CHN: Deadline Approaching for Payday Lending Comments
The May 15 deadline is fast approaching for submitting comments in opposition to the Trump Administration’s proposed rollback of a rule that would protect consumers from predatory payday lenders.
In October 2017, the Consumer Financial Protection Bureau (CFPB) issued a final rule requiring that lenders check a borrower’s ability to repay before lending money in the form of payday or car title loans. But Trump Administration appointees who now lead the CFPB have been working to gut this crucial protection, which is known alternately as the “ability to pay rule,” or the “underwriting provision.” Without this protection, greedy lenders can force borrowers to take out multiple loans, some averaging more than 350 percent interest, which they can’t fully pay back. This way, consumers are trapped in debt far more costly than the original loan.
The rule was years in the making. It was finalized after five years of research and input, including nearly half a million comments calling for protections against the payday lending industry. It would have required lenders to verify a borrower’s income, outstanding debts, and minimum basic needs in order to determine a borrower’s ability to repay a loan before one is made.
Compliance with the payday lending rule was to begin this August. But the CFPB has been working to delay enforcement, even as it seeks to overturn the rule altogether.
On May 2, CHN and Americans for Financial Reform hosted a webinar on the payday lending rule (see the slides from the webinar here; a full captioned recording of the webinar will be available soon). For more information, see CHN’s payday lending campaign page, as well as pieces on CHN’s Voices for Human Needs blog on efforts to dismantle the CFPB; who payday lending hurts; and payday lending stories shared with CHN.