Computer technology – Notizie Informatiche http://notizie-informatiche.com/ Thu, 23 Jun 2022 17:26:15 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://notizie-informatiche.com/wp-content/uploads/2021/10/icon-1-120x120.png Computer technology – Notizie Informatiche http://notizie-informatiche.com/ 32 32 Rent-a-Bank payday loans have the highest loss rates in the banking system https://notizie-informatiche.com/rent-a-bank-payday-loans-have-the-highest-loss-rates-in-the-banking-system/ Thu, 23 Jun 2022 17:23:29 +0000 https://notizie-informatiche.com/rent-a-bank-payday-loans-have-the-highest-loss-rates-in-the-banking-system/ Federal regulators have long expected banks to make loans with a high degree of confidence that borrowers will repay them. But some banks supervised by the Federal Deposit Insurance Corp. (FDIC) issue loans, on behalf of payday lenders, that have dangerously high levels of default. These loans, known as “rent-a-bank” loans, have much higher loss […]]]>

Federal regulators have long expected banks to make loans with a high degree of confidence that borrowers will repay them. But some banks supervised by the Federal Deposit Insurance Corp. (FDIC) issue loans, on behalf of payday lenders, that have dangerously high levels of default. These loans, known as “rent-a-bank” loans, have much higher loss rates than other banking system products, including the small loans that banks offer directly to their own customers with low credit ratings.

These bank lease loans are possible because banks are only required to meet the interest rate limits of their home state, not those of the borrower’s state. So a half a dozen small banks now make loans on behalf of payday lenders at interest rates far higher than those allowed by the borrowers’ home states, with payday lenders only being able to make the loans due to the banks’ charters. These loans are very similar to the kinds of credit offered indiscriminately to non-customers that banking regulators – due to their mandate to keep the banking system safe and sound by limiting unsafe practices – have historically shut down.

Asset quality is a key measure in the federal oversight topic used to assess a bank’s risk management, which includes an assessment of the likelihood that a bank’s loans will be repaid. Federal banking regulators explicitly point out that small loans should be done with “a high percentage of clients repaying successfully…” Yet in 2019, the Three biggest payday loan companies involved in rent-a-bank loans had annualized net losses average of 50%, unlike other loans issued by banks which, throughout the banking system, had losses ranging from 2% to 9% that year. (The 2019 figures are most relevant due to historically unusual borrowing and repayment patterns in 2020 and 2021 as a result of the government response to COVID-19.) These loss rates resemble payday loan rates not online banking, which are based on the payday lender business model, characterized by high customer acquisition costs, losses, overhead and interest rates, and are approximately 12 times higher than credit card loss rates over the same period and more than five times higher than those of small loans from banks and credit unions—suggesting that lending banks had a relatively low expectation of repayment.

Normally, high loss rates in rent-a-bank lending would trigger regulatory scrutiny because they suggest unsafe lending. However, banks sell most of these loans or receivables to their payday loan partners after origination, so the results of bank lease loans are largely hidden from view from bank examiners. By selling the loans, the banks are essentially moving earnings data off their books — which are scrutinized in standard banking reviews — and into the earnings results of payday lenders, which are not.

There is a better way. Banks should provide access to secure credit by following the example of the growing number of institutions that provide small loans to their customers on fair terms, while controlling losses. In fact, many banks serve borrowers with similar credit profiles as payday borrowers, but have much higher repayment rates; these banks are increasingly leveraging technology, particularly in automating loan underwriting and origination, to outperform non-bank lenders in terms of speed of underwriting, ease of access to loans and certainty of approval, which are the primary reasons borrowers have historically turned to payday lenders. This approach leads to affordable loans for bank customers, which helps improve both their financial well-being and their inclusion in the banking system.

It’s time for the FDIC to put an end to high-cost, loss-making rent-a-bank lending, which harms the financial health of customers and undermines safe lending practices in the banking system.

Alex Horowitz is a Principal Officer and Chase Hatchett is a Senior Associate of The Pew Charitable Trusts Consumer Lending Project.

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Big banks improve their overdraft policies and reduce fees https://notizie-informatiche.com/big-banks-improve-their-overdraft-policies-and-reduce-fees/ Tue, 21 Jun 2022 19:18:58 +0000 https://notizie-informatiche.com/big-banks-improve-their-overdraft-policies-and-reduce-fees/ The 25 largest US banks by number of branches have made substantial changes to their overdraft policies in the past 12 months, which could save consumers more than $4 billion a year. These reforms at the biggest banks are expected to have outsized benefits for black and Hispanic customers, as they are more likely to […]]]>

The 25 largest US banks by number of branches have made substantial changes to their overdraft policies in the past 12 months, which could save consumers more than $4 billion a year. These reforms at the biggest banks are expected to have outsized benefits for black and Hispanic customers, as they are more likely to incur overdraft fees.

The banks are taking the action amid much-needed scrutiny from federal financial regulators, including the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau (CFPB), as well as Congress. U.S. banks are also facing increased competition from neobanks, digital-only financial service providers that offer many of the same services to consumers as traditional banks, although they don’t charge overdraft fees. Federal guidelines in 2020, which gave banks regulatory clarity on offering small loans, also allowed them to provide liquidity to distressed customers without an overdraft. Additionally, the reduction in consumer reliance on overdrafts during the pandemic has highlighted what a banking system less focused on overdraft revenue could look like.

Most of these top 25 banks have lowered overdraft penalty fees, reduced the daily maximum number of overdraft fees charged, added a grace period or buffer amount before fees are charged, or eliminated fund fees (NSF) or overdraft transfer fees. Some passed these milestones in 2021, while five did so in quick succession in January. Other banks have since followed suit.

The overdraft has generated significant income for the banks

Banks initially created overdraft programs to help consumers cover small incidental fees that arose before an account holder’s next deposit, as paper checks could be slow to clear, but the fees had become a focus of major profit for many deposit taking institutions.

Most overdrafts today are for debit card transactions and electronic payments. More than half of overdrafts surveyed by Pew in 2013 did not recall agreeing in advance for debit card transactions to be made in exchange for paying overdraft penalties. Additionally, about 3 in 4 overdrafts said they were unaware of their right to have their transactions declined free of charge if the account did not have sufficient funds to cover a debit purchase.

The CFPB believes that consumers have paid $15.5 billion in overdraft fees and insufficient funds in 2019 alone. Overdraft penalties and NSF fees have averaged $35 per transaction in recent years, with repeated overdrafts causing some consumers to become unbanked, meaning they are no longer served by a bank . High or unpredictable fees were a top reason given for not having a bank account in a 2019 survey of unbanked households by the Federal Deposit Insurance Corp.

Repeatedly high overdraft fees can harm the financial well-being of struggling consumers as well as the inclusiveness of the banking system if customers are forced to leave or close their accounts. In January 2022, the CFPB asked for the public’s opinion on junk fees, i.e. inflated or hidden fees. In a letter to the office in April, Pew pointed out that NSF’s overdraft and fee markets have not shown signs of price competitiveness and fees have not aligned with provider costs. For consumers, these costs have therefore historically proven to be unnecessarily high.

Several changes reduce overdraft fees

Among the top 25 banks, more than half said they would no longer charge NSF fees on personal checking accounts, and a similar number said they would charge no more than three overdraft fees per day. A majority will no longer charge fees to transfer money from other linked consumer accounts to cover overdrawn transactions. Previously, these transfers had a median price of $10.

Some banks are also now giving customers an extra day before charging a fee and allowing negative balance buffers – they don’t charge a fee when accounts are only slightly overdrawn. That’s helpful, because nearly two-thirds of overdrafts said in a 2013 Pew survey that the transaction that caused their most recent overdraft was $50 or less. In addition, seven of the 12 largest banks announced or launched small installment loans or lines of credit. These products allow customers to borrow small amounts of money from their bank on affordable terms, rather than paying penalties or turning to high-cost non-bank lenders.

Annual consumer savings

Recent changes to bank overdraft programs are expected to save consumers more than $4 billion a year. Changes to the three major banks alone are expected to save consumers more than $2 billion each year in fees. CFPB Research found that these three banks accounted for 44% of all overdraft revenue in 2019, excluding credit unions and smaller banks.

These consumer-friendly changes should also help reduce the number of unbanked Americans over time. Fewer consumers will be forced out of the banking system due to high and unpredictable fees, and small loans from banks will provide an affordable option for those who have used payday loans or similar loans before. Repeated account withdrawals by payday lenders have also been associated with loss of checking accounts.

Many of the country’s major banks have taken strong steps to reform overdrafts. Going forward, it will be important to see if smaller banks and credit unions follow suit and adopt equally beneficial changes.

Alex Horowitz is a Principal Officer and Linlin Liang is a Senior Associate of The Pew Charitable Trusts Consumer Lending Project.

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Does modern slavery exist? https://notizie-informatiche.com/does-modern-slavery-exist/ Mon, 20 Jun 2022 03:31:43 +0000 https://notizie-informatiche.com/does-modern-slavery-exist/ Juneteenth is a federal holiday now in the United States that recognizes the emancipation of enslaved black Americans. June 19, celebrated on June 19, celebrates the release of the last of 250,000 enslaved black people when 2,000 union soldiers arrived in Galveston Bay, Texas and announced this executive order. But was slavery totally abolished? Webster’s […]]]>

Juneteenth is a federal holiday now in the United States that recognizes the emancipation of enslaved black Americans. June 19, celebrated on June 19, celebrates the release of the last of 250,000 enslaved black people when 2,000 union soldiers arrived in Galveston Bay, Texas and announced this executive order. But was slavery totally abolished? Webster’s Dictionary defines slavery as the state of a person who is held in forced servitude or a situation or practice in which people are entrapped in debt and exploited. While slavery was abolished here in the United States, some say it exists in a different way today.

“Shame. Guilt. And a lot of my family members, you know, they had no money. That’s how Orletta Caldwell describes the feeling of having to take out a payday loan. In 2008, a bad divorce ruined her credit, left her almost penniless as a single mother and forced her to file for bankruptcy. “You have to pay rent,” Caldwell said. “I don’t like overdrafts. don’t like to be late. It’s an easy way. All you need is a check.

A d

“So you walked into the store?” asked Evrod Cassimy of Local 4. “No!” she replied. “Actually, I went online. You can also do it online. “Why didn’t you go into the store?” Cassimi asked. “Because I’m Orletta Caldwell, you know, Masters in Business. You don’t do that kind of stuff. “So you were embarrassed?” “I was embarrassed!”

What would ensue would be a cycle of payday loans with incredibly high interest rates just to make ends meet. A $600 payday loan can come with a $75 fee and an APR of almost 400%. The $675 payday loan is taken from your next paycheque. Orletta would then have to take out another payday loan to make up for the money she paid back. She began to notice a pattern. “They heavily target minorities, people from neighborhoods of color, she said. “When you have someone trapped…and they’re in that cycle and they can’t get out of it, that’s slavery.”

“We noticed, and data carriers, many of these convenience businesses, check advance spaces, are located in black and brown communities. Black and brown and poor and otherwise disenfranchised communities,” said Omari Hall. “There is no immediate presence of more traditional banking options in these black and brown neighborhoods.” Hall is with GreenPath Financial Wellness and has worked with 750 people this year to get them out of this payday loan cycle. He explains why credit cards and other traditional banking options are not possible.

A d

“There has always been a deserved mistrust on the part of the black and brown community of the financial services system in general,” Hall said. “This distrust comes from decades, if not centuries, of systemic disenfranchisement where there has not been a support system in place for blacks and browns and the poor to participate in this type of banking system. With very few traditional or safer alternative banking options and instead the option they have is these payday loan systems, these check cashing systems that are extremely exploitative. Exploitation resembles financial slavery.

“Do you believe that modern slavery exists?” Cassimy asked Seydi Sarr. “It always existed,” replied Sarr. Sarr refers to the types of people she sees being victims of human trafficking. This comes with the territory in the work she does with ABISA, the African Bureau for Immigration and Social Affairs.

A d

“Here in Michigan, for example, we’re known to be the epicenter of what you call modern-day human trafficking,” Sarr said. “Detroit sees a lot of missing girls. Most of the girls that are missing here are black girls. You find young black women, you find a lot of immigrant women in there.” She thinks black women are the most slaves to this world because they are the easiest to target. “Who’s going to come get you? Hmmm… Who’s coming for you? Nobody! So it’s easier to target the most vulnerable because there won’t be any real outcry to ensure that these people are found, sought after.

“Why is that a thing? How is that possible?” Cassimi asked. “It’s possible because I think we still struggle to recognize the humanity of black people. We are used to black bodies being abused. As black women, we talk a lot about how we are perceived. So a black woman can only be angry. People don’t see your pain the same way. People don’t see your tears the same way.

A d

“How does that make you feel as a black woman?” Cassimi asked. “Crazy! I’m mad! I’m mad all the time!” Sarre replied “How do we end modern slavery so that everyone is truly free?” modern slavery, we need to do a lot more work.”

This work includes the fight for equality for all humanity. This is the work that Seydi does daily at ABISA. Orletta Caldwell is working to reduce interest rates on payday loans and cash advances. “They have a ballot initiative. I want it capped at 36%,” Caldwell said.

Caldwell was able to find a way out of his financial troubles by saving only a small percentage of his own money. Today, her credit score is repaired, she has a great job, and after completing her doctorate, she is now Dr. Orletta Caldwell. She had this message for anyone financially enslaved: “You’re not a bad person. You will get there, but you just have to be determined to get through it.

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For more information about GreenPath Financial Wellness, please visit: https://www.greenpath.com/

For more information about ABISA please visit: https://linktr.ee/africanbureau

Copyright 2022 by WDIV ClickOnDetroit – All Rights Reserved.

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What are the other names of Juneteenth? The United States betrays the spirit of the “Jubilee” https://notizie-informatiche.com/what-are-the-other-names-of-juneteenth-the-united-states-betrays-the-spirit-of-the-jubilee/ Fri, 17 Jun 2022 17:50:23 +0000 https://notizie-informatiche.com/what-are-the-other-names-of-juneteenth-the-united-states-betrays-the-spirit-of-the-jubilee/ This story was supported by the Economic Hardship Report Draft non-profit journalism. Dating back millennia, the Jubilee was a momentous celebration, a year when the land was to be returned, debts canceled and enslaved people were to be set free. Announced by the strong breath of a ram’s horn, biblical notethe year of the Jubilee […]]]>

This story was supported by the Economic Hardship Report Draft non-profit journalism.

Dating back millennia, the Jubilee was a momentous celebration, a year when the land was to be returned, debts canceled and enslaved people were to be set free. Announced by the strong breath of a ram’s horn, biblical notethe year of the Jubilee was anchored in the idea of ​​freedom, orchestrating an economic, cultural and moral dynamic. company reorganization. It is therefore normal that Juneteenth is often called Jubilee Day.

In January 1863, the Emancipation Proclamation abolished property slavery, to declare “all persons held in slavery” must be “free forever”. But it wasn’t until two years later, on June 19, 1865, that news of the liberation finally reached the slaves of Galveston, Texas. Juneteenth, sometimes called Black Independence Day or Freedom Day, honors this real end of slavery.

In a way, the Emancipation Proclamation functioned as the first and only Black American Jubilee—in fact, “Jubilee” is what once enslaved people. called the phase that followed the Civil War. Abolition put an end to an entire exploited labor economy that builds the modern capitalist world. But the Emancipation Proclamation went further than requiring the Confederate States to simply recognize the abolition of slavery – it educated the United States government to “maintain” the freedom of formerly enslaved people and to do “no act or deed to suppress such people” or any “effort they might make for their actual freedom”. Today, contrary to the instructions of President Abraham Lincoln, the government still sanctions and facilitates the oppression of black people.

Sharecropping, convict tenancy, medical racism, mass incarceration, policing and other racist institutions have trapped black Americans in cycles of debt bondage, indentured servitude and suffering. Forced to debt-finance public goods and their own incarceration, black people bear the brunt of students, medical, and criminal legal debt. For-profit colleges, hospitals, police departments and the prison industrial complex are all (literally) betting on their schemes to put black communities in debt. Just ten years ago, in the wake of the 2008 financial crisis, racist housing practices and job losses erased more than half black wealth.

As a result, the current gap between blacks and whites in home ownership is wider than over 50 years ago. From the Three-Fifths Compromise to jail and racial gerrymandering, politicians have repeatedly dismantled black political power, returning the right to vote weaker for black Americans than they were in 1965, when the Voting Rights Act was first passed. The scourge of gun violence and the school-to-jail pipeline have stolen the future of black children. black girls are vanish at an unreasonable rate and black trans women have a life expectancy around the age required to be president: 35 years. If you’re black, your risk of incarceration increases almost quintupled. If you’re a black woman in New York, your likelihood of dying in childbirth increases eightfold. Unfortunately, black Americans represent 13% of the American population and 40% of the inhabitants of death corridor.

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MICROCAPITAL BRIEF: UNCDF, Quizrr, Ulula, Wagely Supporting Financial, Digital Literacy for Garment Worker in Bangladesh https://notizie-informatiche.com/microcapital-brief-uncdf-quizrr-ulula-wagely-supporting-financial-digital-literacy-for-garment-worker-in-bangladesh/ Thu, 16 Jun 2022 05:03:00 +0000 https://notizie-informatiche.com/microcapital-brief-uncdf-quizrr-ulula-wagely-supporting-financial-digital-literacy-for-garment-worker-in-bangladesh/ The United Nations Capital Development Fund (UNCDF) recently committed approximately US$556,000 to support pilot training programs for workers in the garment industry in Bangladesh. The funding will pay for technical assistance and performance-based grants for three companies seeking to promote financial and digital literacy skills and therefore financial and digital inclusion for 135,000 people working […]]]>

The United Nations Capital Development Fund (UNCDF) recently committed approximately US$556,000 to support pilot training programs for workers in the garment industry in Bangladesh. The funding will pay for technical assistance and performance-based grants for three companies seeking to promote financial and digital literacy skills and therefore financial and digital inclusion for 135,000 people working in the sector, mostly women. UNCDF implementing partners for the project are Quizrr, Ulula and employee. Wagely will offer attendees its Earned Wage Access service, which allows workers to collect their wages in advance. The other two companies are collaborating to provide digital training on “human rights and responsibilities, worker engagement and digital wages”.

Founded in 2020, Wagely is an Indonesian platform with a mission to “provide a sustainable solution for all employees to break the cycle of indebtedness caused by overdraft fees, high interest credits or loans on salary and play a leading role in building financial well-being for the weakest”. – and middle-income workers in Indonesia.

Quizrr is a Swedish education technology (edtech) company established in 2013. It offers training for digital workers from offices in Bangladesh, China, Thailand and Sweden. The company claims to have served 1.3 million users who work in 600 factories.

Launched in 2013, Ulula, which means “reveal” in Chichewa, is a Canadian company whose services include anonymous feedback and engagement solutions for workers to report human rights abuses, as well as tools to measure the scale of business contributions to the United Nations Sustainable Development Goals. . The company claims to have served 1.6 million users in 40 countries.

Established in 1996 and based in the US city of New York, UNCDF works to create opportunities for the poor and their businesses by improving access to microfinance and other forms of investment capital. The organization operates in 47 low-income countries in Africa, Asia and the Pacific, with a particular focus on countries emerging from crises. For 2020, UNCDF had a budget of $75 million and supported initiatives providing financial services to 3 million unbanked and underbanked customers.

By Saulius Simonas Ramanauskas, Research Associate

Sources and additional sources

UNCDF press release
https://www.uncdf.org/article/7684/financial-digital-solutions-garment-workers-bangladesh

Quizrr homepage
https://www.quizrr.se

Ulula homepage
https://ulula.com

Salary home page
https://www.wagely.app

UNCDF homepage
https://www.uncdf.org

Previous note from MicroCapital on UNCDF
https://www.microcapital.org/microcapital-brief-public-sector-commits-61m-to-smes-via-bamboo-uncdf-initiative-for-the-least-developed-build-fund

Did you know that MicroCapital publishes the MicroCapital Monitor every month? Learn more at https://www.microcapital.org/products-page/.

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The key to reducing child poverty? Child tax credits distributed monthly https://notizie-informatiche.com/the-key-to-reducing-child-poverty-child-tax-credits-distributed-monthly/ Mon, 13 Jun 2022 20:00:00 +0000 https://notizie-informatiche.com/the-key-to-reducing-child-poverty-child-tax-credits-distributed-monthly/ With last month’s extraordinary inflation rate 8.3% pushing Americans down, rapidly rising costs associated with food, fuel, housing and child care are putting countless families at financial risk. Knowing that the nation would face continued economic pressure from the pandemic, the US government adopted and implemented an ambitious policy agenda last year, which included the […]]]>

With last month’s extraordinary inflation rate 8.3% pushing Americans down, rapidly rising costs associated with food, fuel, housing and child care are putting countless families at financial risk.

Knowing that the nation would face continued economic pressure from the pandemic, the US government adopted and implemented an ambitious policy agenda last year, which included the expanded Child Tax Credit (CTC) program. In just six months, this historic initiative has significantly reduced child poverty and impacted local economies by approximately $19 billion per month in additional expenses.

One of the main reasons for the success of the child tax credit? Checks are paid into parents’ bank accounts once a month.

This idea is not new. Just look at the nation the most efficient anti-poverty program — Social Security — which distributes benefits to recipients throughout the year. We know that Social Security protects older Americans from poverty, but as columnist Bryce Covert recently pointed out in the New York Times — America chose not to prioritize children in the same way.

The fact that CTC payments were distributed monthly as part of the US bailout is key to understanding why this direct money program worked so well and why 3.7 million more children live in poverty after the Congress allowed the program to expire at the end of last year.

New analysis from the Columbia University Center on Poverty and Social Policy proves this point directly, breaking down the anti-poverty benefits of the monthly CTC and demonstrating that monthly payments are more effective than an annual lump sum.

When CTC payments are distributed once a year at tax time, child poverty drops significantly by about eleven percentage points or from 22.4% to 11%. However, anti-poverty benefits often decline in May. Compare that to monthly payments – which keep almost a third more children out of poverty each month they are distributed, according to Columbia findings..

According to this report, monthly Child Tax Credit payments could prevent about one in 10 children from experiencing a period of poverty at any time of the year, compared to annual payments, which often alleviate poverty for only one or two months during tax time.

Monthly checks reduce child poverty throughout the year by reducing income volatility, which destabilizes the month-to-month fluctuations in income that affect low-income families the most. Not only do monthly payments reduce the risk of children being persistently poor, they also reduce the risk of children becoming poor throughout the year.

The Columbia data shows what we actually saw in real life when the Child Tax Credit was in effect.

When CTC checks began hitting bank accounts in July 2021, the impact of credit on life was immediately clear. In six weeks, food insufficiency decreased by approximately A quarter. The improvements were significant among black and Hispanic families, who experience the highest rates of eating difficulties.

As we navigate this “new normal, we cannot forget this important lesson of the US bailout: monthly cash payments prevent children from falling into poverty. These payments also help families in other valuable ways. Bills come in every month, and monthly CTC checks help buy groceries, pay bills, and pay rent or mortgage on time. In a survey of low-income families, three quarters of SNAP recipients have used their CTC payments on bills, including to avoid utility cuts, evictions and foreclosures. Families across the country were able to get a breath of fresh air and feeling reported less financial stress because of the CTC.

Economists are still learning about the long-term impact of the child tax credit on the financial health of American families. However, preliminary data – as well as the real-life experiences of millions of families – show that not only monthly CTC payments have no noticeable negative effect on employmentthey or they supported work and entrepreneurship with some parents. In addition, monthly CTC payments have helped parents reduce credit card debt and reduce reliance on payday loans, pawnbrokers and even the sale of blood plasma.

Monthly payments have been a key part of CTC’s success, and that model must be maintained if — and when — Congress brings the program back to life.

Christine Hamilton is a postdoctoral fellow at the Center on Poverty and Social Policy at Columbia University School of Social Work.

Natalie Foster is the president and co-founder of the Economic Security Project, a network committed to advancing the conversation about cash benefits and basic income in the United States.

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Personal loan ads on social networks https://notizie-informatiche.com/personal-loan-ads-on-social-networks/ Sun, 12 Jun 2022 00:07:08 +0000 https://notizie-informatiche.com/personal-loan-ads-on-social-networks/ The past few years have been difficult for many Americans. Unfortunately, trying to stretch every dollar to buy basic necessities has become the norm. Some might consider a second or third job to pay the bills. This is precisely the type of person that payday loans target. Promising quick cash without telling the full story […]]]>

The past few years have been difficult for many Americans. Unfortunately, trying to stretch every dollar to buy basic necessities has become the norm. Some might consider a second or third job to pay the bills.

This is precisely the type of person that payday loans target. Promising quick cash without telling the full story of loan costs, these ads have been popping up on social media platforms like TikTok.

Read on to find out how these companies are bending the rules and why taking a payday loan is bad.

Here is the backstory

All social media platforms have advertising as it is the main way to generate profit. But some sites are not as strict about ad content as others. For example, TikTok claims to have a policy against “exaggerated performance or promises”.

Yet, there are many payday loan messages that target vulnerable users. According to Media Matters for Americathree companies systematically violate TikTok’s advertising policies by promoting payday loans.

Promising instant cash, posts by Earnin, Brigit and Albert target those in need of quick cash with phrasing such as “living paycheck to paycheck” or always being “broke”. It is unclear how advertising is allowed to be on the platform.

TikTok Payday Loans
Credit: Media Matters for America

But Earnin is no stranger to controversy. The company settled a $12.5 million lawsuit three years ago for deceptive lending practices. Brigit and Albert are also not registered with the Better Business Bureau (BBB), as some users claimed there were unexpected charges or missing deposits.

What can you do about it

It may seem like a lucrative opportunity to get some quick cash in your wallet, but there will always be a catch. The interest rate will be exorbitant, and they don’t call it often. Some advertisements will use words such as “fee” or “tip” without mentioning the interest rate.

According to the Consumer Financial Protection Bureau, a two-week payday loan with a $15 fee to borrow $100 gives you an annual percentage rate of 400%. That’s way more than the typical 30% for a high-interest credit card.

It may leave you in a cycle of debt, but according to the BBBthere are safer alternatives to payday loans:

  • Build a budget with an emergency fund. Create a budget so you know how much money you receive and how much you need to pay your bills. This will help avoid needing a loan in the first place. Then set aside money each month to build an emergency fund. You will be covered even if an unexpected expense or emergency occurs.
  • Get credit advice. Get credit counseling if you find yourself unable to pay your bills or caught in a cycle of debt due to a high-interest loan. The US Department of Justice has a list of agencies for people looking for debt reduction help. Also see BBB’s advice on credit counseling for more resources.
  • Shop for loans. Compare interest rates, fees and late fees by reading the fine print before choosing a lender. Pay close attention to interest rates and loan rollover fees. Credit unions are a great place to get a small loan with reasonable interest rates. Even credit card cash advances, which typically have double-digit interest rates, likely have lower interest rates than those offered by a payday lender.
  • Contact your creditors if you cannot pay on time. If you realize you won’t be able to make a payment on time, don’t panic. Contact the creditor directly. Many creditors are willing to work with you to design a payment plan you can afford.

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UK’s credit spread will widen in this cost of living crisis https://notizie-informatiche.com/uks-credit-spread-will-widen-in-this-cost-of-living-crisis/ Fri, 10 Jun 2022 03:00:11 +0000 https://notizie-informatiche.com/uks-credit-spread-will-widen-in-this-cost-of-living-crisis/ This article is the last part of the FT’s Financial Education and Inclusion Campaign Just a year ago, the financial regulator seemed confident that tighter regulation of high-cost loans has failed to drive those in need toward loan sharks and illegal lenders. The proof was that people either went without or turned to friends and […]]]>

This article is the last part of the FT’s Financial Education and Inclusion Campaign

Just a year ago, the financial regulator seemed confident that tighter regulation of high-cost loans has failed to drive those in need toward loan sharks and illegal lenders. The proof was that people either went without or turned to friends and family for help.

You wonder if the Financial Conduct Authority is just as sure now. Leave aside the fact that seemingly benign borrowings from friends and family, who indeed have skipped since 2017, may turn out to be anything but. Against the backdrop of the greatest pressure on living standards in generations, the gap left by the multitude of exits from the subprime loan market last year should be felt.

This is not to say that the regulator and the financial ombudsman were wrong to crack down on fraudulent payday loans or repeat loans and that they paid little attention to affordability in areas such as home or home loan. Even some in the industry admit that there were sketchy practices that needed to be eradicated.

But the pressure, which saw home-based lender Provident Financial exit the market and others like Amigo stop lending, was followed by no proper assessment of what was to come. Indeed, the analysis of what happened to people who once relied on the sector is patchy at best.

What we do know is that the number of loans issued in the short-term credit and high-cost mortgage sectors fell by more than 3.2 million in 2021 compared to 2019 (after the disappearance of the lender Wonga payday), or around £1 billion. And that the number of people who find themselves excluded from mainstream provision, already estimated at 11 million, is almost certainly up, not down.

The biggest banks, which already refuse to serve the poorest in society, will pull the credit drawbridge further in a downturn. Meanwhile, rising energy and food bills, as well as other expenses, could easily add £120-150 per calendar month to expenses on an affordability check, an expert notes. Around a fifth of UK adults have less than £100 in savings.

It seems likely that the explosive growth of the unregulated buy-now-pay-later BNPL market has filled some of the void, potentially substituting a low-cost or no-cost source of credit for what used to be very expensive. A community finance organisation, a sector which tends to serve a similar demographic to high-cost moneylenders (and indeed loan sharks) in terms of high proportions of benefit recipients and incomes under £20,000, said that BNPL had become by far the main form of credit with their customers since 2020.

This echoes concerns about ‘stacked’ BNPL loans, the use of these facilities to meet basic needs such as energy costs, and some suggestions that those dependent on the sector use more expensive loans, such as credit cards to track payments. As default rates likely worsen and providers act ahead of tougher regulation, this source of credit could also become harder to access.

Meanwhile, illegal money lending seems to be on the rise. The links between the refusal of regulated credit and the illegal provision are not well followed. But research this year by the Center for Social Justice estimated that more than a million people could borrow from a loan shark, up 700,000 from the last major survey in 2010. Well more than half of the respondents said they initially considered the loan shark a friend.

What hasn’t happened is a really concerted effort by the government to grow the community lending industry, which is limited in capacity and remains tiny with loans of around £34m a year.

There is not yet much evidence of the emergence of a “compliant, responsible high-cost trade credit sector,” in the words of the regulator, which it says should be able to meet some of the growing demand. Amigo, which recently won court approval for its past customer complaint resolution program, is seeking approval to restart lending with a new product that includes the option to reduce the rate paid over time. Other companies are also considering new models.

The question is what contribution they might make in the near future. The gap in the UK credit market will become harder to ignore this winter.

helen.thomas@ft.com
@helentbiz

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City Limits report on homelessness wins journalism honor https://notizie-informatiche.com/city-limits-report-on-homelessness-wins-journalism-honor/ Tue, 07 Jun 2022 13:05:39 +0000 https://notizie-informatiche.com/city-limits-report-on-homelessness-wins-journalism-honor/ Journalist David Brand’s story about the impact of the COVID-19 pandemic on homeless New Yorkers with health needs won the Silurian Press Club’s News Reporting Merit Award, in the part of the organization’s annual excellence in journalism awards. Adi Talwar Darren Whitney, who was staying at Clarke Thomas Men’s Shelter on Wards Island while awaiting […]]]>

Journalist David Brand’s story about the impact of the COVID-19 pandemic on homeless New Yorkers with health needs won the Silurian Press Club’s News Reporting Merit Award, in the part of the organization’s annual excellence in journalism awards.

Adi Talwar

Darren Whitney, who was staying at Clarke Thomas Men’s Shelter on Wards Island while awaiting a hip transplant last year.

A man staying at Wards Island Men’s Homeless Shelter was awaiting a hip transplant, but his doctor wouldn’t approve the operation until he booked permanent accommodation, citing the risk of infection posed by life in the barracks. shelter-style facility, which did not allow home health aides to visit. Another man staying at a hotel, rented by the city as temporary accommodation space, returned one day to find staff had mistakenly thrown away his belongings, including his diabetes medication and blood thinners.

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Ignore Tom Brady and Matt Damon on Crypto and Celebrities on Money in General https://notizie-informatiche.com/ignore-tom-brady-and-matt-damon-on-crypto-and-celebrities-on-money-in-general/ Thu, 02 Jun 2022 12:00:00 +0000 https://notizie-informatiche.com/ignore-tom-brady-and-matt-damon-on-crypto-and-celebrities-on-money-in-general/ Amid the current crypto crash, a lot of people are a little miffed at celebrities who have bought this stuff out. Gwyneth Paltrow, Tom Brady, Reese Witherspoon, and even Larry David were all happy to help mainstream cryptocurrencies in recent months, only to go quiet now that things have gotten a bit difficult. For Matt […]]]>

Amid the current crypto crash, a lot of people are a little miffed at celebrities who have bought this stuff out. Gwyneth Paltrow, Tom Brady, Reese Witherspoon, and even Larry David were all happy to help mainstream cryptocurrencies in recent months, only to go quiet now that things have gotten a bit difficult. For Matt Damon, “Fortune favors the brave“…who apparently aren’t brave enough to say that maybe it was a bit of a hoot trying to get ordinary people to gamble their hard-earned money on hyper-speculative assets.

If crypto was so certain to make you money, to some degree, why would it need so many high profile celebrity endorsements? After all, money is the most famous celebrity there is.

Here’s the thing: famous people endorse and support financial products and services all the time – products and services that fall within the sketchy spectrum. If you’re going to get mad at LeBron James for playing in a Crypto.com Announcementyou should probably also be annoyed by these Reverse Mortgage Ads by Tom Selleckor places where William Devane talks about buying goldor the litany of A-listers enter the SPACs. In the 1990s, Whoopi Goldberg was a Flooz spokespersonthe cybercurrency of the time which was finally shot down because of crime and fraud.

It might seem a bit obvious to point out – celebrities always make mentions – but I think they do, especially when it comes to money, it’s worth dwelling on. Personal finance and investing are supposed to be a little unsexy; the way you allocate your 401(k) isn’t particularly cool. Today, marketers, advertisers, and the wider culture have managed to make it a hobby and a way of life. Trust has declined so much in traditional financial institutions. People might think Bear Stearns wasn’t doing a great job in the 2000s, so why not take a chance on what Floyd Mayweather says was a good idea now? Companies are able to maneuver this institutional mistrust, replacing cold, untrustworthy, faceless banks with likeable celebrities, to whom consumers might be more open.

Banks left customers “dry” after the 2008 global financial crisis, explained Ana Andjelic, brand manager and expert in business sociology. “What is that trust replaced by? she says. “With brands, with celebrities.”

Yes, famous people are often rich, but not because they participated in a get-rich-quick scheme or made a smart investment in some obscure product. They often have financial advisors who help them manage and build their wealth – and those advisors don’t tell them to pile into dogecoin.

Celebrities = $$$

Companies use famous people to try to sell their products because they know it can work. According to a 2012 study at Harvard Business School, athlete endorsers drove a 4% increase in sales. Several studies found that celebrity endorsement announcements drove up stock prices.

When it comes to finance specifically, the rich and famous aren’t the most influential in consumers’ lives, but they do make a difference. A morning consultation 2021 investigation found that 20% of investors and 45% of cryptocurrency owners would invest in cryptocurrency if famous people endorsed it (although still behind financial advisers, family members or friends and journalists of ‘business). Young consumers may also be more influenced by celebrity — CreditCards.com found that 28% of Gen Zers and 24% of Millennials said they seek financial advice from social media and influencers.

Because people are no longer slumped in front of network TV on Friday nights, the captive audience of advertisements, brands are increasingly relying on celebrities and influencers to connect with consumers, explained Shiv Gupta, expert. of digital marketing and director of the consulting company Quantum Sight. . “The channels are narrowing, he said. A celebrity can catapult your product to consumers through their existing audience and spheres of influence. You can see how it went with crypto. “You had the nerdsphere or the geeksphere pushing the concept of crypto as something that has potential,” Gupta said. “The next step was Larry David and everyone else who came in and started discussing crypto. It was more like saying, “See, that’s common.”

The generalization of a financial product makes it more comfortable for consumers, giving them the impression that it is normal to try it. It can also make them forget about the stakes, even in high-stakes spaces.

“Celebrities endorsing brands is nothing new, we’ve seen that for decades. Selling crypto and NFTs is, obviously, a lot more complex and I would say requires more professional responsibility than selling crypto. typical consumer goods,” said Anindya Ghose, a business professor at NYU. “If you approve of potato chips and energy drinks, that’s another thing.

If you bought a bag of chips because an actor said so and it turned out gross, it doesn’t matter. But if you have taken out a reverse mortgage, which regulators have warned against ads for, and accidentally lost your house because Tom Selleck said, it’s not so good. The focus is on young people and crypto now, but no generation is immune.

“There are those who say, ‘Well, I like Tom Selleck, I grew up with Tom Selleck, he seems like a famous guy. After all, he fought crime on Magnum IP”” Gupta said. “It’s a generational thing, he gets a little older with you.”

Probably don’t listen to celebrities talking about money

If you had asked me in 2004 if I listened to the guy from CO or the guy from Goodwill hunting what to do with my money, I hope I didn’t say either, but I probably would have said the Goodwill hunting dude. Turns out 2004 me would have been wrong. In fact, you shouldn’t listen to either of the Goodwill hunting guys because Ben Affleck accomplices for sports bettingwhich is often not ideal for the end user’s wallet either.

In the end, maybe I should have said CO guy, Ben McKenzie. He has a few points about listening to famous people about money and, in particular, crypto… which is you shouldn’t. McKenzie called celebrities pumping crypto a “moral disaster” in a 2021 article for Slate alongside journalist Jacob Silverman. “These rich and famous entertainers might as well be asking for payday loans or sitting their audiences at a rigged blackjack table,” they wrote. (To be fair, McKenzie also has something to gain here – he and Silverman are writing a book on crypto scams right now that they’re probably getting paid for, and he’s carved himself a celebrity anti crypto.)

Celebrities may not have their fans’ best financial interests at heart. I love Reese Witherspoon, but his crypto tweet, at least for now, feels pretty irresponsible. “At the end of the day, it’s all about the money,” Andjelic said.

It’s not just that celebrities encourage unnecessary risks. Kim Kardashian and Floyd Mayweather may have recently been part of a crypto pump-and-dump scheme. The boxer is no stranger to scandal in the crypto space: In 2018, he and music producer DJ Khaled fees paid from the SEC for failing to disclose that they were paid to promote initial coin offerings, or ICOs, a trend so dubious we rarely hear about it anymore. Actor Steven Seagal got in trouble for something similar too.

It’s easy and tempting to dismiss much of this — of course, celebrities shouldn’t be a reliable source of financial information. And regulators have a say here to protect consumers – endorsers are supposed to be honest to be paid. But famous people are often creeping into the way we think about money in a somewhat uncomfortable way. If you think about it for a moment, celebrities associating themselves with even mainstream names in finance are a bit, well, huh. Jennifer Garner looks good but also isn’t rich just because she’s super savvy with her Capital One card.

Celebrities and financial brands are teaming up to sell people a lifestyle, an aspiration for wealth that may not be realistic. The famous lend their reputation to products that can be questionable. They often do this without acknowledging their own financial stakes – Tom Brady is not just a spokesperson for crypto exchange FTX, he is an investor in the business – or by the way they can take risks, the average person maybe shouldn’t. And the downside risk of lending their reputation, if a project starts from the grassroots, may not be significant.

“It’s not like oh Tom Brady stopped doing anything and now he’s just a crypto boy, you know?” said Andjelic. “People care for a minute.”

Except, of course, the people who lost.

We live in a world that constantly tries to trick and fool us, where we are always surrounded by scams, big and small. It may seem impossible to navigate. Every two weeks, join Emily Stewart in examining all the little ways our economic systems control and manipulate the average person. welcome to The great pressure.

Do you have any ideas for a future column? What is it about the economy that bothers you that you can’t quite put your finger on? E-mail emily.stewart@vox.com.

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