Published: December 2017

Groups call on Congress to protect consumers from predatory high-cost loans

Consumer groups are pushing back against a devastating piece of legislation that seeks to repeal a commonsense Consumer Financial Protection Bureau rule to rein in the predatory high-cost loan industry.

A large body of research has demonstrated that payday and car title loans are structured to create a long-term debt trap that drains consumers’ bank accounts and causes significant financial harm. These types of loans often carry interest rates in excess of 300%! Unfortunately, a new resolution in the House (HJ Res. 122) would roll back a rule that the Consumer Financial Protection Bureau announced in October 2017 to rein in the payday and high-cost loan industry. The commonsense rule requires that lenders check a borrower’s ability to repay before lending them money, lessening the likelihood that borrowers will need to borrow even more money or default on everyday expenses (like rent or groceries) in order to pay off the loan. The rule also limits lenders' automatic access to borrowers’ bank accounts. By repealing this rule, HJ Res. 122 would give payday lenders a free pass to continue exploiting financially vulnerable Americans.

Lead Organization

Center for Responsible Lending

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Groups call on Congress to protect consumers from predatory high-cost loans   (HR2570PredatoryHomeMortgagesLetter.pdf)

 

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