Workers are paying to get part of their paychecks early. It’s ‘payday lending on steroids,’ one expert says

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Greg Iacurci |CNBC
Total fees translate to an annual percentage rate of more than 330% for the average earned wage access user — a rate comparable to payday lenders, according to the California report. It analyzed data from seven anonymous companies across business models and fee structures. “It’s another version of payday loans,” Monica Burks, policy counsel at the Center for Responsible Lending, a consumer advocacy group, said of earned wage access. “There’s really no meaningful difference.”

Buy Now Pay Later giant Klarna to introduce $8 monthly fee to lock in 'loyal' users ahead of US IPO - but watchdogs demand new service is regulated as it is 'essentially a credit card'

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Neirin Gray Desai | Daily Mail
Nadine Chabrier, senior policy counsel at the Center for Responsible Lending, said: 'The monthly subscription fee attached to the Klarna Plus product is clearly a finance charge under the Truth in Lending Act, so we expect Klarna and other lenders offering similar products will provide consumers with the disclosures and consumer protections required by that law.

Biden SAVE Plan May Increase Likelihood of Homeownership for Borrowers

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Arrman Kyaw | Diverse Education
"There is limited research on how this plan could impact other dimensions of financial security for borrowers. For example, how could this plan affect borrowers' ability to obtain wealth-building assets, like mortgages or business loans?" said report co-author Christelle Bamona, senior research at CRL. "Research has shown previously that student loan debt has prevented several families from acquiring assets like homes. And owning a home has traditionally been considered as something crucial for attaining financial security and also building generational wealth."

CFPB's overdraft proposal exempts the small banks that need it most

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Kate Berry | American Banker
Overdraft fees accounted for $10 billion in revenue in 2004, but skyrocketed to an estimated $25 billion by 2009, according to research by the Center for Responsible Lending. By 2019, under pressure from the CFPB, overdraft fee revenue had dropped to an estimated $12.6 billion.

Senate fails to override veto of small-business data collection rule

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Kate Berry | American Banker
"This issue has had a lot of strong support from civil rights and small-business advocates and there's been a fair amount of advocacy around this," said David Ferreira, senior government relations manager at the Center for Responsible Lending. He cited widespread support for the rule among nearly 100 civil rights and consumer groups, including the Consumer Federation of America, Center for Responsible Lending, Farm Aid, National Urban League, NAACP, the U.S. Hispanic Chamber of Commerce and the Union of Concerned Scientists.

California looks to regulate 'earned wage access' apps

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Richard Allyn | ABC News
"People are paying quite a lot to use these apps," said Andrew Kushner, senior policy counsel for the Center for Responsible Lending, a consumer protection advocacy group that supports California's current move to regulate this growing industry. "It doesn't necessarily look like a lot at first glance." Currently, this industry operates in a grey area legally, with little federal oversight.

Think your credit card rate is high? Some in Brazil pay 455 percent.

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Elizabeth Dwoskin and Gabriela Sa Pessoa | The Washington Post
In the United States, charging an APR of 455 percent on a consumer credit card is virtually unheard of — and in some cases, would be illegal, said David Silberman, a senior fellow at the nonprofit Center for Responsible Lending. Twenty states plus D.C. set limits on the interest rates that payday lenders may charge; the highest of these is 36 percent, permitted by several states, according to the center. Lenders nationwide are barred from charging more than 36 percent to active-duty military service members and some of their family members. Federally chartered credit unions may not charge more

States must protect consumers from high-cost fintech cash advances

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American Banker
States are starting to grapple with purportedly new categories of small-dollar loans: earned wage advances and other types of fintech cash advances. Their approach will determine if workers and consumers will be protected from spiraling fees that drain low wages or if a new kind of payday loan will be allowed to operate outside of laws against high-cost lending.