- 9 hours ago
Are you paying high interest rates to cash your check? Are you paying high interest rates on credit card loans? SoLo Funds, a leading community finance platform, and the Global Black Economic Forum, an international enterprise dedicated to advancing the economic interests of the Black Diaspora, released the 2023 Cash Poor Report, a survey of adults in the United States living paycheck-to-paycheck who have experienced at least one unplanned expense in the past twelve months. Based on the results of the study, Solo Funds and the Global Black Economic Forum are seeking policy changes on both the state and federal level to address widespread systematic and ongoing predatory practices that are disproportionately impacting Black and Brown consumers.
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LifestyleTranscript
00:00Welcome to the panel on Ending Junk Fees and Combating Predatory Lending Practices.
00:10Please welcome our moderator, Alfonso David, President and CEO of the Global Black Economic
00:16Forum.
00:17Please welcome Rodney Williams, Co-Founder of SoloFunds, Travis Holloway, Co-Founder
00:26and CEO of SoloFunds, and Dr. Topeka K. Sam.
00:32She is the Co-Founder and Chief Visionary Officer of MyFresh.
00:41Okay, so we're here to talk about Ending Junk Fees and Combating Predatory Lending Practices.
00:53But before we get into the substance, I want to just make sure that the audience understand
00:58what you do specifically.
01:00So maybe we can start with you Rodney and Travis.
01:04Tell us what is SoloFunds?
01:08Solo is a community finance platform created to allow individuals who need access to capital
01:14to be able to get access to that capital in a non-predatory way, in a much more capital
01:21efficient way.
01:23So essentially, we're a marketplace that allows individuals to create their own loan terms
01:29to get access to capital under $600.
01:31So if you need a loan because your car broke down, you need a loan because you're short
01:35on rent, or you have a utility bill that needs to be paid, you're actually able to create your
01:39own loan terms, which is not possible in any other financial ecosystem.
01:44And an individual who has discretionary capital can deploy capital to you in an effort to help
01:49you solve your short-term cash need, but actually be able to earn yield or a return by lending
01:56that capital.
01:57So it's a peer-to-peer, what we like to call consumer-to-consumer lending platform.
02:01And we're the fastest growing and the largest consumer-facing black fintech ever.
02:07Yeah, the only thing I would add is that we started a company based on the shared experience
02:13of our friends and family needing access to capital, needing things to keep the lights
02:17on, pay bills.
02:19And when we saw the market, we just didn't see anything that was equitable that not just
02:22provided capital, but when you do have capital, it provided a way for you to grow that capital.
02:27One of the most important parts to community finance is not just the access, but when you
02:31do have capital, you can grow it.
02:33But that's solo funds.
02:36So that's solo funds.
02:37So Dr. Topeka Sam, maybe you can tell us what MyFresh is.
02:40Yeah, so MyFresh is a fintech platform and a digital bank.
02:45And what we do is we make sure that directly affected people, justice impacted people have
02:50access to free FDIC insured checking accounts.
02:54They're insured up to $250,000.
02:57We also provide health insurance because we know the two things that people lack that they
03:02need before they leave prison and are in community are access to free banking and access
03:08to quality health care.
03:09And so we wanted to make sure that we came in and fulfilled that gap.
03:13Our businesses ran, built, and of by justice impacted people, myself being formerly incarcerated,
03:19my co-founders being formerly incarcerated.
03:21We saw a solution.
03:23And while there are many other banks out there, what we wanted to make sure was that we were
03:27building something that was helping remove the barriers that people who are incarcerated
03:32actually go through each and every day.
03:35So it's one less of the 44,000 barriers that people have to face in reentry.
03:39So let's, let's first set the stage because people may be watching people here in the
03:45audience may not know what is junk fee.
03:49What is a junk fee?
03:50What is a predatory lending practice?
03:52So maybe Rodney, you can address predatory lending practices generally.
03:58And then maybe Travis, if you want to talk more specifically on what is a junk fee, that'll
04:02be helpful as a foundational framework for us to have this conversation.
04:06Yeah, I think there's like two core components that we focus on when things are predatory.
04:12And one of them is when there may be a miscommunication in what you're ultimately going to pay.
04:17Right?
04:18And I know Travis is going to dive into that a little bit deeper, but that's super important.
04:22But the other piece is how fees compound over time.
04:25So that's one of the things that will get you in a trap.
04:27When you think about something like a credit card, where only a very, very small percentage
04:31of people who use credit card actually pay them on time.
04:34What they're really paying is a combination of fees like late fees and annual fees that
04:38are accrued every single month and additionally being applied interest.
04:43That also leads to a negative action on a credit report.
04:48So all of a sudden, you have to have flat tires, a single mom, you're able to get to work,
04:54and one month or two months starts to significantly impact your credit over and over again.
05:00And that's the example of like a debt trap.
05:03Yeah.
05:04So when you think about predatory lending, it's the things that tend to thrive and live in
05:08the communities that we tend to thrive and live in.
05:11Right?
05:12It's the payday lender.
05:13It's the check cashing institution.
05:15It's the title loan, right?
05:17You know, when you need access to capital to pay for your car that broke down, you're actually
05:22going and you're actually putting up the title for your vehicle in order to get access to capital.
05:27And those types of institutions tend to be incredibly predatory.
05:31But when we think about things like junk fees, what we don't realize is that it's not just
05:36the cost of, you know, maybe there's a fee to get access to a loan, but you don't think
05:42about the subscription fees.
05:45You don't think about the, you know, the origination fees.
05:48You don't think about the transaction fees and all of the additional costs that are associated
05:53with you getting, you know, that loan.
05:56And when we think about like the concept of APR, those things are not considered with
06:02that APR calculation.
06:04So I'm going to stop you.
06:05What is an APR?
06:06Cause let's just make sure that folks know what APR is.
06:09So it's an annual percentage rate.
06:10So ultimately when you, when you apply for any type of, you know, loan facility or a credit
06:17card, right?
06:17Your credit card every month has some type of APR associated, right?
06:22And that APR, it tends to be higher.
06:25If your, if your credit score is lower, it tends to, and obviously the inverse.
06:29So, you know, with, with a loan facility, what, what people don't understand is that you're
06:35not only paying that APR because APR can easily be gained.
06:41APR doesn't consider the origination fees and, and, and the late fees and, and the transaction
06:47fees that are associated with that transaction.
06:49So you actually do not understand or know what you're really paying.
06:54And what we really want people to understand is we want actually the, you know, government
07:00and we want regulators to actually consider the full cost in all of the fees associated
07:06with the transaction to make sure that people truly understand what their cost of capital
07:10is.
07:11Okay.
07:12Um, so now we understand what predatory lending practices are.
07:17We understand what junk fees are.
07:19Dr. Topeka, maybe you can talk about the impact that this has on people who have any connection
07:28to the criminal justice system.
07:30So people also understand these principles and how it applies to them.
07:34Yeah.
07:34So, you know, when you're coming, when actually, if you're justice impacted, so that's whether
07:39or not you've actually been incarcerated like myself, or you have a loved one who's been
07:43incarcerated, you already have a million of things that you need to worry about.
07:48And so when people are trying to rebuild their lives or trying to take care of their family,
07:53often what happens is they end up using, uh, check cashing facilities.
07:57And actually there are more check cashing facilities in our communities than there are McDonald's.
08:02And so when you think about that, I'm taking my check and I'm going to a check cashing facility
08:07and I'm usually spending about 13% annual of every single check that is being cashed.
08:13So I'm losing money each year off of the money that I've already made while also having to
08:18pay for my restitution if I have it based on my crime or, um, any other fines and fees,
08:24parole or probation, um, fees to just have an ankle monitor on.
08:28And then when you think about the disparities between women who are coming home from prison,
08:32you think about the things that they need to do just to get their children back.
08:36So for us, it was not only are we trying to think about what we need to do to make sure
08:41that people have access, true access and free access, uh, without having to worry about another
08:47barrier. We wanted to make sure that we're taking away those fines and fees and letting
08:51people put that money back in their pocket. We're making sure that people have access to free,
08:56truly free checking accounts. We're also making sure that people have quality healthcare.
09:01The healthcare that we provide allows for, uh, preexisting conditions to be covered.
09:06It allows for mental health treatment to be covered. It allows for any type of substance
09:12misuse, inpatient and outpatient to be covered. And if you make under $40,000 a year, which often
09:18people who are coming home from prison do, then it is totally free. And so, you know, when you think
09:24about these things, we are starting in our community, we say justice impacted because one in three
09:29Americans has had an incarcerated loved one, but we're also looking on how we creating a solution
09:35that's helping to also end poverty. So we have more check cashing facilities in our neighborhoods
09:42than McDonald's. Folks are going in to cash their checks on a Friday. And when they try to cash their
09:49checks, they're being charged just for cashing their checks, high interest rates or high fees. I should
09:55say Rodney and Travis, I know you too have been talking about this issue, thinking about this issue
10:02for quite some time. In fact, I believe this past week, you released the report working with us on
10:10this specific issue of predatory lending practices. And I think it's important for people to understand
10:16what that report is, why you issued the report, and what are you proposing we do to end predatory
10:22lending practices?
10:23Well, number one, thank you for working on this report together. For us, we call it the cash flow
10:30report. And as we started our company, it became so apparent that the group of Americans that were
10:35facing the issues of these predatory fees were much larger than we could ever imagine, where the average
10:41American wasn't enduring these type of experiences. So when we looked at the research and data, we just
10:47couldn't find the correct stack. So what we commissioned is try to understand who are these Americans, their
10:53demographics, and what are they truly paying over time. And some of the results was fascinating. For
11:00example, 10% of Americans that are cash for make over $100,000 a year. They're gainfully employed.
11:06They're college educated. Being cash for doesn't mean that you're not adding to the economy. It means you
11:13have limited savings in your account. And when you do have limited savings in your account, and you try to
11:18assess certain financial services, or when inconsistencies happen in cash flow, or an emergency
11:24happens, these companies take advantage of that situation with the predatory fees. And that fees
11:30cause major problems. For example, the average person will spend about $1,900 subsidizing an unplanned
11:39expense. That completely removes the savings that a user has, that they experienced over the time. So,
11:49number one, fascinating report. But I think that with the call to action that we have for Congress,
11:55is that the APR is not an accurate cost. So as a consumer, and when I get into this experience, and I
12:02look at that APR, I'm trying to assess value, and I can't. And then I can't understand how to avoid the
12:10trap. Because the trap are the fees that are being hidden, and not being discussed. And that's our call
12:15to action is to think about total cost, not an APR. The only thing that I would add is that, you know,
12:22kind of to your point, what we realized when we were going through this report is that 5% of people who
12:28can't get access to the capital that they need actually resort to crime. And when you think
12:33about 5%, maybe that number sounds small, but that there's over 300 million people in the United States,
12:38which means over 15 million people every year are committing crime because they don't have access
12:44to $400, right? And we tend to think that these problems are black and brown problems. But the reality
12:52is, is 80% of this country is living paycheck to paycheck. So the majority of people who look like us,
12:58but also look like many other different races and nationalities are going through those same
13:03experiences. And when we, when we, when we realize that over 10% of the individuals who need access to
13:08our capitals, call it sub $600 loans, make over $100,000, you know, you have to think about the fact
13:14that 34% of the country has $0 in savings. So more than a third of the country has no money for an unplanned
13:21expense. And, and that's challenging. And to take that to your point one more time is that over,
13:28I'm not sure if everyone here has ever seen the documentary on Kalief Browder, but Kalief Browder,
13:33um, was in, was in, was in jail in Rikers Island. And what I realized was that over 90% of people
13:40sitting on Rikers Island and the jail in New York City are there because they cannot post bail of less
13:45than $1,000. So that means that not only do they not have $1,000, nobody that they know, love and
13:51care about has $1,000. And that's the reality of what we're living in in America. And we like to say
13:58that we are actually the fastest growing emerging market because why is 80% of our country living
14:03paycheck to paycheck? And that is such a great point because it has me think about even when I was,
14:08I started my journey incarcerated and there were women who have been sitting there sometimes up to
14:12a year who could not pay a thousand dollar bail. And when you have a thousand dollar bail,
14:17typically you only need a hundred dollars, right? If you can get a bail bondsman. And I would have
14:21my friends actually pay the bails of people so they can get out of prison just because I knew that
14:27they would spend that on a Friday night going to eat, right? And so when you think about the
14:31criminalization that's also happening within our legal system because of people who are cash poor,
14:37I mean, I think that was an incredible point. And I encourage everyone to also read this report
14:42because it is critical for us to understand money, how money works to get comfortable with money
14:48within our community, because without these resources, we're never going to be able to get
14:54from under the foot of poverty and into true wealth building.
14:58Okay. So I'm living paycheck to paycheck. I've just, I'm returning back into society.
15:07I'm paying high fees when I try to cash a check for all of the people that are watching.
15:13What do you want them to do? What you mentioned a call to action. And for all of these panels,
15:19what I've said is we want to make sure we're providing information to people, but we also want
15:24to make sure that we're guiding them to what we think is most useful for them to do. So in our remaining
15:31minutes, if we can just go around and talk about what you think people should do, what are the
15:37alternatives? Because the cash, the, the, the, all of the facilities you just mentioned, more of these
15:44cash, uh, checking facilities that exist in our neighborhoods than McDonald's exist.
15:51So if I'm living paycheck to paycheck, what are my alternatives? What do you want me to do?
15:57How can I avoid these predatory lending practices?
16:01Yeah. I mean, the first thing you can do is try to avoid the fees, um, and, and not to pitch solo funds,
16:08assess your options and try to avoid the trap. I will say the reason why solo funds exist is so
16:15that you can access capital up to $600 when you do have emergency and you can transparently select
16:21what you want to pay. That is our business model. We allow our users to optionally select what they
16:27want to pay. So the transparency is there. I will tell you the second thing is at some point in time,
16:32you will get a footing in the ground and you will have some savings. Maybe it's a few hundred dollars,
16:37maybe it's a few thousand dollars. The best thing you can do at that point in time is to figure out how
16:42to save it and grow it, create yield. How do you create yield when you only have a few thousand
16:48dollars? Come back to solo funds. Lending on our platform allows you to make tips
16:54every two weeks for helping a person just like you. Those tips can accrue over time and you can
17:00annually make well over 12, 20%. Put that in perspective. You have $2,000 in your bank account
17:06and you lend on solo. At the end of the year, you can accrue an additional $400. That can pay for
17:11Christmas. That's the power of growing and accessing capital when you need it. Dr. Topeka?
17:18Well, I'm going to take $2,000 and give it to solo so that I can make $400 at the end of the year.
17:24Or maybe I'll give a few more thousand. That's a high yield. But what I would, I am going to pitch
17:30and tell everyone to go to myfresh, M-Y-F-R-S-H-N-O-E dot com. You can also download the app and you can open
17:40your free checking account. What we require is, you know, your social security number, ID, those
17:45things. We don't require a photo ID because we also know how hard it is for people who have
17:50convictions to even get their ID when they come out of prison. And take advantage of our healthcare
17:56platform also. So that way, if you have Medicaid, it's fine. But in order to go through our insurance,
18:02you have a better network of providers that can also provide you with great service. And I shared
18:07earlier the additional coverages that it has, and we are also able to provide this insurance
18:13in all 50 states across the country. So please join our platform as we continue to build out.
18:18Outside of just doing the checking accounts in the healthcare, we will be partnering with
18:22companies like SoloFunds to be able to create a marketplace of resources and rewards for people
18:28who are just as impacted.
18:29Thank you for joining us. Rodney Williams, co-founder of SoloFunds, Travis Holloway,
18:37co-founder and CEO of SoloFunds, and Dr. Topeka Sam, who is the founder of MyFresh.
18:45Thank you for joining us. Thank you for thinking about this issue that affects so many people in
18:49our communities. Because all of you know, on a Friday at 4 or 5 o'clock, you can drive by many of
18:56these cash-serving, cash facilities, and you can see the lines out the door. People trying to cash
19:03their checks. And when they try to cash their checks, their money is being taken away from them.
19:08So please take advantage of SoloFunds. Please take advantage of MyFresh. And we hopefully can end
19:14predatory lending practices. What we didn't talk about is take a look at the report because they're
19:19policy recommendations that SoloFunds is advancing. We need legislation, both on the federal and the
19:25state level, to end predatory lending practices. These practices are legal. That's what we don't
19:32talk about. In many states around the country, they are allowed to charge these high interest rates.
19:39And so we have to end that. And the only way we can end that is both with education
19:43and legislation. Thank you again for joining us. Thank you. Thank you.
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