Friday Financial Fraud Roundup
Payment app scams and deceptive lending
A report released by the Consumer Financial Protection Bureau (CFPB) shows that the top complaints among military servicemembers when it comes to consumer finance are about digital payment apps.
These apps are often a necessary part of military service life as servicemembers and their families can be separated due to assignments and can require finance vehicles that allow quick transaction processing.
Among the harms identified in the report:
Serious financial harm from fraud and scams when using digital payment apps. Often during a permanent change of duty station, servicemembers face the need to secure housing, a new automobile, or daycare during a short window, which often requires them to conduct more online transactions using digital payment apps. After reporting being scammed online using payment apps, servicemembers reported that it affected their overall financial stability, and such consequences may impact servicemembers’ ability to continue service or keep a security clearance.
Read more about this insidious use of payment apps for ill-gotten gain>
Business as Usual at OneMain Means Deception
OneMain Financial - a subprime, short-term, installment lender will pay a $10 million fine and refund customers up to $10 million for using deceptive practices to get customers to sign-up for add-on products and then refusing to allow those customers to cancel the essentially useless services.
Here’s more from NewsBreak:
A Consumer Financial Protection Bureau (CFPB) investigation found that the company repeatedly deceived consumers into believing that certain add-on products were required for loan approval. When some customers later asked for refunds — which OneMain claimed were guaranteed — the company then kept a portion of the funds. The CFPB says as many as 25,000 borrowers were defrauded as a result of these practices.
“OneMain pressured its employees to load up its loans with extra charges through false promises of easy cancellation with full refunds,” said CFPB Director Rohit Chopra. “We are ordering OneMain to refund borrowers it cheated and to clean up its business practices.”
Banking Deserts: Higher Interest Rates, Less Access to Credit
While not exactly fraud, the existence of banking deserts can have a devastating impact on communities. A new CFPB report finds citizens of the rural South more likely than other Americans to live in banking desserts - and to pay more for lending products and be declined for loans at a higher rate, regardless of credit score.
A new report from the Consumer Financial Protection Bureau (CFPB) makes clear the potentially devastating impact of banking deserts in the American South. The report notes that the South is home a large number of rural areas and many of these areas lack access to a full range of banking services.
“The rural South faces distinct challenges when it comes to fair access to banking,” said CFPB Director Rohit Chopra. “Understanding regional differences across the country will help us determine where financial marketplaces can work better for all.”
The CFPB found:
"While Southern rural consumers apply for mortgages at the same rate as consumers nationwide (19 per 1,000 residents), they are much more likely to have their applications denied (27% of mortgage applications are denied in the rural South compared to 11% nationally). Additionally, rural Southerners who obtain credit tend to pay higher interest rates on average, 3.51% compared to 3.13% nationally."
As always I enjoy your selection of reading focuses.
On a separate, but related note, I have never really understood the justification for the business of Mortgages (or as the antecedent meaning of the term as derived from the French language’s meaning-a contract until death, because such contracts were understood to be a lasting lifelong repayment plan all the way to death), and more to the point for me personally is why should anyone pay 200% or greater for interest payments on the original property sales price? I find it difficult to justify such an obviously greed-based system of financing.
It is my personal opinion that property financing should be capped and an end to the greed absolutely must be enforced.