The Inclusive Economy
The CFPB Just Proposed Payday Lending Rules!
By Anju Chopra and Emanuel Nieves on 06/02/2016 @ 01:00 PM
Great news! The Consumer Financial Protection Bureau (CFPB) just released proposed rules today to regulate predatory, small-dollar credit products — including payday, auto-title and many high-cost installment loans. This marks an important milestone towards protecting financially vulnerable consumers from the most abusive payday lending practices.
We applaud the Bureau for thoughtfully and deliberately developing these much-needed regulations, which have the potential to significantly rein in an industry that has thrived by trapping vulnerable borrowers in debt and compromising the financial well-being of millions of low- and moderate-income consumers.
The proposed rule requires that lenders ensure a borrower’s ability to repay before extending a loan to a consumer — a standard practice in nearly all other forms of lending, except the small-dollar lending industry. However, the rule also provides an alternative to this standard that limits loan size and prevents borrowers from rolling over the same loan multiple times. The rule also restricts lenders from having unfettered access to a borrower’s bank account, which currently exacerbates the debt trap perpetuated by small-dollar lending.
Now that the Bureau has done its part by proposing a rule, it’s time for advocates to strengthen the rules and show how badly needed these rules really are. The clock starts now: we have until September 14 to make a difference. Here’s how:
- Tune in today at 11 am EDT for the livestream of the CFPB's small-dollar lending field hearing in Kansas City, MO, and join the conversation online to show your support for strong rules.
- Download the updated toolkit to show your support for strong consumer protections.
- Stay tuned for more information in the coming weeks about signing onto a comment letter to the CFPB.
- Contact us if you want support to write your own comment letter.
This is a critical opportunity to protect vulnerable consumers, and we need your help to make sure that the final rules are as strong as possible. Thank you for all your support on this important effort!
The A&O Network and Consumers Can’t Wait teams