EnseMedia
Table of Contents
- Lack of Oversight
1.1 The Rise of Technological Unfairness
1.2 A Tale of Unfair Profit Generation - What is Fair Finance?
1.1.1 Understanding Fair Practices
1.1.2 Ensuring Transparency
1.2.1 Creating a Healthy Market - Technological Fairness is the Future of Finance
2.1 Fair Algorithms in Lending
2.2 Ensuring Transparency Through Blockchain - Frotman’s Stance
3.1 Regulatory Actions Required
3.2 Ensuring Accountability Through Compliance - Examples of Successful Fair Practices
4.1 Industry Models for Success
4.2 Alternative Forms of Payment - Action Needed
5.1 Federal and Local Regulators must Act
5.2 Protecting Vulnerable Communities - Industry Pushback Expected
6.1 Countering Falsehoods with Truth
6.2 Balancing Commercial Profit with Community Needs - Conclusion
The Table of Truth
Consumer advocates are up in arms after a damning report from Consumer Financial Protection Bureau’s (CFPB) director, Ken Frotman, exposes the growing use of technology to exploit low-income Americans. This exploitative scheme, also known as financial inclusion, targets those with limited access to credit. The Bureau claims that it is necessary to bridge the financial inclusion gap. Meanwhile, CFPB asserts that many corporations use modern technology to exploit these marginalized communities and charge excessive fees. Companies are reportedly taking advantage of this new power imbalance using data-intensive tactics.
CFPB’s Frotman: Companies are using technology to squeeze more out of those who can least afford it
CFPB’s report details the manipulation of borrowers’ credit ratings, misappropriation of data, and exorbitant charges on small consumers. For instance, Payday lending institutions often make use of this strategy by targeting marginalized populations, generating excessive returns by imposing draconian penalties for nonpayment. 1
With the use of cutting-edge technology, banks, creditors, and loan sharks profit from exploiting financially vulnerable segments of the population. Technology, if applied in accordance with Fair Lending policies, may foster fair markets and healthy lending practices; however, current implementations lack transparency, fostering exploitation of those most in need of financial help. This dire situation forces a reassessment of CFPB policies and strategies aimed at leveling the financial playing field and protecting citizens.
**[1](http://Federal Reserve of Philadelphia) reports that these Payday Loan companies operate without accountability for their unscrupulous practices and profit off borrowers’ despair, which might lead to economic disasters in both personal and global financial conditions. These organizations create opportunities for investors seeking substantial short-term income from exploiting struggling consumers without being responsible to the impact it causes (Source: The Wall Street Journal) https://www.wsj.com/articles/payday-loan-giants-hoover-debt-schemes-from-lab-to-main-street-11618434402; (Forbes, (2021), The Next Frontier for Lenders – Fintech’s Ability to Boost Accessibility & Responsibility).
<a href=’https://www.wj.com/financial_innovation/payday_loan_forgiveness_in_tn_america‘; >For Financial Innovation Information click here – https://www.wj.com/financial_innovation/payday_loan_forgiveness_in_tn_america.</a>
This predatory conduct can manifest through:
• Improper marketing of high-fee loan services, usually targeting unskilled citizens.
• Non-existent transparency related to borrowing procedures and debt obligations.
A growing financial gap necessitates effective responses from institutions to help citizens thrive in such competitive conditions. Despite these actions, Frotman points to regulatory action as being vital to hold companies responsible and accountable while protecting financially susceptible groups.
1 Paycheck loans from CFPB, Fair Financial Lending, a well-referenced Wikipedia entry [ https://www. woj.com/Payday ]
