Advocates Share Voices of Hundreds of
Thousands Calling for End to Predatory Lending
WASHINGTON _ More than 700 groups carrying the voices of hundreds of thousands of Americans from every state in the union today called on the nation’s consumer financial watchdog to put forth a strong final rule that will truly end the abuses of payday lending. In June, the Consumer Financial Protection Bureau (CFPB) unveiled a proposal that heads in the right direction but will not work to close the debt trap.
That message was carried in a letter hand-delivered today to CFPB Director Richard Cordray and signed by national, state and community-based organizations representing seniors, faith denominations and clergy, labor and workers, consumers and veterans among others. Their message comes on top of more than 400,000 comments submitted to the CFPB by Americans around the country during the official comment period on the proposal, which ends tomorrow.
“The proposed rule takes a right general approach by establishing an ability‐to‐repay principle –including consideration of income and expenses…,” the letter says. “However, current loopholes in the proposed rule could allow lenders to continue exploiting people in our communities with their debt trap lending. For example, the rule contains dangerous exceptions to the ability‐to‐repay requirements, does not provide sufficient protections against flipping of unaffordable loans, and does not go far enough to ensure people have enough money to live on after repaying the loan.”
“The Stop the Debt Trap letter we delivered today was a call from 700 civil rights, consumer, labor, faith, veterans, senior, and community organizations for the CFPB to enact a strong rule to rein in payday lending abuses,” said Gynnie Robnett, payday campaign director for Americans for Financial Reform. The breadth of the call, in this letter and in hundreds of thousands of other messages to the CFPB, sends a powerful message about how unfair and abusive debt trap loans are, and the extent of harm they do to hard-pressed individuals and families.”
For a full list of signers to the payday lending letter click here
Cordray also received a copy of “Caught in the Debt Trap,” a devastating collection compiled by People’s Action Institute and Americans for Financial Reform of real life stories from Americans who have been harmed by
"Our network and groups like us from every state in the nation have been working for years to stop debt trap payday lenders because we see up close the ruin they cause in people's lives. The people profiled in Caught in the Debt Trap represent just the tip of the iceberg but show, in their own words, the devastating impacts these loans have on families all across the country,” said Jay Johnston, Board Chair, People's Action and State Governing Board Member, Virginia Organizing.
"We're grateful to the CFPB for all their hard work on this issue. Said Jen Diamond of The Maryland Consumer Rights Coalition who provided a sample of some of the hundreds of photo petitions collected across PaydayFreeLandia asking for a strong rule. “Our state has outlawed payday lending since the 1970s and we are so glad to have had the chance to share a bit of that legacy with Director Cordray today on behalf of Maryland consumers."
“I know the extent of the incredible energy and mobilization from the states because I could literally feel it making the difference as I walked the halls to talk with Congress members about joining the letter calling for a strong rule. People all over the country are looking forward to as strong of a rule as possible to help protect consumers in the places where they live,” said Yana Miles, policy counsel for the Center for Responsible Lending.
Organizers from the National Council of La Raza (NCLR) submitted a sampling of the comments collected directly to Cordray today, noting the important of closing the debt trap in communities of color, which are often directly targeted by predatory lenders.
“Payday lenders prey on communities of color, with an astounding concentration of payday stores in African-American and Latino neighborhoods. A CFPB rule is absolutely essential to ensuring that payday lenders can no longer strip wealth from vulnerable families who are already struggling to make ends meet. We heard this call loud and clear at the NCLR Annual Conference in Orlando, Florida, where we received nearly 5,000 comments from Hispanic consumers who were calling for a strong CFPB rule,” said Lindsay Daniels, associate director of economic policy at NCLR.
“CFED thanks Director Cordray for taking an historic step toward protecting consumers from the cycle of debt that traditionally accompanies small-dollar lending,” said David Newville, Director of Government Affairs for CFED. “Along with the Assets & Opportunity Network and the Stop the Debt Trap campaign, we believe that the proposed rule, with modifications, will put an end to the worst practices in this marketplace and replace them with safe and affordable alternatives that help working families attain financial security.”
"Payday lending presents enormous economic and physical safety risks for domestic violence and sexual assault survivors," said Erika Sussman, Executive Director of the Center for Survivor Agency. "These companies perpetuate violence through economic exploitation."
Stop The Debt Trap Campaign is powered by 500 civil rights, consumer, labor, faith, veterans, seniors and community organizations from all 50 states. We strongly urge the Consumer Financial Protection Bureau to put rules in place to effectively stop the debt trap. Payday, car-title, and high cost installment loans, with annual rates of 300% or more dig borrowers into a dangerous hole of debt. Its time to end the scam and put rules in place that will end these abusive practices.