Subject Material Specialists
Rachel Gittleman
Financial Solutions and Membership Outreach Manager
Many Recent Press Releases
Most Recent Testimony and Remarks
Stops Usage Of Cards to Evade State Payday Laws
Washington, D.C. – under great pressure through the federal banking regulator and customer advocates, Urban Trust Bank (UTB) announced belated yesterday it has stopped allowing its prepaid cards to be utilized because of the CheckSmart string of payday shops to evade rate of interest caps and payday rules in Arizona, Ohio, as well as other states. The cards that are prepaid by Insight Card solutions carried optional overdraft “protection” that allowed acquisitions once the card ended up being empty, at a price of $0.15 for each $1 in negative stability. The fee equated to an APR of 390% despite interest caps of 28% in Ohio and 36% in Arizona.
“Urban Trust Bank did the thing that is right rid its prepaid cards of overdraft costs,” said Lauren Saunders, managing lawyer during the National customer Law Center. “Prepaid cards should always be exactly that: prepaid rather than vehicles for evading state rate of interest caps and payday rules.”
“Overdraft costs on prepaid debit cards are basically payday advances,” said David Rothstein, task manager for asset building at Policy issues Ohio. “Ohioans deserve safe and affordable financial loans that conform to our rate that is strong cap payday advances.” Kelly Griffith, co-executive manager during the Center for Economic Integrity in Arizona, consented. “Arizona voters upheld a 36% interest limit this season and 390% prepaid credit card pay day loans have now been go out of city.”
In 2012, the nationwide Consumer Law Center and many customer teams asked the federal banking regulator, any office for the Comptroller for the Currency (OCC), to end Urban Trust Bank from partnering with
Community solution Financial, Inc. (CCFI) to supply prepaid cards with overdraft costs and credit features. CCFI runs a string of check cashing and stores that are payday the CheckSmart, Buckeye, as well as other brands in 14 states. The OCC announced an action that is supervisory UTB into the autumn, however it had not been clear exactly what action it had taken.
Later yesterday, UTB announced so it had eradicated overdraft charges from each of its cards that are prepaid therefore the bank has verified that none of their prepaid cards now carry credit features. Another UTB prepaid card with cash advance features, Tandem Money, folded last autumn after the OCC action. CCFI decided a preliminary general general general public providing of stock final springtime, but pulled it following the customer teams’ page to your OCC premiered.
A year ago, a coalition that is broad of and civil liberties teams additionally came across utilizing the CFPB and asked that the bureau ban overdraft charges payday loan lenders Connecticut and credit features on prepaid cards. “The customer Financial Protection Bureau has to stop prepaid cards from used to peddle overdraft fees and abusive loans,” stated Tom Feltner, manager of monetary solutions during the customer Federation of America.
Supporting Papers
Since 1969, the nonprofit National customer Law CenterВ® (NCLCВ®) spent some time working for customer justice and economic protection for low-income along with other disadvantaged individuals, including older grownups, when you look at the U.S. through its expertise in policy analysis and advocacy, magazines, litigation, expert witness solutions, and training.
The middle for Economic Integrity partcipates in research, training and advocacy to bolster regional economies by mobilizing and protecting marginalized individuals, keeping corporations and companies accountable to communities and support that is cultivating good company methods.
The customer Federation of America (CFA) is a link of almost 300 non-profit customer companies that ended up being created in 1968 to advance the customer interest through research, advocacy, and training.
Policy Matters Ohio is really a non-profit, nonpartisan policy research organization started in January 2000 to broaden the debate about financial policy in Ohio. Our objective is always to produce a far more successful, sustainable and Ohio that is inclusive research, news work and policy advocacy.