With 2016 underway – and a constant need to stay atop the ever-changing regulatory environment – make sure you are aware of the primary topics the Consumer Financial Protection Bureau (CFPB) and financial regulators will focus on this year. Among the hot topics, we’ll touch on rulemaking that will impact: Data quality Military Lending Alternative data Access to credit

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 Data accuracy/consumer disputes
 The Military Lending Act
 Regulatory trends in online lending
 Regulators’ views on “Big Data”
 Congressional “Access to Credit” agenda
 Q&A session
Today’s Discussion Agenda

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Speakers
Government Affairs and Public Policy
Liz Oesterle
Senior Director
Murray Johnston
Director
Jeremy Hancock
Director
Zack Smith
Manager
Tony Hadley
Senior Vice President

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Consumer Financial Protection Bureau
2016 rulemaking agenda
Short-term loans and
deposit advance products
Notice of rule
in February 2016
Arbitration
Proposed rule
expected in
winter 2016
Debt collection
Proposed rule in
February 2016
Minority and Women
Owned Business Data
Proposed rule in
September 2016
Credit Reporting
Beyond
November 2016

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Data Accuracy and Consumer Disputes
Credit Reporting
Agency
Data
Furnisher
Data User

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Data Accuracy and Consumer Disputes
Credit reporting complaints:
 Incorrect information
on a report (77%)
 Consumer reporting
agency investigation (8%)
 Inability to obtain report
and score (8%)
 Problems with credit
monitoring or identity
protection services (5%)
 Improper use of credit
report (3%) 35%
Mortgages
Credit cards
7%
20%
Debt
collectors
Bank
account
Credit
reporting
Other
35%
8%
18%
12%
Complaints handled in 2014

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Military Lending Act
Department of Defense Final Rule
Expanded definition of
covered loans
Safe Harbor through:
• DoD Database
• Nationwide Consumer
Reporting Agency
MLA
Military Lending Act
MLA
STANDARDS
AFFECT
FINANCIAL
PRODUCTS
CAPPED
MLA RULE
INCLUDES
Payday loans
Vehicle title
Refund
anticipation,
deposit advance
and auto
installment loans
Unsecured open-
end lines of credit
Credit cards
36%
Military Annual
Percentage Rate
All-inclusive rate,
capturing fees,
charges and the
sale of credit-
related products
No longer will banks
require service
members to:
• Submit to mandatory
arbitration and
legal requirements
• Waive the
Servicemembers Civil
Relief Act rights
• Provide a payroll
allotment
• Allow continual
refinance of a payday
loan
• Provide a post-dated
check
• Access a bank account
or car title

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 Growth and lending models have
caught the attention of regulators
 Scoping by Treasury, CFPB,
FDIC, FTC, States and
Congress
 Do online lenders enjoy a
“regulatory arbitrage?”
 FDIC’s Winter 2015 Supervisory
Insights
 Compliance with existing
consumer protection laws are
paramount
Online Marketplace Lending
Regulators Seek More Information

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Big Data
 Policymakers examining how big data is
used in:
► Marketing
► Fraud
► Credit Decisions
 Policymakers warn: Be fair and follow
existing laws
 Regulators are focusing on technology, not
just data
 European Union
 General Data Protection Regulation
 Safe Harbor  Privacy Shield

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 H.R. 347 – Facilitating Access to Credit Act of 2015
► Would free CFPB-supervised credit bureaus to introduce next-gen
consumer education products into the marketplace by removing barriers
required by the Credit Repair Organizations Act
 H.R. 4172 and S. 2355 – Credit Access and Inclusion Act of 2015
► Would remove regulatory barriers that prevent furnishing consumer
payment histories to credit bureaus for telecommunication, utilities and
rental bills
 H.R. 4211 -- The Credit Score Competition and Equal Access Act
► Would require Fannie Mae and Freddie Mac to establishing a transparent
and open process for the validation and approval of credit score models
Congressional Access to Credit Agenda

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Congressional Access to Credit Agenda
Alternative Data
A May 2015 report from the CFPB estimates that there are roughly
45 million “credit invisibles” in the U.S.
Alternative data is payment information for:
 Rent
 Telecommunications (phone, cable and
wireless)
 Utilities (electric, gas, water)
Telecoms / Utilities report derogatory but
not on-time payments, or the full file
Credit invisibles are consumers with no or
“thin” credit files that cannot be scored

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Fannie Mae and Freddie Mac underwriting
guidelines require use of a specific branded
credit score:
 Pre-recession credit behavior
 Older software
Score competition would allow lenders to
chose among alternative score models to:
 Improve risk prediction with newer
scoring technology/more granularity
 Score more consumers
Congressional Access to Credit Agenda
Credit score competition

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Congressional Access to Credit Agenda
Credit Building and Recovery through CROA Reform
Personalized
Credit
Education
Consumers are directed to Experian by
the disclosures on reports and scores, but
CROA’s misapplication stands in the way of
further education when the consumer asks:
“How can I improve my score?”
What is the Credit Repair Organizations Act (CROA)?
 Enacted in 1996 to protect consumers from
“credit repair” scams
 “Credit Repair”: Fraudulently representing to consumers
that an entity can remove accurate, but negative data
from a consumer’s file. Often for an exorbitant fee.
 3 business day waiting period
 Onerous/scary consumer
disclosure
 Complete disgorgement of
funds as remedy

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Questions
Inside the Beltway:
CFPB Hot Topics in 2016

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