Advocates Respond: CFPB announces possible payday loan rule release date

AFR statement:

On June 2, the Consumer Financial Protection Bureau (CFPB) will hold a hearing in Kansas City, where it is expected to release its proposed regulations for payday and other small-dollar consumer lenders on June 2. Meanwhile, the agency has put out a study of the car-title loan market, adding new weight and urgency to the case for these rules.

Car-title loans, like payday loans, are often marketed as a source of short-term emergency credit; but they’re engineered, the CFPB’s research showed, to suck people into high-cost long-term debt. Only 12 percent of borrowers manage to repay their loans within the typical prescribed term of 30 days, according to the study, while fully 20 percent of borrowers end up losing their vehicles. The average borrower pays more in fees ($1,300) than the amount borrowed ($1,000).

Since the CFPB released a preliminary outline of its proposal in March 2015, more than $10 billion has been drained from consumers by exorbitant interest rates and fees on payday, car-title, and other debt-trap loans. In short, the Bureau’s proposal will not be coming a moment too soon. Consumer advocates will be rooting – and fighting – for it to be completed as expeditiously, and in as strong and loophole-free a form, as possible.

National groups:
People’s Action

Local groups: