Blotter: Fraudulent charges total thousands in Wheaton

A handicap placard was reported stolen from a car parked in the 1000 block of Briarbrook Drive on Sept. 24.

An iPad valued at $300 and $60 in cash were reported stolen from a residence in the 1200 block of Washington Street on Sept. 25.

Four bottles of liquor and assorted groceries valued at $200 were reported stolen from Marianos, 625 S. Main St., on Sept. 23.

A resident in the 1600 block of Camden Place reported a landscaper did not complete work for which he had been paid $400 on Sept. 23.

A resident in the 1700 block of Cherry Court reported fraudulent purchases of $5,000 on a credit card and Pay Day loan advances on Sept. 25.

Paul Z. Lamoreaux, 34, of the 1000 block of College Avenue, was charged with domestic battery on Sept. 24.

A bicycle valued at $200 and bike lock were reported stolen from a residence in the 400 block of Front Street on Sept. 24.

A cellular telephone valued at $200 was reported stolen from an automobile parked near a downtown business in the 200 block of Wesley Street on Sept. 24.

A resident of the 400 block of Prospect Street reported fraudulent charges of nearly $5,000 on his credit card on Sept. 23.

Skyler R. Schlinger, 21, of the 600 block of Aurora Way, was charged with possession of drug paraphernalia, improper lane usage and arrested on an in-state warrant on Sept. 23 at a residence in the 1700 block of Wiesbrook Road.

An 81-piece sterling silverware set valued at $1,600 and a gold and pearl necklace valued at $100 were reported stolen from a residence in the 400 block of Wyndermere Circle on Sept. 22.

A door lock was damaged at the temporary Spirit Halloween shop, 1790 Blanchard St., on Sept. 20.

Michael R. Miller, 47, of the 700 block of Liberty Drive, was charged with criminal trespass to real property in the 500 block of Front Street on Sept. 21.

A gold necklace with a pearl and diamond pendant valued at $400, pearl earrings valued at $190 and a watch valued at $2,750 were reported stolen from an address in the 500 block of Harrison Street between Sept. 14 and Sept. 18.

-Compiled by freelance reporter Alex Keown

How to Start Your Debt-Free Retirement Plan Today

As a financial advisor for more than 30 years, I’ve met a lot of people from all income levels. And one thing holds true no matter how much or little you own: Everyone cares deeply about what’s theirs. A persons $40,000 nest egg is just as important to them as another person’s $10 million estate.

Yet, with how much retirement savings mean, its surprising how prevalent debt is, even in retirement.

Eliminating debt — or better yet, avoiding it altogether — is one of the pillars of a successful retirement. Here is how you can decrease your debt before retirement.

Read: How to Retire With at Least $1,000,000

The Importance of Retirement Planning

In 2010, the average debt among individuals close to retirement was more than $120,000, according to the Social Security Administration. Much of that debt is owed to housing, though student loans are a sizable chunk of it too, as is consumer debt. This amount of debt can be a massive burden for Americans in retirement, when most individuals need to cut back on expenses to stretch savings.

Planning ahead for retirement can help you map out how you will tackle debt leading up to retirement so you dont outlive your retirement savings. A proper financial plan gives you a line of sight to your desired future and helps you stay the course over time. Because a proper financial plan includes an emergency fund of three to nine months of income, it can also help you avoid falling into debt if you stumble along your way to retirement — or if a financial emergency crops up.

Say, for instance, your water heater breaks. With an emergency fund, you can pay for repairs out of pocket. Without proper savings, however, youll pay with a credit card, piling you under high-interest debt.

Retirement planning done right positively affects your whole life. It gives you a sense of security, direction and motive as you save for retirement.

Creating Your Retirement Plan

Find a trusted financial advisor and work with them to identify your short- and long-term goals. Your entire plan should be focused on meeting these goals. Consider how you want to live in retirement, what kind of legacy you want to leave behind and how much youll need to save for health-related issues.

You should also create a personal financial snapshot. Make sure you understand your assets, debts, cash flow, expenses, lifestyle desires and more.

Once you have established what you want, what you have and what you owe, you and your financial advisor can work together to decide on the right investment mix and portfolio structure to help you achieve your goals. Your advisor will also help you create plans for tackling your different kinds of debt, and help you decide whether its worth it for you to pay off debt or save your money in an investment account.

Related: How Much Will My 401k Be Worth?

The important element of any successful retirement plan is commitment to the plan and regular assessment. At the least, you should be assessing your retirement plan annually. Over time, your goals and circumstances might change, forcing you to rework your strategy so you can retire debt free.

8 Ways to Reduce Debt Before Retirement

Retiring without debt is ideal, but even if you can’t get to zero, you should eliminate as much debt as possible. Here are some ways to cut down on debt.

1. Gradually Increase Savings

Strengthen your commitment to saving by putting an extra $50 per month in a separate savings account for one year. The following year, double how much you save. By saving $50 each month for one year and $100 each month the following year, you can have more than $1,800 in two years to pay down debt, put in an emergency fund or invest.

2. Trim Fees You Regularly Pay

From mutual funds to modems to ATM machines, you likely pay a lot of fees. Examine your bills to find fees you can cut, then take the savings and apply them to your debt. For instance, managing cash better avoids bank overdraft and other account fees. Similarly, consider lower-cost exchange-traded funds instead of mutual funds for investing.

3. Minimize Your Mortgage

Consider refinancing your mortgage for a lower interest rate. Also look at decreasing your term, say from 30 years to 15 years. Although you will have to pay more per month, youll potentially be able to relieve your retirement years of the burden of a mortgage.

Another strategy to consider is making one or more additional payments each year. If your payment is $1,000 per month, for example, and you pay $83 each month, youll make about 13 payments annually. Over time, this strategy can knock years of payments off your home loan.

4. Break Old Money Habits

If youre a habitual bad spender or squeamish saver, aim to break your habits for one month. If youre a chronic spender, for instance, commit to analyzing every nickle and dime you spend for one month. Then, use however much you saved for that month on debt.

If youre a squeamish saver, challenge yourself to save a nominal amount regularly. A weekly investment of $40 can produce more than $500,000 over an investment lifetime.

Read: 28 Retirement Mistakes People Make

5. Turn a Hobby Into a Business Venture

If you have a hobby or passion, turn it into cash to help you tackle debt. If you like golf, for example, work as a course ranger. You’ll cut down on your golf costs with employee perks and make a bit of extra cash on the weekend. You can also babysit, sell crafts online or pick up freelance work.

6. Downsize Your Life

As a retiree, you probably don’t need or want a house big enough for a family of five. Sure, you might love your home, but high taxes and regular repairs wont make for successful golden years. Downsizing can result in a good housing fit and free up money for debt reduction. Youre sure to pay less in taxes and maintenance costs on a much smaller home.

7. Help Yourself First

Many retirees want to help their children with money. The problem is they do it while they’re in a perilous financial position themselves. When you have debt, you have to learn to say no to others and pay yourself first until your finances are in order. It might be difficult, but cutting off your kids might be the best financial move you can make, both for you and your kids.

8. Liquidate

Your source of cash for extra debt payments might be lying around your house. Check your attic, jewelry chest or anywhere else for valuable things you’ve accumulated. Selling belongings you dont use or appreciate can be a source of financial windfall.

Commit to Your Retirement Plan

The reason you work hard is so you can retire comfortably. Retirement should be a great time of your life. Dont let debt saddle down your golden years. Use these tips to avoid a retirement filled with financial woes.

Create a retirement plan that aggressively tackles existing debts, and find new and creative ways to help you make money on the side. You might have a few stumbles along the way, but if you can stay the course, youll enter retirement with massive savings.

CBI raids 5 Vijay Mallya premises, books liquor baron, officials

Documents with dna indicate that IDBI used public deposits to lend hundreds of crores to Mallyas airline on dubious guarantees given by Mallya and his airline. A loan agreement between IDBI and Mallyas airline on December 2, 2009, shows that the now-defunct carrier was given a loan of Rs 750 crore.

The deal was struck at IDBIs Mission Road branch in Bengaluru. The loan was sanctioned by IDBI in 2009 despite knowing that Kingfisher was due to repay loans worth Rs 1,438 crore from various Indian banks over the next one year. Kingfisher had taken over Rs 6,000 crore in loans. It came at a time when Kingfisher had sacked close to 100 pilots, indicating that it was planning to downsize operations after running up huge losses.

What has surprised investigators is the lenient terms at which the Rs 750 crore loan was given. The hypothecation deed between Kingfisher and IDBI shows that the loan was given after the airline pledged its credit card receivables and insurance policies. In plain terms, if Kingfisher would have defaulted on loans, IDBI would have to recover the money by reclaiming the airlines credit card receivables. Furthermore, the agreement between IDBI and Mallyas airline states that credit card receivables should be kept in marketable condition by Kingfisher.

The financial accounts of Kingfisher show that it never made a provision for credit card receivables while accounting for repaying its debt in 2009-10. Between 2009 and 2012, when Kingfisher finally shut shop, there had been a massive pruning of workforce and large-scale cancellation of Kingfisher flights across various sectors.

CBI sources said that colluding IDBI officials never made an attempt to monitor Kingfishers credit card receivables and whether they were being maintained at levels sufficient for the bank to recover its Rs 750-crore loan.

On December 11, 2009, another deed was signed between Mallyas airline and IDBI. This time, all of Kingfishers trademarks including Fly Kingfisher (name and label), Flying Models, Fly the Good Times, Funliner, Kingfisher (label and mark) were also pledged in addition to the airlines credit card receivables. At the time the loan was given by IDBI, Kingfishers brand value was pegged by a private audit firm at a little over Rs 4,000 crore, and it owed a similar amount of money to Indian banks.

dna had reported in 2014 that Kingfishers brand value was merely Rs 6 crore. As of date, Kingfisher trademarks have become junk and no one wants to buy them. In other words, IDBI used Rs 750 crore of public deposits to fund an airline in 2009, whose debts, defaults, losses, operations and brand value were in free fall.

To be fair to IDBI, it wasnt the only bank to which the junk trademarks were pledged. Most of the 17 banks that lent money to Kingfisher were pledged the same trademarks, in addition to a personal guarantee by Vijay Mallya himself. The worst-hit was State Bank of India (SBI), which was the largest lender and is struggling to recover even a fraction of its Rs 1,700 crore loan to Kingfisher.

In addition to the Rs 750-crore loan, IDBI Bank also pumped in money into Kingfisher Airlines by purchasing preference shares in the now-ailing airline in 2011. On January 3, 2011, Rs 112.5 crore was taken out of public deposits from IDBI to make the transaction. A couple of months later, on March 31, 2011, another Rs 17.45 crore was pumped into Kingfisher this time through the purchase of equity shares by IDBI. This despite the fact that Kingfishers debt had reached 50% of its net worth. Six months after securing additional financing through the issue of shares to IDBI and other banks, Mallya announced the closure of Kingfisher Red the low-cost airlines under the Kingfisher brand.

CBI officials say that IDBI violated norms while extending a credit line of Rs 900 crore to Mallyas airline. An RBI circular issued to banks on September 19, 2008, raised concerns about the manner in which banks forming a consortium were lending to corporate houses. The circular instructed banks to obtain a declaration from borrowers about the loans already taken by the loan- seeker from other banks.

RBI had also asked banks to exchange information with each other about the borrowers account in addition to regularly obtaining the companys credit reports. CBI sources say that IDBI officials turned a blind eye to adverse credit reports, and, in some cases, also did not share information about Kingfisher with other banks in the consortium led by SBI.

Sharing this information would have reduced the exposure of other banks to Kingfisher. By the time Kingfisher shut operations without repaying its debt totalling over Rs 7,000 crore, RBI issued another circular reprimanding Indian banks for not sharing information with each other. The failure to do so, RBI said, had led to an exponential rise in the bad debts of Indian banks.

The CBIs heat will be felt more on the unnamed IDBI officials rather than Mallya amp; Co. Kingfisher Airlines, Vijay Mallya and the companys CFO A Raghunathan have been booked under sections of the Indian Penal Code, where the maximum punishment is 6 months in jail. Since Mallya and Co stand accused of being partners in criminal conspiracy in a crime that does not invite death penalty, they would serve no more than six months in jail, if found guilty after the CBI concludes its investigations.

The bank officials have been booked under the more stringent Prevention of Corruption Act that involves a jail term of seven years for a public servant found guilty of criminal conspiracy and criminal misconduct.

dnas past investigations on Kingfisher Airlines has indicated how many banks bent over backwards in lending money to Mallyas airline. CBI sources have told dna that its investigations into IDBI Bank has also revealed the collusion of other smaller nationalised and private banks in indiscriminately lending public deposits to Kingfisher Airlines. An email sent to IDBI did not elicit a response at the time of going to press.

Feds rap Fifth Third for car loans, credit cards

The federal Consumer Financial Protection Bureau announced two separate actions against Fifth Third Bank, for discriminatory auto loan pricing and for illegal credit card practices.

The Downtown Cincinnati-based regional bank will pay $18 million to African-American and Hispanic borrowers that were affected by the bank’s auto lending practices. The bank will also change its pricing and compensation system to minimize the risks of discrimination.

Fifth Third will also pay $3 million in relief to credit card customers who were harmed by deceptive marketing of credit card add-on products, the consumer agency said. The bank will also pay a $500,000 penalty.

“We are committed to promoting fair and equal access to credit in the auto finance marketplace,” said Richard Cordray, the agency’s director and a former Ohio attorney general, in a news release. “Fifth Third’s move to a new pricing and compensation system represents a significant step toward protecting consumers from discrimination. We are also obtaining millions of dollars in relief today for consumers affected by deceptive marketing of credit add-on products.”

Fifth Third is one of the nations largest third-party auto lenders, meaning it issues auto loans after they are negotiated between the dealer and car buyer. Fifth Third sets its interest rates based on the credit worthiness of borrowers, while giving dealers the option to increase the interest rate by as much as 2.5 percent as a markup.

Regulators said those markups ended up charging minorities more for loans regardless of credit risk.

Fifth Third is deciding whether to narrow dealers discretionary markup to a maximum of 1.25 percent or eliminating dealers discretion in markups altogether. The bank is also setting up a settlement fund to pay minorities that were affected by discriminatory lending practices.

Regulators said they would not charge penalties against Fifth Third in the auto lending case because of the banks pro-active steps to address the problems under its third-party auto lending.

In a consent order between the bank and the US Department of Justice, Fifth Third neither admitted nor denied the governments accusations about auto loans and said it was settling for the purpose of avoiding contested litigation and to devote its resources to serving its customers. The company said in the order that its policy of permitting dealer markups is common in the industry and has been for decades.

In a statement issued Tuesday, Fifth Third stressed the auto loans in question were bought after terms had already been set.

When considering whether to purchase a contract from a dealer, Fifth Third does not receive or consider any information about a consumer’s race or ethnicity, the company said. Fifth Third is not involved in the transaction between dealers and their customers.

The bank said it strongly opposes any type of discrimination and has monitored its practices for years to safeguard against unfair practices.

In reaching this settlement, Fifth Third stands firm in its conviction that we have treated and will continue to treat our customers in a fair, open and honest manner, the bank said.

Regulators also cried foul with Fifth Thirds credit card practices specifically over its Debt Protection add-on product, which the bank sold from 2007 to 2013. Sold via telemarketing and online, the service promised to allow customers to cancel payments under hardships, such as job loss, disability and hospitalization.

Some customers who agreed to be sent information on the program were actually enrolled in the service and charged fees, the consumer agency said. Some customers who received information about the program got marketing materials with misleading or incomplete information about costs and eligibility.

Bank pays $18M settlement for lending discrimination

A bank with a large presence in the region has agreed to pay an $18-million settlement to resolve allegations that it engaged in a pattern or practice of discrimination against African-American and Hispanic borrowers in its indirect auto-lending business.

The US Department of Justice, or DOJ, and the Consumer Financial Protection Bureau, or CFPB, announced the settlement agreement with Cincinnati-based Fifth Third Bank last month. The bank operates in 12 states.

The settlement, which is subject to court approval, includes compensation for African-American and Hispanic borrowers who were overcharged from January 2010 through September 2015 for auto loans and requires changes to the way Fifth Third prices automobile loans.

Fifth Third Bank has agreed to change the way it prices its loans by limiting dealer markup to 1.25 percent for loans of five years or less and 1 percent for loans greater than five years.

Fifth Third has also agreed to pay $3 million for deceptive marketing of credit card add-on products to harmed consumers.

Fifth Third Bank could not be reach for comment today.

The bank is the ninth largest depository indirect auto lender in the US

Discrimination charges

The investigation relates to the banks indirect auto-loan practices.

Fifth Third allowed car dealers discretion to mark up a loans interest rate from the price Fifth Third initially set, based on a borrowers objective credit-related factors.

Dealers received greater payments from Fifth Third for loans that included a higher-interest-rate markup.

As a result, the DOJ and CFPB said thousands of African-American and Hispanic borrowers were charged higher interest rates than non-Hispanic white borrowers.

The agencies claim that Fifth Third Bank charged borrowers higher interest rates because of their race or national origin and not because of the borrowers creditworthiness or other objective criteria related to borrower risk.

African-American and Hispanic borrowers paid more than $200 more during the term of the loan than their white counterparts.

The Equal Credit Opportunity Act prohibits such discrimination in all forms of lending, including auto lending.

Future auto loans

The DOJ and CFPB anticipate that Fifth Thirds new caps on discretionary markups will substantially reduce or eliminate these disparities.

This agreement shows that the indirect auto-lending industry is moving toward a model of dealer compensation that fairly compensates dealers for their work related to loans, while limiting the dealer markup that leads to discriminatory pricing, said DOJ Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.

Consumers deserve a level playing field when they enter the marketplace, especially when financing an automobile, saidUS Attorney Carter Stewart of the Southern District of Ohio. This settlement prevents discrimination in setting the price for auto loans.

Coalition Forms to Push for Transparency in Online Lending

To a small business owner looking to expand in todays tight credit market, many say their best shot at getting a loan is through a non-bank lender like an online lending company. But many are finding that the clean websites and seemingly simple terms some lenders promote hide the real cost of doing business.

Recent work by the Federal Reserve Bank of Clevelandand the Federal Reserve Board on alternative online lenders found that a focus group of small business owners generally liked the easier access to capital that online lenders provide compared with banks. But many were confused by the terms of lending offers, which can make it nearly impossible to determine if the loan is actually affordable.

The findings may act to help agrowing national effortto regulate alternative lenders and expose predatory lenders.Federal Reserve data show that a little more than half of small businesses (those that earn up to $1 million in annual revenue) are denied a loan when they apply at a bank. Many turn to alternative lenders.

How ZestFinance Used Big Data Lending To Secure $150M From Fortress

Giving money away is very easy, almost anyone can do it. However, unless one has a neverending supply of funds, giving money away is not something any human or company can afford to do for very long.

And while this seems like a rather trivial point, it actually ends up being a often missed critical component in the discussion of lending in the US — particularly as it relates to the emergence of the new class of “alternative” or “digital” lenders recently flooding the marketplace. Lending is more than just giving away money and is much, much harder since the extra component to lending is the entirety of the hard part — having the money paid back.

Alternative lenders — particularly those that cater to consumers — often trumpet their ability to serve underserved markets using better Big Data tools to create more accurate credit profiles for consumers than the FICO scores that dominate traditional lending.

“Every day we see people who are innovating in lending. They say, ‘We’re going to Facebook to use their data points; we’re going to fine-tune our risk metrics.’ And that’s great, but at some point, when you strip everything away, the fees have to get somewhat close to the risk the lenders are taking,” Nathan Groff, chief government relations officer for Florida-based Veritec Solutions LLC told MPD CEO Karen Webster in a conversation earlier this year.

Those underserved markets are often high risk. Groff points out that those better measurements are at base still offering a more detailed picture of a sub-prime borrower, not offering an entirely different picture, which means that the alternative lenders emerging to compete with payday players are still pushed toward offering small-dollar, high-interest loans to hedge against the risk of lending to the sub-prime.

And while Doug Merrill, CEO and Founder of ZestFinance, probably wouldn’t exactly disagree with Groff entirely, he would likely dispute all those fine turnings are something that could just be stripped away, since his firm is built on the idea that better data builds more nuanced pictures and supports a wider variety of more tailored credit products.

And, arguably at least, Merrill knows from data, since he used to be Google’s CIO.

All data is credit data; we just don’t know how to use it yet,” Merrill noted in an interview. “Same lesson applies here as applies to Google search quality. There’s actually hundreds and even thousands of small signals, if you know where to find them.”

ZestFinance launched in 2009 as an attempt to use data analytics and machine learning to build more accurate scores — and consequently offer better loans to consumers. Like many of the entrepreneurs PYMNTS has spoken to in the past, the company was created after its founder had a brush with an inefficient market up close. In this case, Merrill’s sister-in-law, a single mother, found herself with a surprise snow tire bill and without the cash flow to cover it.

Given that Google’s former information head is a relative, Merrill’s sister-in-law was obviously able to secure funds from a family member. But not every sub-prime borrower is so lucky, Merrill realized, and so ZestFinance initially launched as a lending platform to compete directly with the payday lenders of the world.

And those loans aren’t cheap. ZestFinance prices for risk like any rational lender, and that means APRs that are triple-digit.

“We are an expensive loan compared to credit cards or what you can get from your family,” he said. “The problem is not everyone can get credit cards or can borrow money from their family.”

And, in the last three months, the firm has also moved past focusing on sub-prime borrowers exclusively to include a group it is defining: almost-prime or near-prime borrowers. With the launch of a new product, Basix, in July, the firm is now targeting consumers whose credit just misses the threshold of banks or online marketplaces dedicated to prime borrowers only.

That installment loan program offers personal loans of $3,000-$5,000 to consumers with middling credit. The loan term is three years with rates of 26 percent to 36 percent per year. A more expensive than traditional loan but far from the massive APRs associated with payday lending.

There is actually no money to be made on a bad credit deal; in the long run, it doesn’t create customers that want to borrow from you, Merrill noted. We think we offer a fair price, and more importantly, we’re offering a transparent deal. There are no surprises and no weird fees. In a market where deception is a recurring complaint, being upfront and fair is a real value proposition for customers.

And, it seems, a strong value prop for investors. Since its 2009 launch, the firm has landed $250 million in funding. The firm also announced its latest big backer this week; New York’s Fortress Investment Group has provided the firm with a $150 million line of credit.

Those funds will go toward expanding Basix and underwriting more — currently, ZestFinance is financing loans with its own cash.

“The new money helps move forward with the program a bit faster, Merrill said. “It’s also honestly a huge vote of confidence that this little company has attracted such a huge company like Fortress.”

And so expanding faster is what is next on the company’s agenda, with what Merrill described as a foot on the gas pedal as it tries to snap up more of the borrowers that traditional banking isn’t serving.

“FICO-based underwriting doesn’t do a very good job of answering two questions: Can you pay us back? And if you can, will you pay us back? And that’s what we’re really good at seeing, because we look at thousands of small data clues that give us the answer.

And with additional funds to hand out, Merrill says they are getting more data every day to build better answers.

Lending Loop allows Canadians to invest in small businesses

Canadians looking for decent investment returns and small business people in search of attractive financing have a new platform where they can help each other with the launch of Lending Loop.

Investment minimums are set at $50, which allows many more people to participate, Lending Loop’s CEO believes.

Today is a brand new day for Canadians and small businesses across the country, Cato Pastoll said. With as little as $50, Canadians can lend their money to the thriving local coffee shop that needs new equipment to grow or the farm around the corner requiring staff to develop a farm-to-home produce delivery program.

Mr. Pastoll and partner Brandon Vlaar started Lending Loop after seeing the difficulties many friends and family had squeezing money out of Canada’s highly centralized banking system. Those people seldom received anything, and when they did, it took forever.

According to a release, Canadian SMEs employ almost 90 percent of Canadians working in the private sector while producing 40 percent of GDP. Turned down by the big banks, they resort to high-interest options.

Lending Loop aims to simplify the ask by using technology to produce generate a fast and simple application process. Loans do not come into effect until they are fully funded, a measure Lending Loop says reduces the risk of delinquency. They state they also provide flexible repayment options.

Small Businesses Push for Transparency in Online Lending

To a small business owner looking to expand in todays tight credit market, many say their best shot at getting a loan is through a non-bank lender like an online lending company. But many are finding that the clean websites and seemingly simple terms some lenders promote hide the real cost of doing business.

Recent work by the Federal Reserve Bank of Cleveland on alternative online lenders found that a focus group of small business owners generally liked the easier access to capital that online lenders provide compared with banks. But many were confused by the terms of lending offers, which can make it nearly impossible to determine if the loan is actually affordable.

The findings may act to help a growing national effort to regulate alternative lenders and expose predatory lenders. Federal Reserve data show that a little more than half of small businesses (those that earn up to $1 million in annual revenue) are denied a loan when they apply at a bank. Many turn to alternative lenders.

The drive to regulate the industry that observers estimate totals anywhere from $5 billion to $10 billion in annual loans is led by small business owners, industry lenders and nonprofit lenders. This summer, a coalition of those groups plus brokers and think tanks launched the Small Business Borrowers Bill of Rights. The groups want to provide potential borrowers with the right to see an annualized interest rate and all fees. They also say that borrowers have the right to responsible underwriting so they dont take out loans they are unable to repay.

Participants in the Cleveland Feds focus group reported that they found lender websites appealing but had concerns about privacy. One auto dealership owner in New Jersey noted that lenders present their loans in the most confusing way possible. The websites are full of bright colors and testimonials from nice people, the owner added, but they dont give applicants all the information they need.

When small businesses are looking for loans, they sometimes find, for instance, that an alternative lender may quote a 10 percent interest rate, but that may actually be a monthly rate — meaning the actual annual percentage rate is 120 percent. Its a tactic often used by predatory lenders in the personal lending and cash advance markets. Sometimes the lender will demand a certain percentage of the daily sales of a business until the loan is repaid, a move that can make it hard for a busienss owner to make other needed payments.

Many want information like interest rates, late fees and repayment penalties to be explained clearly, said Ann Marie Wiersch, a Cleveland Fed senior policy analyst. They dont want to feel like theyre being taken advantage of.

Participants also found product comparisons to be difficult because of the different ways lenders presented information in each loan term. They said they wanted clearly stated product features and costs and an easier way to compare. Still, they all liked the apparent simplicity of the application process. Banks usually require several years of tax returns and other data to be produced in-person, ask the owner to fill out long forms and take months to respond to a loan request. Participants like that online lenders make money available in days, often pull borrower tax data electronically and include non-traditional measures of creditworthiness like customer ratings on social media.