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The Two Faces of TAB Bank
How a mainstream bank preys on vulnerable consumers
Scroll through the Twitter feed of Utah-based TAB Bank and you’ll see tweets about where the bank is going (to lots of trucking shows) and about how it is an industry innovator. There are stories about the bank’s partnerships with fintech lenders and pictures of their charitable work in Utah. Oh, and they offer a pretty great high yield savings account.
Here are some examples:
Sounds like a bank doing some great work, right? I mean, helping out the trucking industry, offering great savings rates, and partnering with fintech innovators to make banking easier.
Here’s the rest of the story. The partnerships TAB wants? Well, they really seem to enjoy the one with EasyPay Finance that results in loans with interest rates up to 189%.
Here’s more on how TAB is profiting handsomely by participating in predatory practices:
“The Department of Defense studied high-interest loans like those issued by EasyPay Finance and TAB Bank and concluded they harmed troops and their families — and undermined military readiness,” said Nadine Chabrier, senior policy counsel at the Center for Responsible Lending. “TAB Bank and retailers, such as Meineke, should stop facilitating the sale of EasyPay loans, which inflict pain upon military communities and consumers across the country. The FDIC is responsible for supervising TAB Bank and should stop it from abusing its charter by enabling these predatory loans.”
Here’s how TAB describes its desire to partner with fintechs:
Capitalizing on buy now, pay later demand, TAB Bank partners with multiple fintechs that specialize in technology to make everyday purchases easier and faster. These partnerships have fueled tremendous growth of these companies. Loans through these partnerships are made by TAB Bank, which determines qualifications and terms of credit. Many fintechs achieve approval rates of 90% or more with the application process on many loans taking less than one minute for amounts from $50 to tens of thousands of dollars.
I guess that’s one way to describe a profit model based on usurious interest rates that punish borrowers least able to pay. In TAB’s model, everyone wins but the borrower. The auto or retail shop gets paid, EasyPay makes a huge profit off of an outrageous interest rate, and TAB piggybacks on that rate to rake in ridiculous cash.
Here’s more on how TAB Bank is a willing participant in predatory loans targeting pet owners:
EasyPay offers financing for purchases at pet stores, auto mechanics, furniture stores and other retailers at rates ranging from 130% to 189% APR. In 32 states where those rates are illegal, EasyPay launders its loans through TAB Bank, headquartered in Utah, to disguise the loans as bank loans that are exempt from state rate caps. This is a practice often referred to as a “rent-a-bank” scheme.
So maybe skip that stop at TAB Bank’s booth at your local Trucking Show or Banking Expo. And know that the high yield savings rate they offer is likely made possible by the egregious lending they facilitate.
Here’s what the Humane Society had to say about TAB’s practices:
“TAB Bank’s partnership with EasyPay Finance promotes exploitative financing of puppies from inhumane, high-volume dog breeding facilities that ignore the needs of the puppies, including proper veterinary care and early socialization,” said Rachel Heatley, Advocacy Director of the Utah Humane Society.
With rates and practices like these, TAB is little more than a high-tech, dressed-up version of the shady payday loan store.
In fact, consumer advocates are calling on the FDIC to take action against TAB and other “rent-a-bank” profiteers:
In a letter to regulators, consumer groups including Consumer Federation of America and National Consumer Law Center called for further action to stop banks from enabling predatory lending:
“FDIC-supervised banks are helping predatory lenders make loans up to 225% APR that are illegal in almost every state. These rent-a-bank schemes often operate under the guise of innovative ‘fintech’ products, even as their high-cost, high-default business model inflicts harms similar to those inflicted by traditional payday lenders…. Rent-a-bank schemes have flourished at FDIC banks in the past few years, and it is time for that to come to an end.”
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Fighting Back Against Shady Debt Collectors
You should know that collectors can’t threaten jail time and are not allowed to talk to others about the specifics of your debt. Certainly, they should not be claiming to your friends or coworkers that you may be arrested.
However, if you’re facing a shady collector, you have recourse.
Here’s more on what you can do if you feel harassed, threatened, or intimidated by a collector:
The best way to protect yourself from illegal debt collection tactics is to know your rights. The FTC has published information on its website about your rights under the Fair Debt Collection Practices Act. You can also find information on debt collection scams and how to avoid them.
If you are being harassed by a debt collector, you may be able to take direct action against them. The FTC has a complaint process where you can file a complaint against a debt collector for illegal debt collection practices. You can also contact your state attorney general’s office or the Consumer Financial Protection Bureau if you think you have been a victim of illegal debt collection practices.