THE BLOG

30
Jan

Off Topic: Just Some Friday Fun Dancing & Shout Out to Tim Ranney & Clarity Services

A BIG SHOUT OUT TO an old friend, TIM RANNEY & Clarity Services; now owned by Experian.

Totally off-topic! You may want to SKIP this. I met my “wife” in a dance class 10 years ago so I cannot help myself.

I’ve been watching the impeachment hearings non-stop all week. BRUTAL!

So pardon me for what I’m about to share with you. Simply 3 minutes of a hilarious group of guys dancing to a multitude of songs and music genres from the ’50s through the millennium.

Now & then you just gotta fuhgeddaboudit all the BS going on today!

AND a BIG SHOUT OUT TO an old friend TIM RANNEY & Clarity. Back in the day, Tim sponsored a fabulous dinner/dance at the Atlantis Hotel in the Bahamas. Piles of lobster, shrimp, crab… and a live band that played for hours while we all danced and celebrated “the business of lending to the masses.”

28
Jan

Ex-Billionaire Scott Tucker Payday Loan Lender Finally Tells His Own Story

By: Jer Ayles. Consiglieri to entrepreneurs interested in “The Business of Lending to the Masses.”

Scott Tucker has been portrayed by Netflix, American Greed, The WSJ, The NYT… and on and on as a pure, 100%  scum bag payday loan lender and loan shark for years. When I speak to investors, Wall Street, Family Offices, reporters, employees and peers, the name “Scott Tucker” is always part of the conversation.

Below, I give you your opportunity to hear directly from Scott. In his own words, you will gain insight into his side of his story. No matter your preconceived thoughts about Scott Tucker and his payday loan business escapades, the interview below will most likely change your mind in some respects and inform you as to the lengths our government will go should they choose to make an example of you! [NOTE: BOOKMARK THIS PAGE in order to listen to all 5 podcasts!]

Scott Tucker Payday Loans

Scott Tucker Payday Loans

No doubt about it, Scott employed some pretty outrageous business practices. Scott has a big ego and he pushes life and business to the limit!

And, as we all now know, so do the FED’s.

Scott did a 2.5-hour interview with a white-collar criminal consultancy group focused on helping defendants in criminal cases prepare for sentencing, prepare for prison, and prepare for the best possible outcomes. [Link below.]

I know the payday loan space very well. I know Scott Tucker.

I too opened my first location in 1998. There were “rules” and “best practices” and yet it’s true that there was a bit of a “wild west” mindset in the early days of payday loan lending. The industry grew from virtually zero to billions of dollars in funded loans overnight!

Borrow $100 and two weeks later, payback $115. No big deal. Currently, 14M to 20M+ USA customers use payday loans, installment loans, and car title loans to solve their financial challenges. [Imagine China, Brazil, India small-dollar loan volume!] It was simple for an entrepreneur to scrape together $10K – $50K, open a little payday loan store in a strip mall and start handing out money to people! You had no clue if they would honor their agreement with you and pay you back. Collections! Ugh!!

IT WAS NUTS!

Some of us made MILLIONS of DOLLARS doing this! Others went broke! And a few, like Scott Tucker, went to jail! Scott was a pioneer who pushes everything in life to the limit! His downfall? Ego? His pioneering implementation of the “tribe model” after the alleged consumer abuse claimed by the FED’s had occurred? The FED’s decided to make an example of him? Likely a combination…

[NOTE: That the “tribe model” has matured vastly since the so-called “Scott Tucker days!” The combination of $Capital + sovereign federally recognized Native American Indian Tribes + sophisticated technology and extremely positive outcomes in the Courts supporting the tribal lending model have resulted in tremendous advances in the stability of the “sovereign model.” I’ve participated in tribe portfolios and consulted for multiple entrepreneurs who have successfully and lawfully scaled minimal capital infusions in collaboration with Indian Country to achieve $50M+ loan portfolios in just a few years! Small-dollar loans averaging $300 – $800 with 400%+ APR’s.  Click here to learn more about the Tribe Model.]

Boy how things have changed! And yet today, it’s still easy to start a consumer loan business LAWFULLY!

How do I know this?

  • The laws and regulations are more clearly defined.
  • Demand by consumers for small-dollar loans increases daily. [Simply review the Quarterly Reports for CURO/SPEEDY, ENOVA, ONEMAIN
    Each of these companies reported over $1 Billion dollars in loans last year! We’re talking small-dollar loans… often averaging $300- $800+!]
  • Today, there is a multitude of financial products and services for the so-called underbanked/unbanked/subprime as a result of the fact that nearly half of all U.S. households cannot access $1000 cash in an emergency. Approximately 40% can’t access $400 cash in an emergency!
  • A suite of 3rd party vendors can be assembled by a Lender who chooses to enter this “business of lending to the masses.” Within weeks, an entrepreneur can secure a State/Province license if required, select a loan management software company to automate the business, connect with consumer identification underwriters, gain instant visibility on a borrower applicant’s bank account [IBV: Instant Bank Account Verification], employment and cell phone carrier history, employer and residence patterns, determine if the borrower applicant already has outstanding payday and/or car title loans… Lenders today know if their loan applicant just visited Starbucks!
  • Frankly, it’s astounding how much data is available to a Lender today! Loan decisioning in 90 seconds! Same-day funding! Online or in a storefront environment. AI is certain to vastly reduce a Lender’s dependence on call center services if not eliminate completely.

SCARY! In these United States of America today, millions of folks must have access to a few hundred dollars for everyday emergencies!!

The single-payment “payday loan product” is rapidly becoming a dinosaur. However, demand for quick, easy access to a few hundred dollars is going nowhere but UP! Demand continues to increase all over the world. Moneylenders and the ordinary folks who need them have been around since the beginning. Read “Debt: The First 5000 Years” and “The Ascent of Money” for perspective. Two excellent books and highly recommended on the history of money lending.

But as in every industry, there are outliers. Both consumers and business executives who test the limits of common sense and fairness. Fraudsters and thieves.

Example: There was a phone sex call center in my first payday loan location’s building; 100+ female employees. [This was way back in the days of the 1-900 premium pay-per-call business models. “Call 1-900-XXX-XXX to talk to a psychic hotline, adult chat lines…] 20% of these ladies hit up my payday loan store every week. I’d give them $255. Two weeks later, they owed me $300. 70% paid me back as promised. My Team spent our time chasing down the 30% who tried to blow us off. 🙂

Banks & credit unions in my area? They did not like me! They did not like my customers.

But they did like the $35 NSF fees my payday loan customers were avoiding by doing business with me.

I know, dear reader… you’re first thought! My conscious? How could I be a money lender? Profiting off the backs of these poor sex workers! Scum bag!!

  • One lady needed an abscessed tooth fixed. I loaned her the cash to get it taken care of. [Remember this is early 1998 when $255 was really $255!]
  • One lady needed a prescription filled. We helped her…
  • One lady’s car broke down. She couldn’t get to work. We loaned her the cash…
  • I recall a phone sex worker who borrowed $255. Then, every two weeks we tracked her down for our $255. She never had it. She chose to pay us our $45 fee instead and “rollover” her payday loan. This went on for 10 pay periods [so… we collected $450 over 20 weeks]. Don’t think this was easy. She dodged us EVERY payday and would NOT respond to calls, letters… Eventually, I reviewed her transactions. We loaned her $255. She had paid us $450. As she sat at my desk, I told her she had paid enough and I literally tore up her contract. “We are done.” I learned later, from a buddy of mine who owned a payday loan store about 5 miles from me, that she was, and continues to get payday loans from his store.
  • On the other hand, I had a client who borrowed $3000 2 to 3 times/year using his truck as collateral; a “car title loan.” There were times when he had to make payroll or buy supplies for a construction job he had just “landed.” He’d pay us back $3240 for a 30 day $3000 loan. [We charged him 8%/month.] No worries!

Today, I have equity in stores and online platforms in multiple states and via Native American Indian tribes. I’m an investor in several internet lending platforms and Silicon Valley startups. I offer consulting services for entrepreneurs, venture capitalists, family offices, investors, and existing operators in need of help.

MOST IMPORTANTLY, I’m a conduit for all parties interested in “the business of lending to the masses.” My Team operates several websites & Blogs dedicated to “the business of lending money to the masses” profitably.

Additionally, I give and support several charities!

Jer – TheBusinessOfLending.com

Reach out! Cell = 702-208-6736 Email: TrihouseConsulting@gmail.com

Ready and able to explore the business of lending to the masses! Fintech, workplace advances, car title loans, installment lending, payday loans… CLICK HERE TO LEARN MORE

CLICK IMAGE TO LEARN MORE

And no, unlike Scott Tucker, I am not a billionaire. And apparently, Scott no longer is either.

From the Podcast: “Scott Tucker built a billion-dollar business. He started with a single storefront. In this episode, the third episode in a multi-part series, we learn how.

Despite his not being a good student, Scott Tucker always had ambition. Like many young entrepreneurs, he started with lawn mowing businesses that he launched as a child. While in college, Scott found an opportunity to get involved in real estate. Scouring the classified ads, he secured an opportunity that netted him more than $100,000 for six months’ work. Then he invested those resources to build other businesses.

After a brief period in the car business, Scott discovered a new market. People were asking if they could provide him with a post-dated check for a deposit. They needed a bit of liquidity until they received a paycheck.

Scott decided to start a company. People could write a post-dated check for $120. It would not be good until the person’s payday. Scott would give the person $100 in exchange for that post-dated check. That was how the payday loan business began.

Scott said that 1 out of 3 people who borrowed money for the first time chose not to repay the money. The business model had to build profits that would cover those anticipated losses. The strategy he deployed resulted in massive growth for the industry. It also resulted in massive amounts of revenues for his company and employment for thousands of people.

Unfortunately, the government did not like the industry. Scott went through numerous trials. As described in the first episodes of this series, a jury convicted Scott of violating various federal laws. It’s a white-collar crime, but he faces decades in prison.”

Interview #1

Interview #2

Interview #3

Interview #4

Interview #5

20
Jan

AB539-California 36% APR Rate Cap: We have Solutions for Lenders Disruption = Opportunity

AB539-California 36% APR Rate Cap: We have Solutions for Lenders – Disruption = Opportunity

Are you a licensed California Finance Lender (CFL) title loan Lender? Are you concerned about AB539?

Are you funding California car title loans? We can show you how to start/remain in the business of Title lending following the passage of California AB 539.

California AB539 forced all California title loan lenders to offer a maximum 36% APR to their borrowers effective January 1st, 2020.

Do you want to remain in business? We offer a turnkey program that will enable you to start/continue offering <36% APR title loans while maintaining a 200%+ ROI on your portfolio.

We have 2 Solutions to choose from:

  1. Offer CPI: “Collateral Protection Insurance” coverage to your title loan/collateralized borrowers.
  2. OR
  3. Collaborate with a federally recognized Native American Indian tribe. [ LeaningRockFinance.com ]

For the majority of California CFL licensed Lenders, Option 1 [Adding CPI to your loan transactions is the proven answer.]

CPI: The HOW and the WHY: The same way your competitors – who were actually the sponsors of AB539 and paid off the politicians – continue to earn superior ROI on their title loan portfolios! Add Collateral Protection Insurance [CPI] to all your transactions. A 100% completely legal tactic for protecting your loan collateral while enabling you to continue to serve the multitude of California residents in dire need of financial choices to solve their challenges meeting emergency expenses.

California AB539 36% Maximum APR

California AB 539 36% Maximum APR

Collateral Protection Insurance simply stated:

Collateral Protection Insurance, or CPI, insures property held as collateral for loans made by lending institutions. CPI, also known as force-placed insurance and lender-placed insurance, may be classified as single-interest insurance if it protects the interest of the lender, a single party, or as dual-interest insurance coverage if it protects the interest of both the lender and the borrower.

Upon signing a loan agreement, the borrower typically agrees to purchase and maintain insurance (that must include comprehensive and collision coverage for automobiles and list the lending institution as the lien holder. If the borrower fails to purchase such coverage, the lender is left vulnerable to losses, and the lender turns to a CPI provider to protect its interests against loss.

Lenders purchase CPI in order to manage their risk of loss by transferring the risk to an insurance company. Unlike other forms of insurance available to lenders, such as blanket insurance that impacts borrowers that have already purchased insurance, CPI affects only uninsured borrowers or lender-owned collateral, such as title loan lenders.

Additionally, depending upon the structure of the CPI policy chosen by the lender, the uninsured borrower may also be protected in several ways. For instance, a policy may provide that if the collateral is damaged, it can be repaired and retained by the borrower. If the collateral is damaged beyond repair, CPI insurance can pay off the loan. [In our turnkey Model, the Lender is monetized!]

THE ANSWER FOR CALIFORNIA TITLE LOAN LENDERS IN RESPONSE TO AB539?

We offer a turnkey package enabling CFLs to set up their own A1 rated, captured reinsurance company to profitably continue to fund title loans at a 36% APR AND collect monthly collateral protection insurance premiums from their customers.

Example?

Assumptions for all Scenarios:

  • $5M title loan portfolio
  • Average loan principal $4200
  • Average monthly fees 8% of the outstanding portfolio
  • 1191 title loans outstanding

Pre AB539:

  • $5M X 8%/month fees = $400,000/month gross = $4.8M/annually gross fees.

Post AB539:

  • 36% APR maximum fee imposed.
  • $5,000,000 X 3%/month fees = $150,000/month gross = $1.8M/annual gross fees.
  • Note: Federal funds rate could enable Lender to achieve approx.. 38% APR annually

Following Implementation CPI:

  • <36% APR adherence maintained beginning January 1st, 2020 on all newly originated title loans.
  • $5,000,000 X 3%/month fees = $150,000/month gross = $1.8M/annual gross fees.
  • Achieve a significant increase in market share. [Your competition has thrown in the towel.]
  • Comprehensive and collision premiums are now paid to Lender and;
  • Underwriting profit transferred to Lender’s related A1 rated [Typically Berkshire Hathaway or equivalent] captured Reinsurance Company!
  • Assume – worst case – 60% CPI penetration rate.
    • [That is, 60% of your title loan customers secure Collateral Protection directly from your captured Reinsurance Company. Thus, 1191 title loans X 60% = 715 CPI accounts.
  • Assume average CPI payment is $100/month. [This varies depending upon your CSR’s skillset & training, the market you serve, customer’s ability to repay, the collateral…]
    • 715 customers X $100/month = $71,500/month = $858,000/annually CPI premiums.
  • Assume 30% payouts in “claims” [Our model is a $500 deductible] annually.
    • $858,000 X 30% = $257,400 annually [NOTE: The majority of these $$$ paid to Lender.]
    • $858,000 X 70% = $600,600 in CPI premiums remain in Lender’s Reinsurance company. These funds can be “borrowed” by the Lender at 1% – 2% and used for any reason. Or, Lender can choose to take distributions and pay capital gains.

BOTTOM LINE with Implementation of CPI in Calif Post AB539:

  • $1.8M annual gross fees at <36%
  • $600,600 net annual in CPI premiums
  • $257,400: Likely hood of the 30% in “claims” paid to Lender rather than the consumer.
  • The ability to continue to serve the California title lending market thereby achieving a significant increase in market share. [The majority of Calif. title lenders are abandoning this market due to a lack of sophistication, savvy, and resources.]

Total Annual Revenue in this conservative CPI scenario = $2,658,000

Note: By employing our turnkey CPI program in conjunction with our counsel for creating your captured reinsurance entity, you can continue/start title loan lending in a post-California AB539 sub-36% APR environment while maintaining superior ROI, and servicing your community, your employees and your investors! The “devil is in the details.” Call or email for details: TrihouseConsulting@gmail.com and 702-208-6736 PDT. Subject: CPI. Provide your contact info and a few details about your business and situation. 

 

By: Jer Ayles. Are you a California Lender operating per the CFL licensing model? Ready to throw in the towel, sell off your portfolio, mimic title loan lenders such as Finova Financial, Opportun, One Main…by adding CPI to your transaction OR collaborate with a federally recognized Native American Indian tribe, layoff your employees, tell the average Joe’s and Jill’s you simply can no longer serve them when they face a sudden financial emergency… Are you going to give up the business of lending money to the masses that make sense for consumers and a reasonable profit for your company?

WHAT: California AB 539 bans loans between $2500 and $10,000 with APR’s exceeding 36%.  This is huge. The Bill, which became effective January 1st, 2020, enforces a maximum APR rate of 36%, plus the Federal Funds rate, on loans of $2,500 or more but less than $10,000. Other changes include a minimum loan term of 12 months to promote reasonable repayment schedules and a requirement that prior to disbursing loan proceeds credit score resources be provided to consumers to assist them in better understanding the importance of a credit score and how it can be improved.

WHY: A $100 loan for 12 months yields the Lender $36.00 PER YEAR! Lenders cannot pay to acquire customers, pay their rent, pay their employees, process loan applications, spend capital on radio, TV, direct marketing, Google, Facebook, Instagram… process the loan applications [production costs] they secure via all these efforts… And then attempt to collect their hard-earned money by reaching out to customers by phone, text, letters…

RESULT: California loans of less than $4,000 – $5,000+ WILL NO LONGER BE OFFERED to consumers with “shitty credit.” That’s life!

Consumers with poor credit, thin files, maxed credit cards, friends and families in the same boat, communities of color, low wage earners, Latino owned businesses, even the President of the NAACP said his constituents… “cannot qualify for a short term small-dollar loan ANYWHERE in California!” [Except perhaps from an illegal, unlicensed loan shark, by pawning the stuff in your garage, knock you over the head while you dodge the needles and excrement in the streets of your city, outrun the tent cites along your bicycle trails…

BANKS and CREDIT UNIONS [CU’s are non-profits and do not pay taxes by the way] DO NOT WANT TO SERVE THESE BORROWERS! “It’s expensive, a hassle, and they do not pay back their loans in a timely fashion,” said a banker at Lend360!

It’s a FACT: 70% of U.S. residents cannot access $1000 cash when facing a financial emergency. Nearly 50% of U.S. households cannot access $400 cash! Where are these ordinary Americans supposed to get their hands on fast cash to keep on the lights, pay for their kid’s prescription, fix the car so they can participate in the gig economy, or serve you your Big Mac?

READ ON! This may be a long read BUT it will save your business, your investment, your employees, your customers, your landlord,  your life’s work and contribute to the tax base enabling our elected officials to continue to abuse all Americans!!

Are you aware that the “big boys” sponsored AB539? They spent huge sums of $$$ on PACs and politicians in California to make certain all of us “little guys” cannot compete? Do you know that this 36% APR cap calculation does not include ancillary fees such as non-refundable loan origination fees, credit insurance [that only subsidizes the Lender and consumers must pay again each time their loan is renewed], club memberships, life insurance, accident, health, and disability insurance, involuntary unemployment insurance, property insurance, “nonfiling” fees, accidental death & dismemberment insurance, automobile security plansMY Point? THE ALL IN APR  – annual percentage rate – our sub-prime borrowers pay is HIGHER than the stated APR on their loan contract.

Guess who just a few of these “Big Boys” are:

 

Why? They implement a “loan packing” strategy. They add on all the “ancillary” products I mention here; none of which benefit the borrower!

Example? “Credit insurance premiums” are paid ALL UPFRONT! Credit insurance increases the cost of consumer borrowing by 33% while providing ZIP benefits for consumers. And again, these fees are NOT included in APR calculations!

THE REAL WORLD: A stated APR for a nine-month loan, $511 is 43% but the “ALL-IN APR” is 138%! Why? How? Because the so-called “big boy” PAC & politician enabled installment lender charges “credit insurance” with this loan and finances the lump-sum premium payment – $203. Thus, the amount financed increases from $511 to $714 and results in a 138% APR!

Do you know 10M+ US residents take out loans ranging from $100 – $10,000 and pay more than $10 Billion dollars in fees?

Do you know that banks and credit unions make the majority of their profits on NSF fees? They hate small-dollar lenders; unless of course they can provide $300M credit lines to the very lenders who sponsored AB539!

It’s CRIMINAL!

Smaller loans <$2500 MUST HAVE higher APR’s The operating costs for a Lender serving the sub-prime are simply TOO high. The fixed costs for a $500 loan are the same as for a $2500 loan! Upfront and customer acquisition costs are a much smaller share of the revenue from a $2500 loan vs a $500 loan.

California AB539:  36% APR Rate Cap = Devastation = Disruption = Opportunity

By now, the thousands of you who follow my rantings know that the Calif. Department of Business Oversight has begun enforcing the 36% APR rate cap [AB-539] on consumer loans between $2500 > $10,000. This bill impacts both title loans and personal, noncollateralized loans.

What’s this mean? 70% – 80%+ of the Lenders serving California consumers today will STOP funding these loans. 20 million consumers facing temporary financial hardships will have nowhere to turn to for a no-hassle, small-dollar loan FAST! 70% to 80%+ of California Lenders are shutting their doors, laying off their employees, shunning their landlord, not paying taxes… and wishing their thin-file, no file gig economy customers “SO LONG!”

DEVASTATION

Jorge Jones has a landscaping job in Los Angeles. His wife Francis works at a restaurant. Auntie, who lives 14 miles [a rent-controlled one-bedroom apt.] and 4 bus routes away, takes care of the Jones’ two kids.

Jorge’s 12-year-old Toyota pickup needs engine work. The bank turned Jorge down for a loan. Jorge’s credit card is maxed. He’s already borrowed from friends and family in the past; owes them money.

Mary, single with a 3-year old daughter, works for 2nd Chance Community Loans, a chain of 15 small-dollar loan stores in So. Calif. She knows the 1st names of all her customers, their kids’ names, their family situation… Her customers borrow money a few times per year when the washing machine breaks down, the oven takes a dive, the family car needs work…

They all live paycheck to paycheck; virtually no savings in spite of having tried. Life happens…

Carlos owns 3 strip malls. One each in Garden Grove, Santa Ana & Costa Mesa. He’s 55 years old. Worked his ass off as a carpenter, saved money, read real estate books, invested with a buddy in a run-down strip mall, refurbished it and eventually added two more. Each strip mall has the usual mix of Circle-K, a couple of restaurants, dry cleaner, a 2nd Chance Community Loan franchise…

Carlos just received “The Letter.” 2nd Chance community Loans is pulling out of California…

The Costs for Producing a 36% APR Loan

So what you say, dear reader? A $2500 loan at 36% interest is ridiculous anyway! “Good riddance to these loan sharks!”

OPPORTUNITY 

My Team has invested hundreds of man-hours researching, talking and meeting with savants in “the business of lending money to the masses.” It’s been a whirlwind of action and creativity. The results? Success.

We have solutions [ancillary products, tribal collaborations, automation and fraud reduction strategies, lower CAC and FTPD metrics…  for you that offer safe and profitable solutions for you to continue to serve your California communities with emergency funds! Reach out to TrihouseConsulting@gmail.com ASAP for details. We’ve invested the past 6 months evaluating and preparing for January 1st and AB539! We have assembled a Team…

Email Jer at TrihouseConsulting@gmail.com! Include details! Are you a CFL? What type[s] of loan products do you offer? Are you a storefront or internet Lender? Ballpark, how many loans/month? Average term? Avg. loan principal. Installment? Balloon? Additional “color” will move you to the front of the line…  We’ll send you an MNDA and share the solutions available for your specific situation! 

[Again: if you prefer to explore the tribe sovereign nation model rather than implement the CPI Model in conjunction with your own captured reinsurance company, Click Here: https://LeaningRockFinance.com  DISCREET is the word.]

PS: If you plan to simply “throw in the towel, to give up… let us know! We are buyers! We are happy to take your California Market share and SCALE big time. The regulators and paid-off politicians can make the business of lending to the masses more difficult BUT they cannot regulate DEMAND away. Demand for loans by credit-challenged consumers is going nowhere but UP! We want your data, your portfolios, your IP, your websites..!

You too can “play” like the big boys! It just takes creativity, iteration, knowledge, and a little help!

Collateralized [Title] Lenders: Don’t abandon California consumers and your employees in need of your help! If you’re a title loan lender, you can remain in business by submitting to this crazy 36% APR while offering “Lender Collateral Protection” to your customers in dire need of your help while still earning a very respectable ROI. And, since the majority of your competitors are not reading this, YOU CAN EASILY SCALE and TAKE MARKET SHARE! Our 25-year-experienced Triple A-rated insurance company executive Team has a complete turn-key solution ready for you to implement in <30 days! Your out of pocket start-up costs to get up and running? MINIMAL!

Email Jer Ayles: TrihouseConsulting@gmail.com In the “Subject” = CPI. Don’t forget to add a few details about your situation, location, portfolio… DISCREET

Non-Collateralized [Personal Loan/Installment] Lenders: I have another proven strategy for you as well.

10
Jan

How to Start a Title Loan Business

Why Car Title Loan Lending Can Be Better Than Non-Collateralized Personal Loans.

Installment loans, Car Title Loans, Payday Loans, Personal Loans and the Risk Evaluation for Balance Sheet Lenders.

“You know, people say they’re going to pay their house payment first. And then a funny thing happened in 2008, 2009 [during the mortgage meltdown] … Many people let their house go, but they needed that car, and they couldn’t go to work without the car. They left their house…and kept their car payments current.” #tribelending #consultingservices #paydayloans #ab539

11
Dec

The Biz of Lending to the Masses: Fintech, Wage Advance Products & California CFL’s

Fintech “lenders” are pushing the boundaries of what state AG’s consider to be loans. Earnin.com, Dave.com, PayActiv.com, MeetHoneyBee.com, DailyPay.com, Flexwage.com, HelloBrigit.com, BranchApp.com, WageStream.com and on and on all offer “wage advance,” “payroll advance”  in essence a “kinder, gentler version” of a payday loan.

Fintech, California CFL’s, Wage Advance Products Embroiled in Class Action Lawsuits.

The Biz of Lending to the Masses

By: Jer Ayles & “The Biz of Lending to the Masses.”

Bottom line, these Fintech companies offer employees early access to their earned income from employers such as Walmart, McDonald’s, Wendy’s, Allstate…

Are these loans? Should these Fintech companies be forced to navigate through the EXPENSIVE, TIME-CONSUMING HASSLE of securing state-by-state lending licenses? Or, collaborate with federally recognized Native American Indian tribes enabling geographically challenged tribes to participate in this new world of E-commerce?

Fintech companies typically charge their customers a monthly enrollment fee, strongly “suggest” a payment to “accelerate the ACH into their customer’s bank account” and additionally, a “tip” for using their platform!

Yet they fail to enable their “borrowers” with APR comparison tools in order to evaluate their “tip” model versus other loan products such as payday loans, installment loans, line-of-credit loans, title loans…

Example:

We reversed engineered Dave.com. Here’s what we found.

A few weeks back, we applied for a $75 loan via a cell phone at Dave.com 

  • We filled out the Dave.com application
  • Tied it to a Chase acct
  • Dave “asked,” us if we would pay $3.95 to accelerate the ACH into Chase immediately.” We opted out
  • Dave “asked” us to give them a tip. The default was 15% of the $75. Via my phone, I could “slide” left to right… tip Dave 20%, 15%, 10%, or zero. We opted for zero.
  • All the above took 3 minutes 12 seconds WITHOUT any human intervention. No call center CSR… no human intervention!
  • The following day the $75 was in my Chase account in spite of the fact we opted NOT to pay the $3.95 to accelerate the ACH deposit into our Chase account.
  • We authorized Chase to pay Dave the $75 4 days later.
  • My total cost to borrow this $75? ZERO!!!!!!!!!!!!!!!!!!!!!! Free
  • THE CATCH if any? Dave charges me $1/month for their service.
  • In January 2019, Dave had 1M account holders at $1/month. As of September? 5 million! At $1/month per user. So… $5M/month top-line revenue w/o funding a single loan! Via AI and automation!!
  • Could they up the monthly fee to $2/month and achieve $10M/month?
  • Their default rate? No clue.
  • How low will they go regarding sub-prime borrowers? No clue.
  • I do know they serve a lot of “gig” workers because I’ve asked some folks I know to go through this process.
  • Are they making money yet or is this model, as of today, all about customer acquisition and data collection? No clue.
  • Mark Cuban is an early investor… SMART DUDE!
Regarding Earnin? We “borrowed” $100 for a week. The “default tip suggested” was $14.00. That’s a 700%+ APR!
A California class-action lawsuit captioned “Stark v. Activehours, Inc., d/b/a Earnin,” asserts the company is actually an unlicensed lender: “Earnin seeks to skirt applicable financial, banking, and payday lending regulations through a linguistic trick: calling a payment to use its service a ‘tip’ instead of a cost of borrowing. Semantics aside, Earnin is in the business of loaning money.”
In July of 2019, Crunchbase estimates Earnin was downloaded 776,711 times in a single month! “Pay what you think is fair.”
PS: If you’re one of my MANY readers who have paid millions of dollars in licensing, compliance, legal, audit, fines and store leases and… try NOT to be PISSED!
Instead, scale your knowledge! Embrace the changes brought about by THE PHONE!
THE DIFFICULTY IS THE OPPORTUNITY!
The magnitude of the problem solved is the magnitude of the money you can make!
If the business of lending money to the masses was easy, EVERYONE would be doing it! [MJ]
Jer
Thanks for being a loyal email subscriber since December 11, 2019. I appreciate hearing from you. Let me know if you ever have any questions, ideas, needs… Jer at 702-208-6736 Cell TrihouseConsulting@gmail.com. NOTE: California CFL lenders send an email. We have solutions! Subject: “CFL” Text: Provide a few details about your Calif. business and your product line.

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