CFPB’s Office of Research finds new trends in payment habits by consumers who carry a credit card balance from month-to-month.

In most cases, consumers use credit cards to borrow and sustain a positive balance for nearly a year, sometimes longer, according to a new Consumer Financial Protection Bureau Data Point: Credit Card Revolvers .

The CFPB’s Office of Research, using data from the Credit Card Database between April 2008 and April 2016, “examines how often balances are revolved on an account, or borrowed, how long balances are revolved, and how regularly they are paid down,” according to the report.

About two-thirds of actively used credit card accounts carry a revolving balance, it states. In cases where consumers with revolving credit have a positive balance on their account, a “substantial proportion” have a balance for two years or more.

“Accounts also show variation in their repayment patterns. Some revolvers appear to take on debt and then make regular payments on this debt. Others show signs of revolving a more-or-less constant amount for long periods with little pay down until a lump-sum payment of the balance in full,” the CFPB reports.

Researchers found varying trends in credit card repayment by geographic region and credit scores.

While credit cards are a safe and convenient means of paying for goods and services if consumers budget properly, this research shows increasing borrowing trends using credit cards and resulting revolving debt on their accounts.

WalletHub, in its Credit Card Debt Study: Trends & Insights  released in June, found consumers’ outstanding credit card debt is at the third highest level since the end of 2008—$985 billion in the first quarter 2019—compared to $952 billion in 2018.

Consumers repaid $38.2 billion in credit card debt in the first quarter this year, according to the report.

– Brian Boswell

SallieMae released its twelfth annual report, “How America Pays For College,” yesterday (the Study). This year’s study found that families are feeling more confident about financing a higher education, but also that many are failing to file the FAFSA, the Free Application for Federal Student Aid. The FAFSA is required to get access to federal grants, work-study, and student loans.

Money On The Table

Despite the high cost of a higher education, only 77% of undergraduates completed the FAFSA. It’s unusual because there is no cost to apply and it does not take much time. Of the 23% of students that did not apply they stated as their reason that they:

• Did not feel they would qualify (40%)
• Missed the deadline (15%)
• Did not know about it (14%)
• Didn’t have the information necessary to complete it (10%)
• Felt it was too complicated (9%)

Yet of those that applied three-in-four received some form of financial aid. In fact, many high net worth individuals still qualify for some form of financial aid, even if it reduced as income rises, so every family should be filing. That said, while many Americans failed to file the FAFSA, the percentage of applicants has increased over 2018, when only 75% filed the form.

College Is Expensive, But Americans Find Savings

For most Americans who attend college it will be the second-largest expense in their lifetime after their home. Today, the median price of a home in the US is $226,800, according to Zillow. And while the “sticker price” of tuition and fees at a private four-year school was $35,830 in 2018-19 according to the College Board, families paid just $26,226 on average according to SallieMae’s Study due to a combination of grants, scholarships, and tax benefits, among other less common reductions.

Americans Are Feeling More Confident

While the cost of a higher education continues to rise, Americans are starting to feel more confident in their ability to finance that education. According to the SallieMae Study, 44% of families had a plan to pay for all four years of higher education relative to 40% in the prior year.

Americans are tapping into a variety of resources to meet shortfalls in financing higher education costs, with the majority using scholarships and grants in their payment plan.

POST WRITTEN BY

Anabel Perez

CEO and Co-Founder of NovoPayment, a FinTech company that enables financial institutions in the transformation of their digital services.

According to KPMG, fintech has established itself as one of the fastest-growing sectors over the past decade, with global funding reaching $111.8 billion in 2018, up 120% over the prior year. And, as the sector grows, people are naturally finding fintech startups touching everyday life in more ways than realized.

Like hidden figures inside a picture, many of today’s fintech companies are tucked away and out of plain of sight, yet material parts of the larger portrait of present-day financial services. These organizations are helping transform once complicated and time-consuming routines to improve customer experiences, creating unprecedented network effects.

Meet The Fintech Enabler

Initially, fintech startups were largely seen as competition for traditional financial institutions and threats to their market share. However, in practice today, fintech companies are also a core force driving innovation deep within the financial industry, not just as head-on competitors, but as collaborators that enable others.

As it happens, collaboration between fintech providers, traditional financial players and other fintech companies is now the norm, a key catalyst of the financial and payment industries’ changing landscapes. Rather than neatly grouped, distinctive camps working against one another, what has developed is a far richer and more nuanced fabric.

More Interesting Than Many Realize

This development means that individuals and organizations are interacting with a lot more fintech providers on a day-to-day basis than they are probably aware of, and would have far different experiences were it not for the fintech enabler hidden deep in the background of the bigger picture.

To illustrate, here’s a look at some of the invisible players that work to enable other services consumers have grown accustomed to:

Apps: Do you know what goes great with online shopping from the comfort of your home? Having your dinner delivered and errands handled. Do you see Postmates bringing a meal to your neighbor’s doorstep? And look — there’s the TaskRabbit you ordered to assemble your new shelves arriving by Lyft. What do they all have in common? You guessed it. A common fintech enabler. All of these companies use Stripe to fuel an on-demand economy that’s delivering convenience.

Challenger banks: In the UK, where open banking laws have been in effect for a more than a year, challenger banks have found a natural fit partnering with fintech companies to address market segments considered underserved by larger traditional players. One such example is Starling Bank. The mobile digital bank was launched in 2014 and granted a banking license by the Bank of England in July 2016. Since then, it has created an extensive financial services app by partnering with fintech providers for personal finance capabilities (Yolt), payments (Tribe), loyalty and rewards (Yoyo), and wealth management (Moneybox), to name a few.

It’s In The Details

The truth is that most of the companies that rely on fintech collaborations and integrations do it for the simple fact that it allows them to focus on their strategy, which in turn helps their ability to scale — in some cases exponentially.

But, what are they doing exactly? Are they helping to create new digital accounts, assisting compliance or supporting the massive number of payments on-demand companies need to make? Yes, yes and yes. Today’s fintech companies are changing all manner of banking as a service, from account origination to how institutions handle know-your-customer requirements, secure transactions and mass payouts.

Achieving a better understanding of the spaces and roles occupied by today’s fintech enablers requires pausing and taking a closer look. It’s like approaching a painting to appreciate the techniques an artist used to achieve a particular effect. Yes, I just used art as a metaphor for today’s financial services. I guess the world is indeed full of surprises.

ATG Credit is proud to announce our recent implementation of ComplyARM.

ComplyARM Dashboard is an online Compliance Management System (CMS) designed by Chief Compliance Officers (CCO) to help us better perform our own jobs. Dashboard provides accounts receivable management firms with a powerful compliance tool at an affordable price. ComplyARM began as a company that wrote policies and procedures for debt buyers and agencies. During the process, we realized that our manuals added a significant administrative burden and we knew there had to be a better way to manage all of the information.

Dashboard was designed to improve compliance readiness and provide a uniformed way to track, monitor and analyze all of the different compliance related tasks in your organization. Dashboard enables you to collaborate with clients, vendors, debt buyers and other partners through a secure online platform that integrates seamlessly with your existing systems.

The ComplyARM platform assists in the secure management of:

Complaints & Disputes
Consumer Portal
Vendor Management
Licensing & Insurance
Buying & Selling Tools
Reporting & Analytics
Data Security

For more information please visit http://complyarm.com/

ATG Credit is proud to announce our recent integration of the IDAP® (Integrated Data Analytics Platform) by Provana.

IDAP® is a dynamic business analytics dashboard customized to your needs. Built upon Microsoft Power BI, IDAP connects to your existing systems to create interactive visualizations that make it easy to understand, interact with and present your data, and better manage your team. IDAP bridges the gaps between your disparate reporting systems, presenting unified insights on a single dashboard.

Some benefits of IDAP® include:

Interactive Reporting

Dive deeper into the numbers and drill down to account-level detail with targeted reports. In just a few clicks, you can filter and segment data to highlight specific metrics, or quickly consolidate data from across departments for broader insights.

Near Real-Time Data

Stay on top of your data. Receive up-to-date information online with automated, near real-time reporting for accurate insights into claims, payments, invoices and more.

Intelligent Forecasting

Use data to gain a glimpse into the future. IDAP’s built-in predictive modeling learns your business and generates forecasts.

Customized Dashboards

Every business relies on different data. IDAP dashboards can be customized to your business needs, allowing you to track and measure the revenue drivers and performance metrics that move your bottom line.

Anywhere, Anytime Access

IDAP reports can be accessed from any device, anywhere. So whether you’re at the office or on the road, your data is always at hand.

Learn more at https://www.provana.com/business-analytics-dashboards

Association submits comments to bureau in response to RFI on adopted regulations and new rulemaking authorities.

ACA International supports the Bureau of Consumer Financial Protection’s authority to update and streamline outdated provisions for rules under the Fair Debt Collection Practices Act. As such, the association on Tuesday submitted comments to the bureau in response to its “Request for Information Regarding the Bureau’s Adopted Regulations and New Rulemaking Authorities .”

While Congress passed the FDCPA in 1977 to eliminate deceptive, unfair and abusive conduct by third-party debt collectors, at the time of its enactment, lawmakers failed to provide regulators with rulemaking authority. “The result has been 40 years of inconsistent interpretation of the law by the courts,” Mark Neeb, ACA’s CEO said in the comment letter. “ACA welcomes the opportunity to work with the bureau to address onerous provisions and interpretations of the FDCPA, which often do not account for modern technology and consumer preferences.”

“With this new authority to write rules, however, the bureau must recognize the complexity of the marketplace and avoid seeking a ‘one size fits all’ approach,” Neeb wrote. “Finally, the bureau must institute a rigorous cost-benefit analysis and consider the impacts rules will have on industry as well as consumers in order to meet statutory objectives.”

Among other highlights related to the complexity of the debt collection marketplace, ACA advised the bureau to “consider that many third-party debt collectors will simply not have the infrastructure necessary to implement the complex compliance requirements likely to result from certain types of debt collection regulation.”

ACA’s recent response to the bureau’s “Request for Information Regarding Rulemaking Processes” noted repeatedly that the bureau must work toward “clarifying legal obligations for debt collectors and solving problems for consumers and regulated entities.”

Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse. Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training website to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.

https://www.acainternational.org/news/aca-advised-bcfp-to-avoid-a-one-size-fits-all-approach-in-rulemaking

Written by: Eric Troutman
Attorney at Womble Bond Dickinson

Ok, confession time–I love TCPAland.

Yes, that is probably the least surprising confession in the history of the world, but here’s why I love it so much–the TCPA is this simple little statute that is so dizzyingly complex to apply and frequently co-exists with esoteric legal doctrines of near-impossible obscurity. Bizarre legal scenarios that never seem to arise in any other context crop up on a near-weekly basis here in TCPAland. Its as if the TCPA were a giant atom smasher for federal constitutional and procedural doctrine and I’m the theoretical legal physicist who gets to study resulting TCPA anti-quarks for the first time, marvel at their structure and composition, and then report my new discoveries to all of you. Its a wonderful life I lead. Truly. I am grateful for it.

Consider our latest ephemeral legal Hadron– what result if Congress dictates that the FCC issue regulations implementing an amendment to a statute and the FCC just doesn’t do it? Is the amendment defective for want of implementing regulations? Or is the amendment applied even without the implementing regulations?

That was the issue faced in Schneider v. Solutions, No. 16-CV-6760 CJS, 2018 U.S. Dist. LEXIS 96125 (W.D.N.Y. June 6, 2018)–although it is just a tiny part of the thorny nest of issues arising under the Congressional amendment to the TCPA pursuant to the Bi-Partison Balanced Budget Act of 2015 (“Budget Act”). (For those keeping score at home, there’s also i) the whole thing about the FCC using the Budget Act amendment to bring the federal government back within the reach of the TCPA after holding that the government was not a “person” subject to the act in the first place; ii) whether, assuming the amendment remains valid, conduct that was previously illegal becomes legal or is still actionable as illegal under the law as it existed at the time (see Silver Petition for Cert.); and iii) the fact that the amendment converts the entire TCPA into a content-specific restriction on speech, triggering strict scrutiny analysis and almost certainly guaranteeing that the statute will one day be struck down as unconstitutional–but we’ll settle for analyzing just the tiny piece addressed by Schneider for now.)

In Schneider the court first had to solve the mystery of the missing BBA implementing regulations– now that would have made a great Nate the Great volume– as the FCC published proposed rules in August, 2016 but never saw them through.

As the Schneider court unravels matters:

Despite the fact that only certain parts of the proposed regulations required approval by the Office of Management and Budget (“OMB”), the FCC chose not to have any of the regulations take effect until OMB gave such approval. See, FCC 16-99 at ¶ 72, 31 FCC Rcd. at 9101; see also, 20 No. 9 Consumer Fin. Services L. Rep. 15 (Sep. 25, 2016) (“The final rules, released on Aug. 11, 2016, will become effective 60 days after the FCC publishes notice in the Federal Register of the Office of Management and Budget’s approval.”). Apparently, however, OMB never gave such approval, and the FCC eventually withdrew its request to OMB, thereby effectively preventing any of the proposed regulations from taking effect.

The parties agreed with the Court’s conclusion that the FCC’s proposed implementing regulations never became effective, but they disagreed as to the effect. Notably, Congress commanded the FCC to implement such regulations within 9 months of the passage of the statute– Indeed, Section 301(b) of the Budget Act states that “[n]ot later than 9 months after the date of enactment of this Act, the [FCC] . . . shall prescribe regulations to implement the amendments made by this section[.]” Plaintiff argued, therefore, that the failure of the Commission to heed this Congressional mandate meant that the amendment was never effective at all. Defendant, of course, disagreed arguing that the lack of an FCC implementing order simply means that the statute is to applied as written.

The Schneider court agreed with the Defendant. In its view, treating the amendment as invalid due to the FCC’s inaction–or, more accurately stated, incoherent actions– with respect to implementing the Budget Act would “thwart the will of Congress and the President …” Schneider at *13. In the Court’s view, the general rule that statutes are effective at the time they are passed applied and the fact that Congress assigned effective dates to other portions of the Budget Act–but not the TCPA amendment–meant that the amendment was immediately effective and valid as of November 2, 2015. See Schneider at *14-15. The Court also easily distinguished Second Circuit authority to the effect that claims arising under unimplemented regulations do not accrue until the regulation becomes effective– the claim in this case was barred by the statutory amendment, not by the FCC’s unimplemented regulation. Id. at *15-16.

Finally, but most importantly, the Court found that the Defendant is simply not bound by the FCC’s proposed BBA implementing ruling–which, inter alia, limits covered debt collectors to three calls within a thirty-day period and mandates certain affirmative disclosure requirements– because “proposed regulations ‘have no legal effect.’” Schneider at *18.

Notably, the conclusion in Schneider is exactly contrary the decision reached in another case involving Navient just last year– Cooper v. Navient Case No. 8:16-CV-3396-T-30MAP (M.D. Fl. April 21, 2017). In Cooper the Court found that it was bound to apply the FCC ruling implementing the Budget Act as a “final” agency action, even though the Schneider court would later conclude that this same ruling was never more than a “proposed regulation.” Even more deliciously, the Cooper court subsequently denied Navient’s interlocutory appeal request concluding there was not “a substantial ground for disagreement on the issue of the effect of the FCC’s August 11, 2016 Order.” So not only do these courts not agree on the enforceability of an FCC TCPA order–nothing new there– the Cooper court did not even believe that a reasonable mind could reach the conclusion adopted by Schneider. How much fun is that?

Just another day in TCPAland. The quirkiest place on Earth.

https://www.insidearm.com/news/00044048-mystery-solved-so-s-what-happened-fccs-or/

In May the Federal Communications Commission (FCC) published a Notice seeking comment on how it might re-interpret the Telephone Consumer Protection Act (TCPA) in light of the recent D.C. Circuit Court Decision in ACA International v. FCC. Yesterday was the comment deadline. Among the organizations providing input was the Bureau of Consumer Financial Protection (BCFP or Bureau). You can read their full comment here.

While the Bureau doesn’t suggest specifics, the gist of the comment supports communication between consumers and collectors through modern channels,

“[T]he Bureau believes that a properly circumscribed definition of [ATDS] could be critical to fostering communications between consumers and debt collectors, servicers, and other financial service providers.”

In March 2018, a court reversed several key provisions in the FCC’s 2015 TCPA expansion, including the FCC’s autodialer definition as well as the regulator’s approach to the treatment of consent and reassigned phone numbers. Many stakeholders had been waiting for the outcome of the case since it was filed by ACA International within days of the 2015 Declaratory Ruling and Order. The March 2018 decision left the FCC back at square one, with industry once again calling for clarification of the law, but hoping that this time the definition will be different.

One might look at this and say that the Bureau does not have jurisdiction over the TCPA…and one would be correct. But in the age of mobile-only households we are seeing a convergence of laws.

First, privacy guidelines in the Fair Debt Collection Practices Act (FDCPA) — the jurisdiction of the Bureau — say that debt collectors can’t reveal the purpose of their call until they confirm they have the right person on the phone.

Second, because of an aggressive initiative by the FCC, carriers and software companies, mobile phones are delivering more information about a call right on the screen, as the call comes in, so the consumer can decide whether to answer, hang up, delete, or complain.

Third, as insideARM readers likely know, there is widespread confusion over the concept of consent to call a mobile phone using an automated dialer: Do we have consent? What constitutes consent? Is it passed by the creditor to their service providers? How can it be revoked? While some might say the only purpose of using an automated dialer is to make more calls faster — and they would in part be correct, automated dialers do reduce cost and allow for more calls to be made — there are also important consumer benefits to the technology. Automated equipment also automates compliance. To expect human beings to comply perfectly with varying state and federal laws governing when, how often, and under what conditions a consumer may be called is unrealistic.

Fourth, to require manual contact ignores consumer preference, which increasingly favors digital channels such as text, email, and private messaging. Which brings us back to the Bureau’s comment, including this:

“Notably, the Bureau is engaged in an ongoing rulemaking focused on debt collectors under the Fair Debt Collection Practices Act (FDCPA) concerning debt collection practices, including calling behavior by debt collectors. Since the FDCPA was enacted in 1977, technological developments have raised concerns about the application of the FDCPA’s restrictions on collector communications with consumers. In 1977, placing a telephone call was a manual process that required a caller to dial a telephone number one digit at a time. Since then, development of predictive dialers and other outbound dialing technology has substantially reduced the cost to callers, such as debt collectors, of placing telephone calls and has enabled debt collectors to place many more calls at a very low cost. Consumers, however, consistently complain about frequent or repeated collections telephone calls.

The Bureau’s rulemaking is considering, among other topics, collector telephone calling behavior. The Bureau also is evaluating alternatives that would reduce uncertainty surrounding the use of newer technologies that could facilitate communication and conform more closely to consumers’ preferences. Input from stakeholders has helped and will continue to help the Bureau understand the practical ramifications of potential new rules. The Bureau’s goal is to develop standards which will protect consumers without imposing unnecessary or undue costs on debt collectors.”

insideARM Perspective

So why is this interesting? Because, as the Bureau notes, it is currently engaged in debt collection rulemaking, and is contemplating rules that will impact collectors’ ability to communicate with consumers through modern channels (those other than U.S. postal mail and landlines). We don’t often get an official statement about the Bureau’s latest thinking. The fact that they would state publicly that they are developing standards to address this issue is promising for the industry.

Aetna said that it will automatically apply pharmacy rebates for its commercial plan consumers at the time of sale starting in 2019.

The announcement follows a similar release by UnitedHealthcare earlier this month. Both insurers aim to promote transparency, lower out-of-pocket costs and call attention to the high price of prescription drugs.

Greater transparency is needed in the pharmaceutical supply chain in response to the nearly 25 percent increase in drug prices between 2012 and 2016, insurer said.

Pharmaceutical companies should be held to same regulation as insurers that requires the majority of premiums to be spent on medical expenses, not profit or business costs, according to Aetna CEO Mark Bertolini.

“Additional reforms are needed to bring down rising drug prices that are driving increased spending across the healthcare system,” Bertolini said by statement. “Payers are required to spend the vast majority of premium dollars on medical costs, not overhead or profits. Drug manufacturers should be held to the same high standards.”

Aetna said it supports the recommendation of the Medicare Payment Advisory Commission in improving Medicare Part D by enacting a true out-of-pocket cap for consumers.

The insurer would like to see the elimination of “gag clauses” that prohibit pharmacists from telling customers that paying cash for prescription drugs may be cheaper than using their health insurance.

“The company does not require these clauses in contracts with pharmacists, and is encouraged by pending and recently passed legislation aimed at ending this practice,” Aetna said.

The rebate discount at point-of-sale will benefit an estimated 3 million Aetna members when filling prescriptions. Currently Aetna passes along savings from rebates to plan sponsors and their employees through lower premiums.

“We have always believed that consumers should benefit from discounts and rebates that we negotiate with drug manufacturers,” Bertolini said. “Going forward, we hope this additional transparency will encourage these companies to rationalize their pricing and end the practice of annual double-digit price increases.”

After UnitedHealthcare announced its point-of-sale drug discount, Secretary of Health and Human Services Alex Azar praised the program as supporting transparency and lowering out-of-pocket costs.

Ben Johnson, Union Pacific Health System’s plan pharmacy services director, said at the time that he believes the drug program unfairly penalizes healthier members who are footing the bill through their premiums.

http://www.healthcarefinancenews.com/news/aetna-announces-plans-pass-along-drug-rebates-consumers-pharmacy-counter

It’s no secret that merger and acquisition activity in the healthcare industry has been steadily climbing for the last few years, but according to data compiled and reported by Bloomberg, 2018 has started off with the biggest bang in a decade.

So far in 2018, roughly $156 billion in deals are already done thanks to pharma giants like Sanofi, GlaxoSmithKline and Celgene, and a pending deal with Takeda Pharmaceutical Company’s acquisition of Shire that is valued at $45 billion would propel 2018’s year-to-date over $200 billion, making for a record breaking first quarter the likes of which hasn’t been seen in at least 12 years, Bloomberg reported.

Glaxo recently jumped on a deal to buy Novartis AG’s stake in a consumer health joint venture, a deal valued at $13 billion. January saw a historic deal for Celgene with a $9 billion acquisition of Juno Therapeutics and a $1.1 billion deal that secured them Impact Biomedicines. Sanofi has scored $15 billion in various deals this year, the report said.

Things have been increasingly busy at the hospital health system level as well. Philadelphia healthcare giant Jefferson Health just inked a non-binding letter of agreement to merge with Einstein Health, and Dignity Health and Catholic Health Initiatives are also moving towards a merger that would form the second largest nonprofit health system in the country.

In New England, the Massachusetts Department of Health has recommended approval of the full-asset mega-merger of the CareGroup System, which includes Beth Israel Deaconess Medical Center and several affiliates, Lahey Health and a stand alone hospital in Newburyport. Also, Partners Healthcare, which includes the renowned Massachusetts General Hospital and Brigham and Women’s Hospital, is finalizing plans to acquire a major Rhode Island system, Care New England.

Also, earlier this month, stockholders for both Aetna and CVS Health voted to approve that proposed merger as well, a deal valued at $69 billion. There are plenty of eyes on the transaction, especially after the failed merger of Aetna and Humana.

http://www.healthcarefinancenews.com/news/merger-and-acquisition-activity-has-record-breaking-first-quarter-2018