Press Releases
03/18/2019
AG TONG OPPOSES CFPB EFFORT TO DELAY PROTECTIONS FROM PAYDAY LENDERS
Attorney General William Tong today joined a coalition of 25 states led by North Carolina Attorney General Josh Stein in urging the Consumer Financial Protection Bureau (CFPB) to take immediate action to protect consumers from abuses in payday, vehicle title, and other types of high-cost exploitative consumer lending.
In 2017, CFPB announced a new rule that would help protect borrowers and ensure they’d have the ability to repay loans while also prohibiting lenders from using abusive tactics when seeking repayment. While the rule went into effect in early 2018, compliance was delayed to Aug. 19, 2019 to give lenders time to develop systems and policies.
CFPB has now proposed to further delay compliance to Nov. 19, 2020 – more than three years after the regulation was finalized. At the same time, CFPB is reviewing another rule that would altogether rescind this one. Together, these actions would put at risk hard-fought borrower protections.
"High interest payday loans too often become traps ensnaring desperate consumers into debts they have no realistic hope of fully repaying, as fees continue to mount. The 2017 rule – based on five years of extensive research by the CFPB into payday, vehicle title and high-cost installment loans – was designed to prevent consumers from becoming caught in these dangerous debt traps. Delaying compliance to November 2020 would expose the hardest-hit consumers to exploitative lenders. The payday and title loan regulations that were issued in 2017 need to move forward without delay to protect consumers from the ballooning debt that can accrue from payday loans," said Attorney General Tong.
In their comments, the attorneys general cite CFPB’s own findings that demonstrate the many ways the short-term payday and title lending model is broken – specifically as a significant percentage of these loans are expected to fail.
Ninety percent of all loan fees come from consumers who borrow seven or more times in 12 months. Twenty percent of payday loan sequences end in default and 33 percent of single-payment auto title loan sequences end in default.
Attorney General Tong is joined in filing these comments by the attorneys general of California, Colorado, the District of Columbia, Delaware, Hawaii, Iowa, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, New York, Nevada, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington and Wisconsin.
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Media Contact:
Elizabeth Benton
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