Mulvaney’s Consumer Bureau Signals Plans To Roll Back Consumer Protections Against Payday Debt Traps

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WASHINGTON, D.C. – Today, the consumer bureau, under acting director Mick Mulvaney and deputy director Brian Johnson, has announced its plans to “reconsider” the “ability-to-repay provisions” of its landmark 2017 Payday Rule. The Payday Rule offers vital protections for consumers of payday, car title, and some longer term loans to ensure that predatory lenders don’t trap customers in unaffordable loans. The basis of the rule is the common sense principle that lenders should ensure that their customers have the ability to repay a loan before they get trapped in a cycle of debt. Consumer groups see today’s statement as evidence that the bureau plans to gut the underlying basis for the rule.

 The consumer bureau issued a rulemaking agenda last week that announced once again that the bureau would propose changes to the Payday Rule in the beginning of 2019. Shortly thereafter, Bloomberg reported that the bureau’s proposal would indeed gut the ability-to-repay standard, and that most of the rulemaking staff that worked on the set of protections put into place last year have refused to work on this attempt to weaken these protectionsafter years of data collection and public comment.

The Stop The Debt Trap campaign, a coalition of over eight hundred consumer, civil rights, faith, social service, labor, and other groups in all fifty states, spoke out against this attempt to gut consumer protections:


“The consumer bureau, a once great agency dedicated to enforcing the law and protecting consumers, continues to put predatory lenders ahead of the law and its mission with this attempt to gut consumer protections,” said José, Payday Campaign Manager at Americans for Financial Reform. “We have already seen that the bureau has little to no interest in enforcing the law against predatory lenders. Under Mick Mulvaney and Brian Johnson, the bureau has dropped cases against predatory lenders that illegally charged up to 950% APR, dropped an investigation into a case against a lender that had contributed to Mulvaney’s congressional campaigns, and just this week settled a suit against payday lender Cash Express for a paltry sum, far less than the originally planned sum which would have gone to refunding the consumers that they had wronged. With the bureau’s preference for payday lenders over consumers in full view, Mulvaney has shown that his efforts to change the Payday Rule are being done in bad faith to eliminate consumer protections.”

“Americans can’t catch a break with Mulvaney at the helm of the CFPB,” said Rebecca, Senior Policy Counsel at the Center for Responsible Lending. “This is nothing more than his keeping his promise to predatory lenders to sabotage the payday lending rule. If predatory lenders and Mulvaney succeed in eliminating or watering down this important consumer protection, millions of financially distressed Americans will continue to be caught in a crippling cycle of 300 percent interest rate loans. This predatory lending business model relies on a borrower’s inability to repay their loans, which leads to a long-term cycle of very high-cost debt. This in turn often causes a downward spiral of bank penalty fees, defaulting on other bills, and even bankruptcy. These predatory loans especially harm communities of color, where payday lenders disproportionately locate their storefronts. The CFPB payday lending rule should be implemented as finalized, without interruption. A delay is unjustified, and every additional day without the rule will permit lenders to trap more borrowers in the high-cost debt traps the rule is designed to prevent.”