Government warns screen scrapers used to push predatory loans – Finance – Cloud – Security – Software
With payday lenders rebranding themselves to hipster fintech and buy-it-now credit, late payment providers abuse screen scrapers to determine when consumer bank balances are bottoming out before hitting them with pressure marketing for loans at cost raised.
This is the disturbing reality described by Drew McRae, Policy and Advocacy Officer for the Financial Rights Legal Center, who observes a barrage of intense lobbying on the Australian fintech industry to legitimize screen scraping as part of an open bank and a review of transaction liability regulations.
Testifying at a public hearing of the Select Committee on FinTech and Regulatory at the end of last week, MacRae rejected suggestions that he was implicitly appealing to the big banks by arguing for a ban on screen scaping, a line increasingly driven by parts of the fintech industry.
“I want to address the issue that, strangely enough, we align ourselves with the position of the banks,” McRae said in response to questions from the committee.
“We spent the whole week fighting them over the implementation of the royal commission.”
“We sometimes align ourselves with groups that we tend to disagree with. This just happens to be one of them. We didn’t really have a very close conversation with them. We are not here to defend the traditional banking sector.
It has been a largely friendless struggle for the Financial Rights Legal Center (FRLC) which had previously warned that elements of the largely unregulated FinTech sector were gradually becoming infested with predatory credit stings seeking new avenues for push their products while other loopholes were closed.
For major banks, credit card systems, insurers and lenders view the LRF with apprehension because it too often shows their failings. But with many fintechs complaining that banning screen scraping could bankrupt them, the advocacy group is putting evidence of aberrations on the public record.
“One that we’re certainly aware of is when someone got scratched on the screen and went into their account to find out if their bank account went low – that’s the payday lender. – he then receives an advertisement saying, “Hey, do you need a payday loan? and voila, they get one, ”McRae said.
“For that person at this point it doesn’t seem like a bad thing, but, in the long run, as they go into a debt spiral, it’s bad for them, and they will eventually go away. realize.”
McRae said that currently “there are very few laws that apply specifically to the nature of the FinTech sector, and we would like the reforms, as outlined in our submission, to apply to this sector.”
“We have found in the past that when a new industry grows – I think, by heart, of many organizations in the peripheral financial services industry known as debt management companies – it tends to operate in outside the standards. industry, ”McRae said.
“Our concern is that we want to make sure that when the fintech and regtech industries come into play, they meet high standards of ethical behavior and follow the law.”
The Committee heard that while FRLC understood and understood that for many fintechs, screen scraping had been the only technology available to obtain customer data, this did not make it an acceptable practice that should be legitimized.
“I would say that screen scraping exists because the CDR [consumer data right] does not exist and has not existed until now. CDR is there to make screen scraping redundant, and that’s what it should be – redundant, ”McRae said.
“I sympathize with the industry that has developed and used this technology over a long period of time because, frankly, there was no other setting in which to work; consumer data will now provide one. But, now that we have it, we should get rid of it.
McRae described the tolerance of screen scraping as “this strange moral hazard where we back up a case for the delivery of your passwords, where you lose your rights under the electronic payment code and this information could be violated” .
“We have seen some very shady cases where passwords were used multiple times after the first use. From our point of view, there is really no justification for this to be legal. “
Fintech and industry get-togethers don’t seem like much fun for MacRae, although they do provide some valuable insight.
“When I spoke to the fintech industry, it was through the consumer data rights workshops and other meetings. I’m generally the only consumer representative in the room. The scenario is usually you have a lot of fintech folks and a lot of banking folks, and there’s me at the center trying to figure out what’s going on.
“Usually they fight against each other, and because they usually don’t know who I am, they talk about some of the things they want to do. [like] try to understand loopholes and exemptions and other ways to get around certain rules.
“It caused me some concern,” McRae said.