Bankers Mislead, Cajole as Overdraft Fee Opt-In Deadline Nears

As the August 15th deadline nears for bank and credit union customers to opt in to high-cost overdraft programs, a new CRL analysis finds these firms market most aggressively and often misleadingly to their most vulnerable customers. Banks target these customers because they likely live on the edge financially and therefore are most likely to repeatedly overdraw accounts. To induce these customers to accept overdraft coverage, many marketing campaigns use scare tactics or incomplete information. For example, they fail to emphasize customers can have debit card transactions declined at no cost

New FTC Rule Curbs Debt Relief Abuses, Helps Families

American families won a major consumer victory today when the Federal Trade Commission issued a new rule barring debt relief firms from collecting up-front fees from customers before any service is provided. We commend the FTC commissioners for exercising their authority to lay down common-sense rules in the debt settlement arena, where unfair and deceptive practices are rampant. The new rule applies to any debt relief firm that either receives a call from or makes a call to a customer. It prohibits these firms from collecting fees up front before they have provided any promised service or

Historic Financial Reform Becomes Law

President Obama's signing of the financial reform bill today marks a watershed in efforts to restore common sense to lending and financial markets. Our nation now has a roadmap for ending the unfair and deceptive practices that have cost millions of families their financial security and nearly capsized the economy. To members of Congress who worked so diligently to craft this law—and to withstand big-money lobbying against reform—we offer our deepest gratitude. Their support for the Consumer Financial Protection Bureau and strong lending rules will help all Americans who simply want fair

American Families Win with Financial Reform

The current economic meltdown has been a nightmare for American families, and a recurrence would be a disaster for our nation. The Senate's vote today puts in place key reforms that help create a brighter future, one in which our financial system flourishes: People will get loans they can afford to repay, and principles of fairness and value in financial products will trump easy money and self-enrichment. The Senate's action means President Obama can now sign the legislation into law. The new regulatory framework will go far to reduce risky practices and restore common-sense in financial

Just Say No To Overdraft Fees: Opt-out Deadline for New Customers Begins July 1, 2010

Washington, D.C.— Starting tomorrow, banks must obtain permission from new customers before enrolling them in costly overdraft coverage for debit-card transactions. The Federal Reserve Board's new rule improves the status quo but still falls far short of what's needed: Banks should not be allowed to impose exorbitant charges that bear no reasonable connection to the overdraft amount or a lender's cost for making the loan. Banks also continue to pile on overdraft charges, including by manipulating transactions to maximize the number of fees they hit customers with each day. In addition

New Consumer Agency Would Protect Families, Small Businesses, Taxpayers and the Economy

Statement from Michael D. Calhoun President, Center for Responsible Lending Washington, D.C.— "Today, House and Senate conferees reached a historic agreement to create a consumer protection agency that is truly independent from the lenders it will oversee: It will have a single director nominated by the president and confirmed by the Senate; funding that is largely insulated from meddling by industry lobbyists; and the tools and scope needed to ensure most lenders operate under one set of common-sense rules. That's a win for families, small businesses, taxpayers and the economy. Lawmakers

Demographics of a Man-Made Disaster

The ongoing foreclosure crisis has slashed hundreds of billions of dollars in wealth from communities of color, a new CRL research report shows, as an estimated 17% of Latino homeowners and 11% of African-American homeowners have already lost their home to foreclosure or are now at imminent risk. The wealth drain is the result of direct losses from foreclosures and also the decline in neighboring property values each foreclosure brings. The report—"Foreclosures by Race and Ethnicity: The Demographics of a Crisis,"

New Rule on Credit Card Penalty Fees Not Tough Enough

Statement of Center For Responsible Lending President Michael D.Calhoun regarding Federal Reserve Board Rules on Credit Card Penalty Fees The Federal Reserve Board today issued rules that significantly limit the penalty fees that credit card companies can charge, but didn't go far enough to curtail widespread abuse in this area. Our recent report shows that card issuers are charging late fees that are unrelated to issuer losses but instead are just another way to raise costs for credit card customers. Under the new rules—the third and final set implementing the Credit CARD Act of 2009—card

Credit Card Late Fees Don’t Reflect a Customer’s Risk of Defaulting

Contrary to what they say, credit card companies don't price late fees for risk, a new report by the Center for Responsible Lending shows. Instead, the study finds issuers that engage in predatory pricing in general are more likely to charge the highest late fees, ones that bear little relationship to the issuers' potential loss. "The largest credit card issuers claim they use these fees as a deterrent to late payments or to cover their losses," says CRL senior researcher Joshua M. Frank, author of the report. "But the evidence shows late fees are just another way to charge customers more."

Foreclosure Avoidance Bill Clears California Senate

Legislation that would help prevent avoidable foreclosures and deter irresponsible lender and servicer behavior passed out of the California Senate today, 21-12. "Simple fairness dictates that no one should lose their home while they are in the middle of trying to save it," said Paul Leonard, director of the California office of the Center for Responsible Lending. SB 1275, authored by Sen. Mark Leno (D-San Francisco) and Senate President Pro Tem Darrell Steinberg (D-Sacramento) would prevent servicers from foreclosing on homeowners who have requested modifications until a decision has been