FDIC to Probe Bank Payday Loans; Fiserv Software Criticized by Consumer Groups
The FDIC has announced it will investigate bank payday loans in response to a February petition signed by approximately 250 consumer rights advocates that was critical of a Fiserv lending software program marketed to credit unions.
The petition called out Wells Fargo & Co., U.S. Bancorp, Regions Financial Corp. and Fifth Third Bancorp for their lending practices and cited Fiserv’s Relationship Advance lending software for contributing to the problem, saying it promises to increase fee income.
According to a release on Fiserv’s website, the company launched the lending module in late 2009 response to challenges faced by courtesy pay programs.
"The FDIC is deeply concerned about these continued reports," said Martin Gruenberg, acting chairman, in a letter to Americans for Financial Reform, a Washington-based advocacy group that spearheaded the petition. "Consequently, I have asked the FDIC's Division of Depositor and Consumer Protection to make it a priority to investigate reports of banks engaging in payday lending and recommend further steps by the FDIC."
Jeff Burton, vice president and managing director of Fiserv’s Revenue Enhancement division, did not immediately return a call for comment.