CFPB Proposes Rule to End Payday Debt Traps

CFPB Proposes Rule to End Payday Debt Traps

“Rule Would Require Lenders to Determine Whether Consumers Have the Ability to Repay Payday, Auto Title, and Certain Other High-Cost Loans”

WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) today proposed a rule aimed at ending payday debt traps by requiring lenders to take steps to make sure consumers have the ability to repay their loans. The proposed rule would also cut off repeated debit attempts that rack up fees. These strong proposed protections would cover payday loans, auto title loans, deposit advance products, and certain high-cost installment and open-end loans. The CFPB is also launching an inquiry into other products and practices that may harm consumers facing cash shortfalls.  (more…)

CFPB Finds Half of Online Payday Borrowers Rack Up an Average of $185 in Bank Penalties

CFPB Finds Half of Online Payday Borrowers Rack Up an Average of $185 in Bank Penalties

Repeat Debit Attempts Add Steep, Hidden Cost for Borrowers Yet Typically Fail to Recover Payments

WASHINGTON, D.C. — Today the Consumer Financial Protection Bureau (CFPB) issued a report that found that attempts by online Payday-loanslenders to debit payments from a consumer’s checking account add a steep, hidden cost to online payday loans. Half of online borrowers rack up an average of $185 in bank penalties because at least one debit attempt overdrafts or fails. And one third of those borrowers who get hit with a bank penalty wind up having their account closed involuntarily. The study also found that despite this high cost to consumers, lenders’ repeated debit attempts typically fail to collect payments. (more…)