Credit Sesame’s personal finance weekly news roundup June 10, 2023. Stories, news, politics and events impacting the personal finance sector during the last week.
- Vantage score usage increases
- Money in cash apps is unprotected in case of failure
- JP Morgan Chase glitch charges customers twice
- SEC sues crypto exchange for securities violations
- Saudi Arabia announces oil production cut
- Financial regulator raises concerns about bank chatbots
- Corporate America reins in hiring plans
- CFPB fines debt collector
1. Vantage score usage increases
The use of the VantageScore increased by 30% during 2022. VantageScore is an alternative to the traditional FICO credit score model. VantageScore is a joint venture created by the three major credit reporting bureaus – Equifax, Experian and TransUnion. Growth in the use of VantageScore was especially fast among financial institutions. Those institutions (banks, credit unions and other lenders) increased VantageScore usage by 46%. In comparison, non-financial institutions increased VantageScore usage by just 18%. The VantageScore methodology seeks to include a broader range of payment streams so that even people who haven’t been able to get credit in the past will be able to establish a payment record. The challenge is to do this without compromising the predictive value of credit scores. See article at Yahoo.com.
2. Money in cash apps is unprotected in case of failure
While consumers have been reminded of the risk of bank failures in recent months, they may be less aware of the risk they take when they deposit money with non-bank payment apps. The Consumer Financial Protection Bureau (CFPB) recently warned consumers that money in cash apps like PayPal and Venmo is at risk if those companies fail. Unlike bank or credit union deposits, money in these cash apps is not covered by federal deposit insurance. 85% of people aged 18 to 29 use these apps. The CFPB advises people who use payment apps to transfer money out of those apps as soon as it is no longer needed for a transaction. See article at abc15.com.
3. JP Morgan Chase glitch charges customers twice
A systems problem at JP Morgan Chase bank caused fees, payments and other transactions to be posted twice on June 2. JP Morgan Chase is one of the nation’s largest banks, so the issue involved millions of customers. The bank says it has resolved the issue and customers will not be liable for any overdrafts or other problems resulting from the double charges. Still, JP Morgan Chase customers would be wise to review their account transactions and balances carefully to be sure the appropriate corrections have been made. See article at APNews.com.
4. SEC sues crypto exchange for securities violations
The Securities and Exchange Commission (SEC) has sued the Binance cryptocurrency exchange over allegations of a variety of securities violations. Binance is the world’s largest crypto exchange. The suit also names the firm’s founder, Changpeng Zhao, for securities violations. The SEC alleges that at Zhao’s direction, Binance commingled customer and company assets and overrode compliance controls so U.S. customers could trade on unregulated foreign exchanges. A day later, the SEC also filed suit against Coinbase, the largest crypto exchange operating in the United States. See article at CNBC.com.
5. Saudi Arabia announces oil production cut
A new inflation threat emerged when Saudi Arabia announced that it will cut oil production by 1 million barrels a day. The move to reduce oil supply is an attempt to shore up sagging oil prices. Oil prices responded with an immediate surge but quickly subsided. So far, production cuts have been unable to reverse a steep decline in oil prices. The price of a barrel of crude oil is more than 10% lower than it was when the year began, and about 40% lower than it was a year ago. See article at Yahoo.com.
6. Financial regulator raises concerns about bank chatbots
The Consumer Financial Protection Bureau (CFPB) announced that it is investigating concerns that have been raised about customer service chatbots. These are automated tools that are used increasingly by banks for online service. The CFPB found that approximately 37% of the U.S. population interacted with a bank chatbot last year. The top ten commercial banks in the country all use chatbots to some degree. Concerns about the performance of these tools include making it difficult for customers to get a timely response, providing inaccurate information or failing to protect the legal rights of bank customers. See Issue Spotlight at ConsumerFinance.gov.
7. Corporate America reins in hiring plans
A quarterly survey of American CEOs found expectations about hiring over the next 6 months are at their lowest level since the third quarter of 2020. That was back when the pandemic had brought much of the economy to a standstill. Overall, the consensus seems to be that the economy will be sluggish, but will avoid a recession for the time being. On average CEOs expect real GDP to grow by 1.5% this year. As a group, they expect sales to hold steady and plan to increase capital investment by 1%. See article at Yahoo.com.
8. CFPB fines debt collector
The Consumer Financial Protection Bureau (CFPB) announced an enforcement action against Phoenix Financial Services. The action includes a fine of $1.675 million. Phoenix is a third-party debt collector that specializes in pursuing past-due medical debts. The CFPB cited Phoenix for continuing to pursue collections from consumers who had disputed the debts, without providing those consumers documentation for the debts. Consumers pursued by debt collectors have the right to dispute their debts and receive written substantiation of the amounts owed. See news release at ConsumerFinance.gov.