Credit Claims For Boston Freelancers: Legal Strategies For Income Stability – The CFPB, “buy now, pay later” companies and credit bureaus all believe that BNPL data should be counted in credit scores. So what is the bond?

Now, most of the “buy now, pay later” products can only hurt the user’s credit, but the big BNPL companies, customer advocates and companies loan they say change that.

Credit Claims For Boston Freelancers: Legal Strategies For Income Stability

Now, most “buy now, pay later” products can only hurt a user’s credit – if there is an impact on their credit score. But BNPL’s major, consumer and credit unions say they are trying to change that.

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The effort began to gain steam in June, when the CFPB required BNPL’s “pay-to-four” companies, credit unions and rating agencies to work together to introduce the BNPL analyzes the credit scores of the users on the way to pay the duty. But BNPL companies say they are hesitant to trust credit bureaus with data.

Most BNPL companies today do not disclose data from their 0% APR, pay-as-you-go loan products to credit bureaus – that is, unless the customer defaults on their payments. and the debt is sold in collections. Some companies insist on not reporting crimes. (Affirm, which offers a unique and long-term product, reports some credit data to Experian.)

If companies disclose BNPL user data to credit bureaus, it could hurt users’ credit scores. FICO Score 8 — which is the most commonly used credit scoring algorithm — works best with lines of credit, although BNPL services are treated as something similar to a payday loan. This means there is a risk to the credit scores of BNPL customers based on their average age of loan and loan utilization percentage. BNPL customers use the products an average of 3.8 times a year, according to C+R Research. Additionally, users are approved for lines of credit based on individual purchases – essentially “upgrading” the line of credit each time they choose to pay-in-four during purchase. (Financial Technology Association, a trade group, disputes BNPL’s characterization as a “line of credit,” arguing that users are allowed a line of credit at a premium.)

If the data is not included in credit reports, it faces another problem: Lenders do not know which BNPL products the customer is using. This can “disturb BNPL lenders and non-BNPL lenders who are seeking to understand how much debt a potential borrower is carrying,” the CFPB said.

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“We want to make sure that customers can use this product to build credit – good credit – and can show, prove and believe that if they are people who are using this product responsibly, they will get the positive impact on their scores,” said Penny Lee, CEO. of the Financial Technology Association, preach. The company represents BNPL companies Klarna, Afterpay and Zip.

Customer support, in that case, yes. Lawyer Chi Chi Wu of the National Consumer Law Center argued in an op-ed that one solution for credit companies is to evaluate BNPL as a line of credit, like a credit card. But Wu said he was concerned that BNPL companies might be reluctant to agree, because companies don’t want to deal with the rules around credit cards. These regulations include limits on late payments, requirements for standard terms and – potentially problematic for BNPL companies – refund rights.

According to BNPL companies the credit card model is not viable. “We don’t want to be involved in credit card regulation, because we’re not a credit card company,” Harris Qureshi, head of public policy and regulatory affairs at Afterpay, said in response to that. debate.

Instead, argues Qureshi, there are fundamental differences between BNPL’s debit and credit card products. For example, payments are usually made every two weeks, not monthly, and BNPL companies have their own safeguards against misuse such as cutting off users. after not paying, it seems to prevent users from getting more debt. can be by credit card.

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Instead of having a common process for providing BNPL data to FICO and VantageScore to use in credit scores, each major company has developed a different process. BNPL companies are not required to submit their data to agencies by law. But if they do, the big three – namely, those in the business of gathering and selling data – say they can use it. Experian, for example, is a separate “BNPL bureau”, where data is recorded but “protected” from other credit data of users. Equifax said it would log BNPL’s trade lines into reports for lenders who want to see it, while TransUnion has created a “suite of solutions” that would allow BNPL’s information to be disclosed to in a credit report regardless of the user’s score.

BNPL companies say this is not enough. “The main thing is that there’s a different approach, not just for the credit report, but for the final score as well,” Qureshi said.

The CFPB, meanwhile, is concerned about BNPL companies collecting data for anticompetitive purposes. “The main software, BNPL, and connected transactions allow the data to be stored within the limits of the technology and increase and secure the trust of the customers in these products,” said researchers Martin Kleinbard and Amy Zirkle in a recent CFPB blog post.

BNPL companies, credit unions and the CFPB have it all: they all agree that BNPL products can be used as credit tools. The products, when used properly, show a record of timely payment and financial consideration.

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But with data comes power. Both the BNPL companies and the credit institutions want to become the controller of BNPL customers’ data, leaving the parties in a stalemate. It can be done by the CFPB to break it.

Veronica Irwin (@vronirwin) is a reporter in San Francisco covering fintech. Previously, he was at the San Francisco Examiner, covering technology from a hyper-local angle. Before that, her line was featured in SF Weekly, The Nation, Techworker, Ms. Magazine and The Frisk.

His rulings in major cryptocurrency cases include “The Big Lebowski,” “SNL,” and “Dr. Strangelove.” Because he wants you – yes, you – to read them.

The ways in which Zia Faruqui (right) weighs the cases that come before him can provide lawyers with information about the legal basis for making decisions.

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That’s not a quote from “The Big Lebowski” — at least, not exactly. That’s a quote from a Washington, D.C., district court memo about the role of cryptocurrency data processors in government investigations. Justice Zia Faruqui is the author.

It’s not uncommon for judges to make pop culture references, which haven’t reached the level of Faruqui’s cryptocurrency experience. His decisions made clever references to “The Big Lebowski,” “Dr. Strangelove,” and “SNL” parodies of the McLaughlin Group. They also provide a detailed overview of how criminals use cryptocurrency to their advantage and, more importantly, how they can’t: in the January arrest warrant, for for example, Faruqui said that “money in law enforcement is more than cryptocurrency. in cashless wallets. On the other hand, he called anonymity on the blockchain a “myth,” describing cryptocurrency as a useless tool for criminals avoiding punishments.

His knowledge is not the product of spending time on crypto Twitter. But before taking the judge Faruqui was one of a group of prosecutors in the US Attorney’s office in Washington, D.C., who called themselves “Bitcoin Strikeforce,” and worked with agencies such as the IRS and FBI in federal investigations. There, Faruqui prosecuted cases involving terrorism, child pornography, and weapons proliferation. A well-known case involved a dark website called “Welcome to Video,” which facilitated about 360,000 downloads of child abuse videos to 1.28 million members worldwide using the bitcoin. Bitcoin’s immutable index is used to track down criminals.

The judge does not set the same standard as the Supreme Court – only stare decisis is heard by the lower courts, Farqui is not the highest. But the ways in which Faruqui weighed the cases that came before him could give lawyers clues about which legal bases to pass. Crypto lawyers drew on its previous decisions in the context of the Tornado Cash sanctions, for example.

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Faruqui spoke about the power of his position, and what people understand about crypto in relation to the law.

When I was a lawyer I really learned about it. There was another prosecutor, Christopher Brown – you know, the other Chris Brown – and he was interested in this when we were working on financial crimes in the US Attorney’s office, D.C.. he got the feeling that “this is going to get bigger, and we need to start looking at it.”

Our US attorney at the time, Jessie Liu, had this idea of ​​using financial investigations in a way that was not limited to just white collar crime, or narcotics cases, but for cyber investigations, in national security investigations, and in civil cases. . Many of the things we study are related

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