Help Support Federal Rules to Rein in Predatory Lenders
The Consumer Financial Protection Bureau has proposed important new standards to help rein in payday and auto title lenders who intentionally trap low-income and impoverished people in a cycle of high-interest, unaffordable debt.
These commonsense rules would require lenders to either consider a borrower’s ability to repay the loan or abide by a set of alternative requirements that eliminate some of the most predatory practices.
This is one of the most important actions the CFPB has taken to protect consumers since the agency was formed in the wake of the financial crisis of 2007-08.
But the industry is fighting back to protect its ill-gotten profits – the billions it drains from local communities.
You can help support these rules by making your voice heard today.
Right now, as part of the rulemaking process, the CFPB is collecting comments from the public to support its new consumer protections. You can read the proposed rules here. And you can submit your comments to the CFPB using our campaign page.
The debt trap
These lenders tout their services as a solution for times when budgets are tight and ends aren’t going to meet. Their promises of fast money and no credit checks seem too good to be true.
And they are – as borrowers often find out too late.
In fact, the industry’s entire profit model is built on lending to people who can’t afford to pay off their loans before the lender offers to “roll over” the principal into a new loan.
One study found that, over the course of one year, the average payday loan borrower was in debt for 199 days and took out an average of 10 payday loans. And more than two-thirds of auto title borrowers take out seven or more consecutive loans, according to a new CFPB report.
As far as the lenders are concerned, they are ideal customers, guaranteeing a steady stream of profits as borrowers spend months and years simply paying the interest as their loan amounts grow ever larger. As the owner of one payday loan store told the Southern Poverty Law Center for its report on predatory lending in Alabama, “To be honest, it’s an entrapment – it’s to trap you.”
Remorseful borrowers know this all too well.
The CFPB wants to protect consumers from the debt trap and ensure that consumers have access to credit that helps, not harms them. Its regulations, years in the making, are designed to rein in predatory practices that financially ruin borrowers and drain billions of dollars from local economies.
Please take the opportunity to make your voice heard today by submitting your comments here. You can also send comments by mail to this address:
Monica Jackson, Office of the Executive Secretary, Consumer Financial Protection
Bureau, 1700 G Street, NW., Washington, DC 20552
