Fintech Flash

The latest fintech industry news and developments in a flash.
Goodwin’s Fintech Flash aims to share the latest news and developments for the rapidly evolving fintech industry – which often can change in a flash.

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Traps for the Unwary: Using Alternative Credit Data to Expand Credit Access to LMI Individuals and Underrepresented Communities

Traditional credit underwriting methods, which are generally based on credit reports, have not always successfully captured the full picture of a borrower’s ability to repay. It is estimated that more than 45 million US consumers lack sufficient credit history to generate either a credit report or a credit score. Low- to moderate-income (LMI) individuals and underrepresented communities are disproportionally represented in that figure. Approximately 40% of low-income individuals and about 30% of moderate-income individuals have insufficient credit history to generate an accurate credit score. Further, nearly 54% of Black Americans report having no credit or a poor to fair credit score, and roughly 41% of Hispanic Americans are in the same category.

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The CFPB’s “Junk Fees” Initiative: Recent Developments and Trends

In January 2022, the Consumer Financial Protection Bureau (CFPB) announced an initiative to “Save Americans Billions in Junk Fees.” Since then, the CFPB and other regulatory agencies have expended significant effort, through new rulemaking and increased regulatory scrutiny, on discouraging these types of fees. In this edition of Fintech Flash, we examine two new rules recently proposed by the CFPB that are aimed at curbing types of junk fees that banks and other depository institutions may levy on consumers; we also evaluate their impact on covered institutions.

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