WOODSTOCK INSTITUTE | JUNE 2014 Webinar June 18, 2014 Make your voice heard: Commenting on CFPB policies Courtney Eccles | Policy Director Katie Buitrago | Senior Policy and Communications Associate Woodstock Institute | Chicago, Illinois P | F WoodstockInstitute

What is the Consumer Financial Protection Bureau? Created by the Dodd-Frank Act in 2010 Opened its doors in July 2011 Mission: Make markets for consumer financial products and services work for Americans — whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products. WOODSTOCK INSTITUTE | JUNE 2014

What can the CFPB do? Write rules, supervise companies, and enforce federal consumer financial protection laws Restrict unfair, deceptive, or abusive acts or practices Take consumer complaints Promote financial education Research consumer behavior Monitor financial markets for new risks to consumers Enforce laws that outlaw discrimination and other unfair treatment in consumer finance WOODSTOCK INSTITUTE | JUNE 2014 Source: consumerfinance.gov

What can the CFPB do? Write rules, supervise companies, and enforce federal consumer financial protection laws Restrict unfair, deceptive, or abusive acts or practices Take consumer complaints Promote financial education Research consumer behavior Monitor financial markets for new risks to consumers Enforce laws that outlaw discrimination and other unfair treatment in consumer finance WOODSTOCK INSTITUTE | JUNE 2014 Source: consumerfinance.gov

How the CFPB makes policy Writes rules and regulations regarding implementation of consumer protection laws Puts them out for comment in Federal Register Usually open for days and-comment/ and-comment/ WOODSTOCK INSTITUTE | JUNE 2014

Writing comment letters Respond to CFPB’s questions Rely on the strengths of your organization’s perspective –Data analysis? Policy/legal expertise? Client stories? Other options –Use template from Woodstock or another group— personalize it! –Sign on to another letter Let Woodstock know when you comment/file complaints! WOODSTOCK INSTITUTE | JUNE 2014

Issue: Prepaid cards What are prepaid cards? –Network-branded cards that allow users to load a specified amount of money on them –Often used by underbanked people as an alternative to a checking account –The industry is largely unregulated  broad variety of cards on the market WOODSTOCK INSTITUTE | JUNE 2014

Issue: Prepaid cards Consumer protection issues –Require clear and comprehensive disclosures of terms and conditions –Require fees to be reasonable –Prohibit credit on prepaid cards When is the proposed rule coming out? –June 2014 WOODSTOCK INSTITUTE | JUNE 2014

Issue: Payday loans What are payday loans? –Traditional payday loans are short-term (2-4 week) loans with balloon payments and high interest rates (in IL, up to 400% APR) –Regulations vary by state, IL reforms created multiple loan products: Traditional Payday Loan Payday Installment Loan Small Consumer Loan WOODSTOCK INSTITUTE | JUNE 2014

Issue: Payday loans CFPB has authority to regulate this industry (cannot institute a rate cap) Consumer protection issues –Rules need to be comprehensive (lenders will look for loopholes) –Clear underwriting standards that consider a borrower’s ability to repay the loan –Limit the number of loans and total period of indebtedness –Prevent balloon payments –Prevent lenders from taking payments before essential bills are paid Proposed rule expected September 2014 WOODSTOCK INSTITUTE | JUNE 2014

Issue: Overdraft An overdraft takes place when a consumer does not have sufficient funds in their account, but the financial institution allows the transaction to go through –Often fees associated with process –Banks offer overdraft protection/coverage – lesser fee to transfer money from a savings account or use a line of credit WOODSTOCK INSTITUTE | JUNE 2014

Issue: Overdraft Federal law requires customers to “opt-in” for overdraft with ATM and debit transactions Process for checks and auto-bill pay differs by institution Despite changes to opt-in vs. opt-out, financial institutions generate substantial revenue from overdraft and NSF fees WOODSTOCK INSTITUTE | JUNE 2014

Issue: Overdraft Consumer protection issues –Confusion around opt-in vs. opt-out, various types of overdraft protection, and different treatment for different transaction types –Limit fees to amount representative of the actual cost to an institution and proportional to the size of overdraft –Limit the number of overdraft charges to one per month or max of six per 12 months –Prohibit institutions from reordering transactions to maximize fees Proposed rule expected February 2015 WOODSTOCK INSTITUTE | JUNE 2014

Webinar June 18, 2014 Make your voice heard: Commenting on CFPB policies Courtney Eccles | Policy Director Katie Buitrago | Senior Policy and Communications Associate Woodstock Institute | Chicago, Illinois P | F WoodstockInstitute