September, 2019: CFA’s 16th Annual High Cost Lending Summit and Lobby Day is taking place December 4th and 5th in Washington DC. The summit will begin at 8:30am with a reception at the end of the day. Stay tuned for the full agenda! Register now and see below for more details on location and travel. This gathering will also be held in conjunction with our annual Financial Services Conference which takes place on December 5th and 6th. More information on this conference can be found here.
Payday lending
Click on the link above to learn about advocacy efforts underway to protect consumers of financial products from predatory debt.
Less than 16 days from the September 18th Deadline to comment! If so inclined, click here
June & July 2019
The CFPB has proposed a debt collection rule that hurts consumers. Pubic comments are due by September 19, 2019.
The proposed rule would allow collectors to:
A few links to publications on medical debt and collection practices:
May 2019
Blight Bill in Wilmington. We support our neighbor's concerns.
The American Law Institute is considering the most recent draft of a new Restatement of the Law, Consumer Contracts. The restatements can carry a great deal of weight with the courts. The current draft severely favors businesses over consumers when entering into and enforcing consumer contracts. In particular, the draft makes it difficult to challenge terms that consumers have “agreed” to by signing a form or clicking “I agree”; makes it easier for businesses to change terms after the fact; places the burden of proof on consumers; and limits consumers remedies if a court finds a contract is unconscionable or that a business engaged in deception. If you wish to send your own letter, feel free to email it to Richard Revesz at [email protected] and also to Stephanie Middleton at [email protected]. The email should clearly identify that the comments relate to “Annual Meeting Tentative Draft of the Restatement of Consumer Contracts” and the email should say: "Please post this letter to the Comments Page for this Restatement project."
Payday loans don’t just affect the individual borrowers; they harm families. You can hear a few stories here. We partner with leaders who work to stop predatory payday lending so that we can prevent stories like these from ever happening. And we have a chance to fight back. The CFPB is proposing to rollback major payday protections; let the bureau know you vehemently oppose that decision. Please share these video stories so that others can understand why this is issue is so important.
The New York Times: Closing the racial wealth gap
The United States tolerates a widening chasm between the very rich few and the many with low incomes. The burden of poverty falls heaviest on African Americans and other people of color. [link]
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April 2019
The Electronic Portal for submitting comments is up and running and available at this link: www.stoppaydaypredators.org. It will populate the comment with one sentence and please write your own stories/comments.
Excerpts from Payday and Car Title Lenders Drain $8 Billion in Fees Every Year; Center for Responsible Lending,
Research shows that these loans lead to a cascade of other financial consequences, such as increased overdraft fees, delinquency on other bills, involuntary loss of bank accounts, and even bankruptcy. For car title, the end result is too often the repossession of a borrower’s car, a critical asset for working families.
Collectively, these loans drain billions of dollars a year in charges on unaffordable loans to borrowers with an average income of approximately $25,000. This fee drain hampers future asset‐building and economic opportunity in communities most impacted by these predatory lending practices.
Data repeatedly show that payday and car title lenders’ bottom line is dependent on borrowers stuck in a cycle of debt. According the Consumer Financial Protection Bureau, the typical payday borrower is stuck in 10 loans a year, typically one right after the other. This means that a borrower will pay $458 in fees on a typical $350 two‐week loan. Further, 75% of all payday loan fees are generated from borrowers with more than 10 loans a year.
While comparable data is not available for car title lenders, the typical car title loan is refinanced 8 times. As a result, car title loans extract twice as much in fees than credit extended.
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March 2019
If you are on twitter, follow:
AFR (@RealBankReform), Stop The Debt Trap (@StopTheDebtTrap), CRL (@CRLONLINE), Allied Progress (@AlliedProgress), Consumer Federation of America (@ConsumerFed), Bart Naylor (@BartNaylor), and Woodstock Institute (@WoodstockInst) and stay up to date on what is happening in the consumer protections arena.
CFPB Releases Plan to Gut Payday Loan Protections
FOR IMMEDIATE RELEASE: February 6, 2019
CONTACT: Desmond Lee; [email protected]; 646-517-1826
A Gift to the Payday Loan Sharks
WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) under Trump-appointed Director Kathy Kraninger unveiled a plan to gut the CFPB’s landmark 2017 payday and car title lending rule before it even goes into effect. By eviscerating this consumer protection, Kraninger’s new plan would help predatory lenders continue to trap Americans in debt. Specifically, the proposal would eliminate the common-sense and widely supported requirement that lenders verify that a borrower can afford to repay the loan. [Additional background at bottom of release.]
The Stop The Debt Trap campaign, a coalition of more than 700 consumer, civil rights, faith, veterans, seniors, labor, and other groups in all fifty states, spoke out against this latest effort to gut consumer protections:
“The Kraninger CFPB is giving an early Valentine’s present to payday lenders, helping them continue trapping Americans in crippling cycles of debt,”said Center for Responsible Lending Senior Policy Counsel Rebecca Borné. “The payday rule was developed over years of extensive research and dialogue with stakeholders. Scrapping it will especially harm communities of color, whom payday lenders disproportionately target for predatory loans. The CFPB’s action today should be a call to action for Americans to speak out against the financially-crippling practices of payday lenders.”
“In proposing to undo the rule against abuses in payday and car title lending that the CFPB crafted after five years of careful study and an open process, the new CFPB director Kathy Kraninger is allowing the payday lenders to drive policy at the agency, just as Mick Mulvaney did,” said Linda Jun, senior policy counsel at Americans for Financial Reform. “This puts a vital consumer protection on the chopping block at the behest of predatory payday lenders, inviting them to continue profiting from trapping borrowers in a cycle of debt. We urge the Director to change course and not finalize such a rule”
“The CFPB’s decision to undo payday and car-title lending protections is a slap in the face to consumers—especially people of color—who have been victims of predatory business practices and abusive lenders,” said Vanita Gupta, president and CEO of The Leadership Conference on Civil and Human Rights. “This decision will put already struggling families in a cycle of debt and leave them in an even worse financial position. This administration has moved the CFPB away from protecting consumers to protecting the very companies abusing them.”
“UniodosUS, along with the thousands of Latinos who participated in a national campaign calling for a strong payday rule, have supported efforts to help protect vulnerable consumers and stop the abuse in the payday lending industry. Doing away with the critical ability-to-repay provision as is currently proposed, will open the floodgates once more to unscrupulous lenders. Removing this critical protection will place working families in a position where they are once again easy targets for those seeking to increase their profits without care as to the devastation they are causing for so many Americans trying to make ends meet,” said Marisabel Torres, Senior Policy Analyst at UnidosUS.
“Stripping important protections within this rule is a disservice to the public. With little accountability for their actions, payday lenders have long preyed upon communities of color and drained them of their hard-earned savings. We strongly urge Kathy Kraninger to reconsider her decision to weaken the payday lending rule and allow it to move forward as planned without delay. Every day that goes by without this crucial rule only threatens the financial security of American families throughout our country,” said Hilary O. Shelton, NAACP Washington Bureau Director and Senior Vice President for Policy and Advocacy.
“It’s a tragedy that the agency charged with protecting consumers is proposing to shelve modest but important limits on the debt trap that ensnares working families, seniors, and veterans in endless strings of unaffordable payday loans,” said National Consumer Law Center Associate Director Lauren Saunders.
“Millions of struggling Americans are bogged down in triple-digit interest rate payday loan traps. Now, instead of draining the swamp, the Trump administration is filling it with loan sharks,” said Christopher Peterson, Consumer Federation of America’s Director of Financial Services and Senior Fellow.
“This reckless proposal written by and for the predatory payday loan lobby could potentially shove millions of Americans into the debt trap,” said Jeremy Funk, spokesman for Allied Progress.“It’s as if Trump wants another recession. While it’s anathema to CFPB’s mission of protecting consumers, it’s obvious why the Trump administration is pursuing it. This is payback – pure and simple – for the nearly $2 million in support the payday lending industry has showered on Trump’s campaign and his inauguration fund, not to mention for hosting a major conference at a Trump resort.”
###
Additional Background
CFPB research found that “[m]ore than four out of every five payday loans are re-borrowed within a month, usually right when the loan is due or shortly thereafter,” an indication that the loan was not affordable in the first place.
The 2017 payday rule disrupts this exploitative, debt trap business model and establishes a vital consumer protection. The core of this protection is the “ability-to-repay” standard, which requires that short-term payday and car title lenders check that a borrower can afford the loan, taking into account income and expenses. The rule also requires a break after three back-to-back loans made without considering ability to repay. Additional information can be found in this two-page summary of the payday rule.
Kraninger’s action today directly contradicts the views of the American public, who — across the political spectrum — support holding the financial industry accountable. A 2018 poll found that 79 percent of likely American voters support the CFPB’s payday rule, which includes support from Republicans at 82 percent, Independents at 83 percent, and Democrats at 77 percent.
Parties interested in weighing in on the proposal to gut the rule, officially titled a Notice of Proposed Rulemaking (NPRM), will have 90 days to submit comments to the agency. The comment time period starts once the NPRM is published in the Federal Register, which is expected in the coming days.
_________________________________________________
Upcoming Federal Regulatory Comment Deadlines and Resources
a) FDIC Small Dollar Lending RFI
- Deadline: January 22
- Federal Register Link
b) CFPB No Action Letter and Product “Sandbox” Policy Deadline:
- Deadline: February 11
- Federal Register Link
Materials, letters, and resources
Payday lending
Click on the link above to learn about advocacy efforts underway to protect consumers of financial products from predatory debt.
Less than 16 days from the September 18th Deadline to comment! If so inclined, click here
June & July 2019
The CFPB has proposed a debt collection rule that hurts consumers. Pubic comments are due by September 19, 2019.
The proposed rule would allow collectors to:
- Ring you 7 times per week, per debt. A consumer with 8 medical debts could hear the phone ringing up to 56 times a week!;
- Contact you by text, email, or direct message without your permission, and send important information through hyperlinks;
- Sue you without the collector’s attorneys reviewing original account documents to make sure you are the right person and the debt is the right amount and;
- Collect debt that is so old that the deadline for a lawsuit has passed and records of who owes the debt and for how much may be lost.
- Here is a link to NCLC’s Take Action Page: https://www.nclc.org/issues/take-action-debt-collection-rule.html
- Here is a video on how to submit a comment: http://bit.ly/HowToStopBadDebtCollection
A few links to publications on medical debt and collection practices:
- ProPublica, The Nonprofit Hospital That Makes Millions, Owns a Collection Agency and Relentlessly Sues the Poor, June 27, https://www.propublica.org/article/methodist-le-bonheur-healthcare-sues-poor-medical-debt
- NPR, When Hospitals Sue For Unpaid Bills, It Can Be 'Ruinous' For Patients, June 25, https://www.npr.org/sections/health-shots/2019/06/25/735385283/hospitals-earn-little-from-suing-for-unpaid-bills-for-patients-it-can-be-ruinous
- The Wall Street Journal, When Patients Can’t Pay, Many Hospitals Are Suing, June 25, https://www.wsj.com/articles/nonprofit-hospitals-criticized-for-debt-collection-tactics-11561467600
May 2019
Blight Bill in Wilmington. We support our neighbor's concerns.
The American Law Institute is considering the most recent draft of a new Restatement of the Law, Consumer Contracts. The restatements can carry a great deal of weight with the courts. The current draft severely favors businesses over consumers when entering into and enforcing consumer contracts. In particular, the draft makes it difficult to challenge terms that consumers have “agreed” to by signing a form or clicking “I agree”; makes it easier for businesses to change terms after the fact; places the burden of proof on consumers; and limits consumers remedies if a court finds a contract is unconscionable or that a business engaged in deception. If you wish to send your own letter, feel free to email it to Richard Revesz at [email protected] and also to Stephanie Middleton at [email protected]. The email should clearly identify that the comments relate to “Annual Meeting Tentative Draft of the Restatement of Consumer Contracts” and the email should say: "Please post this letter to the Comments Page for this Restatement project."
Payday loans don’t just affect the individual borrowers; they harm families. You can hear a few stories here. We partner with leaders who work to stop predatory payday lending so that we can prevent stories like these from ever happening. And we have a chance to fight back. The CFPB is proposing to rollback major payday protections; let the bureau know you vehemently oppose that decision. Please share these video stories so that others can understand why this is issue is so important.
The New York Times: Closing the racial wealth gap
The United States tolerates a widening chasm between the very rich few and the many with low incomes. The burden of poverty falls heaviest on African Americans and other people of color. [link]
XXXXXXXXXXXXXXXXXXXXXXX
April 2019
The Electronic Portal for submitting comments is up and running and available at this link: www.stoppaydaypredators.org. It will populate the comment with one sentence and please write your own stories/comments.
Excerpts from Payday and Car Title Lenders Drain $8 Billion in Fees Every Year; Center for Responsible Lending,
Research shows that these loans lead to a cascade of other financial consequences, such as increased overdraft fees, delinquency on other bills, involuntary loss of bank accounts, and even bankruptcy. For car title, the end result is too often the repossession of a borrower’s car, a critical asset for working families.
Collectively, these loans drain billions of dollars a year in charges on unaffordable loans to borrowers with an average income of approximately $25,000. This fee drain hampers future asset‐building and economic opportunity in communities most impacted by these predatory lending practices.
Data repeatedly show that payday and car title lenders’ bottom line is dependent on borrowers stuck in a cycle of debt. According the Consumer Financial Protection Bureau, the typical payday borrower is stuck in 10 loans a year, typically one right after the other. This means that a borrower will pay $458 in fees on a typical $350 two‐week loan. Further, 75% of all payday loan fees are generated from borrowers with more than 10 loans a year.
While comparable data is not available for car title lenders, the typical car title loan is refinanced 8 times. As a result, car title loans extract twice as much in fees than credit extended.
XXXXXXXXXXXXXXXXXXXXXXXX
March 2019
If you are on twitter, follow:
AFR (@RealBankReform), Stop The Debt Trap (@StopTheDebtTrap), CRL (@CRLONLINE), Allied Progress (@AlliedProgress), Consumer Federation of America (@ConsumerFed), Bart Naylor (@BartNaylor), and Woodstock Institute (@WoodstockInst) and stay up to date on what is happening in the consumer protections arena.
CFPB Releases Plan to Gut Payday Loan Protections
FOR IMMEDIATE RELEASE: February 6, 2019
CONTACT: Desmond Lee; [email protected]; 646-517-1826
A Gift to the Payday Loan Sharks
WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) under Trump-appointed Director Kathy Kraninger unveiled a plan to gut the CFPB’s landmark 2017 payday and car title lending rule before it even goes into effect. By eviscerating this consumer protection, Kraninger’s new plan would help predatory lenders continue to trap Americans in debt. Specifically, the proposal would eliminate the common-sense and widely supported requirement that lenders verify that a borrower can afford to repay the loan. [Additional background at bottom of release.]
The Stop The Debt Trap campaign, a coalition of more than 700 consumer, civil rights, faith, veterans, seniors, labor, and other groups in all fifty states, spoke out against this latest effort to gut consumer protections:
“The Kraninger CFPB is giving an early Valentine’s present to payday lenders, helping them continue trapping Americans in crippling cycles of debt,”said Center for Responsible Lending Senior Policy Counsel Rebecca Borné. “The payday rule was developed over years of extensive research and dialogue with stakeholders. Scrapping it will especially harm communities of color, whom payday lenders disproportionately target for predatory loans. The CFPB’s action today should be a call to action for Americans to speak out against the financially-crippling practices of payday lenders.”
“In proposing to undo the rule against abuses in payday and car title lending that the CFPB crafted after five years of careful study and an open process, the new CFPB director Kathy Kraninger is allowing the payday lenders to drive policy at the agency, just as Mick Mulvaney did,” said Linda Jun, senior policy counsel at Americans for Financial Reform. “This puts a vital consumer protection on the chopping block at the behest of predatory payday lenders, inviting them to continue profiting from trapping borrowers in a cycle of debt. We urge the Director to change course and not finalize such a rule”
“The CFPB’s decision to undo payday and car-title lending protections is a slap in the face to consumers—especially people of color—who have been victims of predatory business practices and abusive lenders,” said Vanita Gupta, president and CEO of The Leadership Conference on Civil and Human Rights. “This decision will put already struggling families in a cycle of debt and leave them in an even worse financial position. This administration has moved the CFPB away from protecting consumers to protecting the very companies abusing them.”
“UniodosUS, along with the thousands of Latinos who participated in a national campaign calling for a strong payday rule, have supported efforts to help protect vulnerable consumers and stop the abuse in the payday lending industry. Doing away with the critical ability-to-repay provision as is currently proposed, will open the floodgates once more to unscrupulous lenders. Removing this critical protection will place working families in a position where they are once again easy targets for those seeking to increase their profits without care as to the devastation they are causing for so many Americans trying to make ends meet,” said Marisabel Torres, Senior Policy Analyst at UnidosUS.
“Stripping important protections within this rule is a disservice to the public. With little accountability for their actions, payday lenders have long preyed upon communities of color and drained them of their hard-earned savings. We strongly urge Kathy Kraninger to reconsider her decision to weaken the payday lending rule and allow it to move forward as planned without delay. Every day that goes by without this crucial rule only threatens the financial security of American families throughout our country,” said Hilary O. Shelton, NAACP Washington Bureau Director and Senior Vice President for Policy and Advocacy.
“It’s a tragedy that the agency charged with protecting consumers is proposing to shelve modest but important limits on the debt trap that ensnares working families, seniors, and veterans in endless strings of unaffordable payday loans,” said National Consumer Law Center Associate Director Lauren Saunders.
“Millions of struggling Americans are bogged down in triple-digit interest rate payday loan traps. Now, instead of draining the swamp, the Trump administration is filling it with loan sharks,” said Christopher Peterson, Consumer Federation of America’s Director of Financial Services and Senior Fellow.
“This reckless proposal written by and for the predatory payday loan lobby could potentially shove millions of Americans into the debt trap,” said Jeremy Funk, spokesman for Allied Progress.“It’s as if Trump wants another recession. While it’s anathema to CFPB’s mission of protecting consumers, it’s obvious why the Trump administration is pursuing it. This is payback – pure and simple – for the nearly $2 million in support the payday lending industry has showered on Trump’s campaign and his inauguration fund, not to mention for hosting a major conference at a Trump resort.”
###
Additional Background
CFPB research found that “[m]ore than four out of every five payday loans are re-borrowed within a month, usually right when the loan is due or shortly thereafter,” an indication that the loan was not affordable in the first place.
The 2017 payday rule disrupts this exploitative, debt trap business model and establishes a vital consumer protection. The core of this protection is the “ability-to-repay” standard, which requires that short-term payday and car title lenders check that a borrower can afford the loan, taking into account income and expenses. The rule also requires a break after three back-to-back loans made without considering ability to repay. Additional information can be found in this two-page summary of the payday rule.
Kraninger’s action today directly contradicts the views of the American public, who — across the political spectrum — support holding the financial industry accountable. A 2018 poll found that 79 percent of likely American voters support the CFPB’s payday rule, which includes support from Republicans at 82 percent, Independents at 83 percent, and Democrats at 77 percent.
Parties interested in weighing in on the proposal to gut the rule, officially titled a Notice of Proposed Rulemaking (NPRM), will have 90 days to submit comments to the agency. The comment time period starts once the NPRM is published in the Federal Register, which is expected in the coming days.
_________________________________________________
Upcoming Federal Regulatory Comment Deadlines and Resources
a) FDIC Small Dollar Lending RFI
- Deadline: January 22
- Federal Register Link
b) CFPB No Action Letter and Product “Sandbox” Policy Deadline:
- Deadline: February 11
- Federal Register Link
Materials, letters, and resources
- After Payday Loans: How do Consumers Fare When States Restrict High-Cost Loans?
- Analysis of States' APR Caps for a $10,000 Five-Year Installment Loan
- U.S. Bank’s Simple Loan Product
- Payday Litigation
- E-loansharking One Page Summary
- State-by-State CFPB Enforcement Action Tool
- Report on Private Equity Investment in Payday and Installment Loans
- Federal Register on NCUA's Payday Alternative Loan Notice of Proposed Rule
- Legion Letter