protection or serve the public interest.

The Treasury report also found that:

—The CFPB’s rule will impose extraordinary costs—generating more than 3,000 additional class action lawsuits over the next five years, imposing more than $500 million in additional legal defense fees, and transferring $330 million to plaintiffs’ lawyers.

—The CFPB’s data show that the vast majority of class action lawsuits deliver no relief to the class — and that consumers very rarely claim relief available to them.

—The CFPB did not show that its rule will achieve a necessary increase compliance with the federal consumer financial laws, despite the rule’s high costs

“The CFPB failed to consider less onerous alternatives to its ban on mandatory arbitration clauses across market sectors,” Treasury officials added about their report that’s available here.

NAF Association launches Phase 2 of Collector and Underwriter Compliance Certificate Programs

HANOVER, Md. - 

Along with highlighting seven major findings and availability of the 2017 Non-Prime Automotive Financing Survey, the National Automotive Finance Association on Friday announced the next stage of its compliance training offerings.

Building off of the momentum generated by wide-spread leveraging of its Compliance Certification Program, the NAF Association launched what it’s calling Phase 2 for the Collector and Underwriter Compliance Certificate Programs. The NAF Association believes Phase 2 of these programs provides the necessary second educational step for collectors and underwriters to stay compliant in a difficult regulatory environment.

“We have found that many NAF Association member finance companies rely on the Compliance Certificate Program to provide necessary front line education for their staff,” said Jack Tracey, executive director of the National Automotive Finance Association.

"Phase 2 of the program equips company management with the opportunity to assess how collectors and underwriters have retained the compliance knowledge acquired in Phase I as well as providing education on current compliance issues,” Tracey continued.

The NAF Association — also one of the industry partners in the orchestration of Used Car Week that begins on Nov. 13 in Palm Springs, Calif. — highlighted both the collector and underwriting courses include coverage of the Equal Credit Opportunity Act (ECOA), the FTC Act and Unfair, Deceptive or Abusive Acts or Practices (UDAAP) and updates on other recent regulatory developments.

To learn more about the Collector and Underwriter Compliance Certificate Programs, go to www.nafassociation.com.

The growth in education offerings arrives as the non-prime automotive financing sector experienced the sixth consecutive year of market growth in 2016, according to the 2017 Non-Prime Automotive Financing Survey co-sponsored by the National Automotive Finance Association and American Financial Services Association.

Through the combined efforts of both associations, 54 companies participated in this year’s survey. This is the 21st year of the survey, started by the NAF Association, and the third year both trade associations have teamed up as co-sponsors. This effort is thought to be the most comprehensive survey of the non-prime auto financing sector.

Over the past few years, significant improvements to the survey have been made. For example, an easier data gathering approach through a web survey and a new reporting format give the report broader and more comprehensive coverage and provides information that cannot be found anywhere else.  Contributing to the report are TransUnion, FactorTrust and Black Book, which are providing additional market insight by supplying data and analysis on nonprime auto financing. 

Key findings from the survey include:

• Sixth consecutive year of market growth

• Competition increases, pace slows

• Banks led market share development with positive gain in 2016

• Several indicators showed a trend towards improved quality including higher credit scores for new and used, decreases in payment-to-income, decreases in average annual net charge-off and annualized repossession rate. 

• Delinquency increases

• Operating expenses increase

• Profit reduction

Benchmark Consulting International administered the survey and provided the report analysis. Participating finance sources responded to survey questions covering topics such as originations, servicing and loss management. The results are illustrated in 129 graphs.

The survey report is distributed at no cost to finance company participants. Others may purchase a copy of the report for $500. To purchase, contact Diane Merino at the National Automotive Finance Association at (717) 676-1533 or Diane.merino@nafassociation.com.  

More than 10K professionals have completed RISC’s compliance certification program

TAMPA, Fla. - 

Recovery Industry Services Co. (RISC) recently reached a new threshold of industry professionals completing its Certified Asset Recovery Specialist (CARS) and CARS-FC certification program.

Since it was launched in 2002, RISC tabulated that it has certified more than 10,000 individuals through its recovery agent training offering that is geared to meet the demands an ever-increasing focus on compliance.

RISC insisted that finance companies, forwarders and repossession professionals have sought standardized training programs and reporting to internal and third party auditors as well as the Consumer Financial Protection Bureau. The industry’s focus on compliance has created a surge in the number of companies that require CARS certification for all employees.

“Since June, more than 3,000 individuals have become CARS certified, with another 2,800 professionals currently preparing for the exam,” RISC founder Stamatis Ferarolis said.

“By the end of Q3, the nation’s five largest forwarding companies had certified all of their employees with CARS-FC, and more than 600 repossession companies have begun the process of having all their employees, not just their drivers, CARS trained,” Ferarolis continued.

“We are proud to be the only compliance certification program accepted nationwide by all lenders and forwarders,” he went on to say. “From the CARS certification program to vendor vetting to lot inspections, RISC has developed a comprehensive solution that ensures compliance by enforcing standards and teaching individuals how recover vehicles safely and handle sensitive data.”

This spring, at finance companies’ request, RISC created the Certified Asset Recovery Specialist-Forwarding Company (CARS-FC) training program as an extension of the industry standard CARS program. CARS-FC consists of a comprehensive set of applicable laws and regulations specific to forwarding company personnel to provide standardized training in all areas of compliance.

RISC recognized the following forwarding companies that committed and certified their personnel on the standard RISC CARS-FC program. RISC praised the commitment to the effort of standardized compliance of these firms, including:

• Primeritus Financial Services
• ALS/Resolvion
• American Recovery Service
• Del Mar Recovery Solutions
• MVTRAC         
• Plate Locate
• Synergetic Communication

For questions about the RISC CARS or RISC CARS-FC program, or to sign up your company, contact RISC president and chief operating officer Holly Balogh at holly@riscus.com.

CFPB survey shows more than 40 percent of households struggle to cover regular bills

WASHINGTON, D.C. - 

More evidence arrived this week indicating how some contract holders in your portfolio might be struggling to maintain their finances. This time, the research came from the Consumer Financial Protection Bureau.

The CFPB’s latest survey showed that more than 40 percent of U.S. adults struggle to make ends meet.

The National Financial Well-Being Survey was conducted by the CFPB in 2016. Using the 10 question scale developed by the CFPB, the bureau insisted its survey provides the first-ever national data directly measuring the financial well-being of U.S. consumers. Upon answering the 10 questions provided, consumers were given a score from 0 to 100.

In the survey, the average consumer score was 54.

Bureau officials explained the consumer sample used to conduct the survey was designed to be representative of U.S. households.

In addition to responding to the questions which are included in the financial well-being scale, people participating in the survey answered questions about a host of other measures. These measures include individual, household, and family characteristics; income and employment; savings and safety nets; financial experiences; and money behaviors, skills and attitudes.

Of the nationally representative sample of consumers surveyed, the CFPB reported 43 percent of consumers report struggling to pay bills.

Additionally, more than one third — 34 percent — of all consumers surveyed reported experiencing material hardships in the past year. For the survey, examples of material hardships include running out of food, not being able to afford a place to live, or lacking the money to seek medical treatment. 

“These survey results are beginning to measure and examine the financial well-being of consumers,” CFPB director Richard Cordray said. “And the new tool we are releasing allows consumers to measure their own financial well-being and helps them take better control of their financial futures.”

The complete survey results can be viewed here.

From the editor: The CFPB and a fire alarm

WASHINGTON, D.C. - 

There didn’t appear to be any obvious connection between a representative from the Consumer Financial Protection Bureau finishing his presentation during the National Policy Conference hosted by the National Independent Automobile Dealers Association and the hotel fire alarm activating as a question-and-answer session started.

While not trying to perpetuate some wild conspiracy theory, perhaps the underlying simmering of dealers in the room triggered the fire alarm on Tuesday morning.

The CFPB’s Damion English took the stage in front of what could have been considered a hostile audience — nearly 200 independent dealers and other automotive industry service providers who might have had varying assessments of how the bureau is impacting and possibly curtailing their businesses. English serves as the bureau’s auto finance program director and came to the agency after prior positions with Regional Acceptance, Capital One Auto Finance, American Honda Finance and as finance manager for the Victory Automotive Group.

English insisted the bureau is trying to gather all the information it can about how vehicle financing and deliveries happen, stressing that the CFPB wants input from dealers “because you know your business better than we do.” 

Apparently making a favorable impression, an abbreviated Q&A segment started with one dealer telling the gathering that English was “the coolest person I’ve seen from the CFPB.” English welcomed the kind words by replying, “Thank you. I appreciate that. I’m going to tell my mom!”

Then moments later, the fire alarm began and the staff at the Dupont Circle Hotel asked us all to depart the facility. Outside, as the Washington, D.C. Fire Department arrived to confirm it was a false alarm, several dealers approached English and his two other CFPB colleagues for informal conversations. They all appeared civil but certainly intense.

Dealers are concerned about the CFPB’s new rule regarding arbitration. NIADA came out with multiple efforts to keep it from going into effect as it is on track to do so early next year.

NIADA pointed out that the CFPB’s study on arbitration found consumers receive on average more than $5,000 in arbitration hearings compared to roughly $32 in class-action litigation — if they receive anything at all.

“We are disappointed that the bureau has decided to adopt this ill-conceived rule,” NIADA chief executive officer Steve Jordan said when the bureau finalized the rule back in July. “(This) action shows the CFPB has decided to put the interests of class-action lawyers above those of the very consumers the bureau is mandated to protect.

“Arbitration has proven to be a faster, less expensive and more effective means of resolving consumer disputes than class-action lawsuits. And consumers who receive an award in arbitration almost always receive more than they would in a class-action lawsuit, a point proven by the CFPB’s own research,” Jordan continued.

“This rule will force small businesses to bear additional costs in defending class-action litigation, particularly meritless suits,” Jordan went on to say. “Those costs will ultimately be borne by consumers, and in the case of those who are credit-challenged, it could prove to be too much.”

The thought that dealers could face class-action lawsuits instead of settling matters via arbitration is leaving NIADA members uneasy to say the least. Later on Tuesday when the Small Business Administration made its conference presentation, multiple attendees fervently implored that the government entity designed to aid businesses such as independent dealers to intervene.

“Somebody in this town has got to help us,” one attendee said at the venue located less than a test-drive distance away from the White House and Capitol Hill.

The House approved resolution on July 25 leveraging authority provided under the Congressional Review Act (CRA) to stop the CFPB’s final rule prohibiting the use of class action waivers in arbitration clauses. Despite all House Democrats and one Republican voting against H.J. Res 111, the resolution cleared the chamber by a vote of 231-190.

Ever since, it’s been the Senate’s turn, but various online reports have indicated the margin for a similar resolution getting the necessary 51 votes for approval is slim — if it exists at all.

By now, dealers who went to our nation’s capital this week likely have returned to their stores to secure inventory, finalize deliveries and complete a long list of other chores necessary to remain a profitable enterprise. I applaud those dealers who participated in NIADA’s activities. Any fruits from the efforts might take some time to ripen, but at least they were planted.

Nick Zulovich is senior editor of SubPrime Auto Finance News and can be reached at nzulovich@cherokeemediagroup.com.