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Rachel Gittleman

Financial Solutions and Membership Outreach Manager

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Most Recent Testimony and Reviews

Stops Utilization Of Cards to Evade State Payday Laws

Washington, D.C. – under some pressure through the federal banking regulator and customer advocates, Urban Trust Bank (UTB) announced belated yesterday so it has stopped allowing its prepaid cards to be utilized by the CheckSmart string of payday shops to evade rate of interest caps and payday legislation in Arizona, Ohio, as well as other states. The prepaid cards supplied by Insight Card solutions carried optional overdraft “protection” that allowed purchases as soon as the card ended up being empty, at a price of $0.15 for every single $1 in negative stability. The fee equated to an APR of 390% despite rate of 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, handling lawyer in the National customer Law Center. “Prepaid cards must be exactly that: prepaid rather than vehicles for evading state interest caps and payday rules.”

“Overdraft charges on prepaid debit cards are basically payday advances,” said David Rothstein, project manager for asset building at Policy issues Ohio. “Ohioans deserve safe and affordable lending options that adhere 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% rate of interest limit this year and 390% prepaid credit card payday advances have already been go out of city.”

The Office of the Comptroller of the Currency (OCC), to stop Urban Trust Bank from partnering with in 2012, the National Consumer Law Center and several consumer groups asked the federal banking regulator

Community solution Financial, Inc. (CCFI) to provide cards that are prepaid 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 a supervisory action against UTB into the autumn, however it wasn’t clear exactly what action it had taken.

Later yesterday, UTB announced so it had eliminated overdraft charges from each of its cards that are prepaid in addition to bank has verified that none of its prepaid cards now carry credit features. Another UTB card that is prepaid pay day loan features, Tandem cash, folded last autumn following the OCC action. CCFI decided a preliminary general public providing of stock spring that is last but pulled it following the customer teams’ letter to your OCC was launched.

Just last year, a coalition that is broad of and civil legal rights teams additionally came across with all the CFPB and asked that the bureau ban overdraft costs and credit features on prepaid cards. “The customer Financial Protection Bureau has to stop cards that are prepaid getting used to peddle overdraft charges and abusive loans,” stated Tom Feltner, manager of economic 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 financial safety for low-income along with other disadvantaged individuals, including older grownups, within the U.S. through payday loans and check cashing Booneville 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 businesses that had been 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 created in January 2000 to broaden the debate about financial policy in Ohio. Our objective would be to produce a far more successful, sustainable and Ohio that is inclusive research, news work and policy advocacy.