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Customer Federation of America calls For New Protections To Safeguard Borrowers’ Bank Accounts As An Element Of Forthcoming Rule On Pay Day Loans
Washington D.C.—Today, the customer Financial Protection Bureau (CFPB) circulated a brand new report documenting the damage caused whenever payday loan providers utilize immediate access to a borrowers’ bank-account to gather payments-including regular, high overdraft costs and even account closing. Even though the report utilizes information linked to cash advance deals carried out online, the findings recommend the necessity for strong protections for several pay day loans.
Like pay day loans produced by storefront lenders, payday loans online carry high rates of interest, pull re re re payments directly from a consumer’s bank account and are also created using small consideration of a borrower’s power to repay.
“These findings reinforce just exactly what customer, civil rights and faith companies around the world have stated again and again,” said Tom Feltner, Director of Financial Services at customer Federation of America. “Payday loans result in long-lasting hardship that is financial put on overdraft along with other fees that put borrowers’ monetary safety at an increased risk.”
The CFPB report unearthed that over a period that is 18-month
New protections into consideration should protect borrowers from overdraft costs along with other hardships that are financial
In March 2015, the CFPB circulated a draft proposition to safeguard customers from abusive auto and payday name loans.
Among the list of conditions inside the proposition in mind are a necessity to completely think about a borrower’s earnings and costs before generally making a loan, in the place of counting on banking account access to gather re re payments. The Bureau can be considering a restriction on collection efforts that could protect consumers’ bank reports.
“The CFPB’s scientific studies are clear—direct use of a borrowers’ bank-account puts customers’ checking records at an increased risk. We are in need of strong and instant action to require lenders’ to totally look at a borrowers’ ability to settle that loan without re-borrowing, overdraft costs or other pecuniary hardship,” said Feltner.
Contact: Tom Feltner, 202-618-0310
The buyer Federation of America is just a nationwide company in excess of 250 nonprofit customer teams that had been launched in 1968 to advance the buyer interest through research, advocacy, and training.