Released: July 07, 2020

Trump’s ‘Consumer’ Bureau gives predatory lenders green light to exploit consumers

Contact: Linda Sherry; [email protected]; (202) 544-3088, or Ruth Susswein; [email protected]; (301) 718-2511

Today, CFPB Director Kathy Kraninger announced that the Consumer Financial Protection Bureau (CFPB) has finalized a revised “payday loan rule” that guts the important protections that the original rule was designed to establish. In fact, the new rule purposefully negates the Bureau’s prior, well-researched consumer protections.

In 2017, the CFPB released a commonsense and much-needed rule that, if passed, would have required payday and auto title lenders to first determine if borrowers had the ability to repay the high-interest loans before they could be issued. The rule was designed to help spare financially strapped individuals and families from an all-too-common scenario—one predatory loan replacing another, trapping borrowers in a consuming, never-ending cycle of debt. Rather than approve the critical 2017 rule, the CFPB revoked the debt trap protection.

“The one government agency tasked solely with protecting consumers financially is issuing a farcical ‘rule’ that allegedly addresses abusive payday and car title loans—a rule with no benefits to consumers—leading any rational person to ask ‘Why bother issuing a rule at all?’” Consumer Action’s director of national priorities, Linda Sherry, said. “Infuriatingly, the answer is clear: To benefit the predatory lending industry.”

“By stripping the critical payday rule of any provisions even resembling real consumer protections, the federal government is letting loan sharks know that it will not only tolerate abusive, outrageous loan terms; it will welcome them with open arms,” Sherry said.

“It’s time to admit that this CFPB is the very definition of ‘regulatory capture.’ It is not fulfilling its critical mission to protect the consumers who lose billions annually to loans and other products that prey on poor and low-income people. Instead, it is doing just the opposite—advancing the interests of the predatory corporations that stand to make billions on the backs of millions of Americans who can least afford it.”

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Consumer Action has been a champion of underrepresented consumers nationwide since 1971. A non-profit 501(c)(3) organization, Consumer Action focuses on consumer education that empowers low- and moderate-income and limited-English-speaking consumers to financially prosper. It also advocates for consumers in the media and before lawmakers to advance consumer rights and promote industry-wide change. www.consumer-action.org