How the High Cost of Compliance affects Consumers

Here’s an eye-opener for you – 38% of car buyers earning overtime will under-report their incomes by 5% or more. Over half of the car buyers who auto lenders ask to verify their income earn overtime pay (based on Informed analyzing a sample of 125,000 paystubs submitted in the last 30 days).

Car buyers (and the dealers serving them) don’t always know if the auto lenders will “count” their overtime pay, commissions, tips, and bonuses before filling out a credit application for an auto loan. After all, auto lenders have incredibly complex formulas to calculate applicant incomes that vary throughout the year and can’t be easily explained. This leaves many car buyers and dealers in the dark, concerned about overstating income that could result in an unwanted repossession.

The number one reason (or “defect”) Informed sees a loan stopping a deal in its track is the “failed” status of… credit application. If dealers are stopped at credit application due to issues, the bottleneck cascades from there.

Argyle and Informed have partnered to automate the end-to-end data collection and income verification process. Argyle automates income and employment verifications for up to 80% of the US workforce. The user experience can be embedded in an application or sent to a consumer via secure SMS using Informed’s CollectIQ to initiate the data collection process. Consumers find their employer or payroll provider and log into their accounts. Lenders receive instant access to income and employment data.

Dealers with automated income calculation ensure car buyers are treated fairly and in compliance with Fair Lending laws and the Equal Credit Opportunity Act  – while selling more cars. If the options above don’t work for you or you want to explore more financing opportunities for whatever reason, such as the inability to access consumer-permissioned data or privacy concerns, Informed offers other solutions.

Implications of privacy requirements – How are other organizations managing them?

Privacy and data protection requirements such as the California Consumer Privacy Act (CCPA), General Data Protection Regulation (GDPR) and Payment Card Industry Data Security Standards (PCI DSS) are shaping the privacy frontier as digital and automation adoption increases. CCPA puts requirements on data custodians and institutes de facto policy across the U.S. For some standards, such as GDPR, US-based companies are taking a wait-and-see approach because issues such as cross-jurisdictional enforcement and scope have not been fully litigated.

We strongly recommend regular audits of authentication and access logs. Analysis of successful logins and pivoting or other activities should be performed. While failure logs indicate unsuccessful attacks, these may not show credential re-use attacks. Performing spot checks and activity reviews are typically required by privacy standards but are frequently overlooked. And companies are often cited during compliance audits for failing to do them.

With an increase in privacy and law enforcement, full spectrum automation of income verification inclusive of electronic data collection applied intelligence, and decisioning makes sense for the consumer, dealer, and lender. Informed’s solution eliminates the need for lenders to manage separate integrations across third-party data providers like Argyle, Plaid, Finicity, and a number of other partners.

Implications of the Community Reinvestment Act

Financial institutions should focus on economic opportunities and challenges in the communities they serve. These community banks and financial institutions are critical in ensuring all Americans can participate fully in the financial system. Minority communities across the US face barriers to accessing financial services and credit. Banks with strong community connections help reduce these barriers and are being pushed from a regulatory perspective to make this a priority.

Informed enables loan applicants with multiple jobs to upload paystubs from multiple employers, helping to ensure we don’t allow bias against people, enabling 233,392 lower/middle-income people to pass lenders’ income stipulations needed to obtain loans automatically.

We hope these insights help advance all of our efforts to build an economy that works for everyone. We want to ensure financial services are transparent, clear, and easily accessible to all.

As Featured in American Banker

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