Building Shared Prosperity from The Ground Up: Consumer Protections as the Foundation Fighting Poverty Summit Shared Prosperity Philadelphia 11.30.17 Kerry Smith Senior Staff Attorney Homeownership and Consumer Rights Unit Community Legal Services 1424 Chestnut Street Philadelphia, PA 19102 215‐981‐3724 [email protected]
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Consumer Protections as Foundation Kerry Smithsharedprosperityphila.org/documents/Summit2017_ConsumerProtections.pdfFederal Loans: CLS‐eligible, low‐income borrowers almost always
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Building Shared Prosperity from The Ground Up:
Consumer Protections as the FoundationFighting Poverty Summit
Shared Prosperity Philadelphia11.30.17
Kerry SmithSenior Staff Attorney
Homeownership and Consumer Rights UnitCommunity Legal Services
Consumer Protection: A Foundation for Financial Security
Financial Education
Safe and AffordableProducts
Income & Wealth Building
Opportunities
PROTECTGains made by eliminating predatory practices
Graphic from Center for Responsible Lending
Student Loan Debt
Student Loan Debt
Student Loan Delinquency Rates by ZIP Code
www.mappingstudentdebt.org
Student Loan Debt
1%
16%
7%
18%
35%
18%
3%
1% 1%
CLS Student Loan Borrower Clients by Age Range
Teen20s30s40s50s60s70s80s90s
Student Loan Debt
Challenges:Federal Loans: CLS‐eligible, low‐income borrowers almost always will qualify for an income‐sensitive payment that is or is near $0
Problem: loan servicers have a disincentive to enroll borrowers into these plans; and failure to do so can cause significant financial harm
Student Loan Debt
Challenges:Private Loans: no mandated affordable repayment plans; collection through traditional means, and bankruptcy discharge is generally not available unless “undue hardship”Abusive For‐Profit Schools: “defense to repayment” rules in limbo
CFPB: Student Loan Watchdog
• Student Loan Ombudsman• $19.1 million to be paid by a private student loan collector for improperly suing borrowers
• Suing the largest student loan servicer to ensure borrowers get affordable payment plans
• PA Attorney General’s new Consumer Financial Protection Unit: our next watchdog?
Abusive Debt Collection Litigation
Consumers are facing an explosion of predatory debt collection lawsuits.
Dirty Debts Sold Dirt Cheap*Debt Buyers Unfair Practices:
– Filing claims with defective, inaccurate or insufficient proof of the debt.
– Robo‐signing.– Collecting on time‐barred debt.
*Dalié Jiménez, Harvard Journal on Legislation, Vol. 52 (Winter 2014).
Abusive Debt Collection Litigation
How to collect Dirty Debts Sold Dirt Cheap:Use the courts!
“Do not be intimidated by the Court House. The Small Claims Court is actually going to help you make money. It is the vehicle that flushes out payment.”
Larry K. Neil, The Complete Guide to Buying Debt (2013), available at www.beadebtcollector.com.
Abusive Debt Collection LitigationCompounding the Problem:• Limited access to representation.
• “Rubber Stamp Justice” Human Rights Watch callsout Philadelphia’s judgelesscourtrooms
• 10/11/16 Navy Federal Credit Union: Made false threats about debt collection to its members, and restricted account access when members had a delinquent loan.
• 01/03/17 Transunion & Equifax: Deceived consumers about actual costs, and lured customers into costly recurring payments.
• 01/18/17 Navient Corporation: Illegally failing to provide borrowers with flexible repayment plans.
• 04/20/17 Ocwen Financial: Failed borrowers throughout the entirety of their mortgage servicing process.
The financial industry is spending roughly $2 million per day
lobbying Congress to deregulate Wall Street.
WHY IS THE CFPB CONSTANTLY UNDER ATTACK?
Consumers have strength in numbers.
Each has a stake…
• Seniors• Veterans• Students• Low‐income families• Single mothers• Single fathers• Women• Unemployed• Underemployed• Immigrants• Underbanked• Millenials• Gen Z
• Servicemembers• Consumers with disabilities• Community Associations• Community Development Organizations• Faith communities• Communities of color• Consumers without a high school diploma• Middle class families• Working class families• And on…• …an on…
THE POWER OF OUTREACH
THE POWER OF STORYTELLING
THE POWER OF COALITIONS
Change rests on our ability to build
collective power.
FINANCIAL JUSTICE AND COMMUNITY EQUITY:
An affirmative agenda for New York.Andy Morrison, Campaigns Director
New Economy Project’s mission is to build a new economy that works for all, based on principles of cooperation, democracy, equity, racial justice, and ecological sustainability.
We work with community groups to achieve this mission by: (1) challenging corporations that harm communities and perpetuate
inequality and poverty; and (2) building strong local economies, by fostering democratically-structured,
community-controlled initiatives such as worker cooperatives, community development credit unions, community land trusts, and mutual housing.
We believe a world is possible in which all people live in safe, healthy, thriving communities, and that fundamental change is needed to achieve that world.
TWO‐TIERED FINANCIAL SYSTEM
PREDATORY LOAN SHARKS ARE CIRCLING
THE BEST DEFENSE IS A GOOD OFFENSE1. Build individual and community
wealth.2. Hold banks accountable to New
Yorkers and New York communities.
3. Preserve and enhance our state’s strong usury and other consumer protection laws, and keep payday and other predatory, high‐cost lending out of New York.
A CDCU is a credit union with a mission of serving low‐ and
moderate‐income people and communities. CDCUs specialize in serving populations with limited access to safe financial services.
“WE ENVISION A COMMUNITY DEVELOPMENT CREDIT UNION IN EVERY NEIGHBORHOOD.”
2015 FDIC National Survey of Unbanked and Underbanked HouseholdsHow interested are banks in serving households like yours? for New