CFPB throws borrowers to the sharks

 

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Washington, DC—Consumers have been betrayed today by the very agency meant to protect them. The Consumer Financial Protection Bureau (CFPB) has proposed gutting and further delaying a critical, commonsense rule created to rein in the most egregious forms of predatory lending.

Consumer Action issued the following statement:

Rather than working on behalf of consumers, new leadership at the Consumer Financial Protection Bureau has opted to protect the ability of predatory lending companies to fleece the American people through payday and other high-cost loans with up to 400% interest rates.

The CFPB has proposed gutting the central tenet of its own modest rule—to ensure that payday, car title and other high-cost, short-term lenders determine if a borrower has the ability to repay a loan (without going broke or taking out more loans) before issuing it.

If the CFPB’s unjustifiable proposal sticks, those who are most likely to resort to using payday loans—people with limited opportunity to access credit, including low-income borrowers and communities of color—will be the ones trapped in a cycle of debt. Payday loans are illegal in 16 states.

It is appalling that the new director of the Consumer Financial Protection Bureau, Kathy Kraninger, is already sabotaging one of the most meaningful rules the agency has created to protect consumers!

For more on the CFPB rule as it was originally proposed, after five years of thorough research into the short-term loan industry and its victims, click here.

Consumers have 90 days in which to let the CFPB know that they oppose changes to the original proposed rule designed to help borrowers avoid a cycle of debt.

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Consumer Action has been a champion of underrepresented consumers nationwide since 1971. A non-profit 501(c)(3) organization, Consumer Action focuses on consumer education that empowers low- and moderate-income and limited-English-speaking consumers to financially prosper. It also advocates for consumers in the media and before lawmakers to advance consumer rights and promote industry-wide change.

By providing consumer education materials in multiple languages, a free national hotline, a comprehensive website and annual surveys of financial and consumer services, Consumer Action helps consumers assert their rights in the marketplace and make financially savvy choices. Nearly 7,000 community and grassroots organizations benefit annually from its extensive outreach programs, training materials and support. 

 

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