The Consumer Financial Protection Bureau announced Thursday it’s considering rules that would end payday loan debt traps by requiring lenders to take steps to make sure consumers can repay their loans. The proposals would also restrict lenders from attempting to collect payment from consumers’ bank accounts in ways that rack up excessive fees.
The consumer protections would also apply to auto title and installment lenders, business that have sprung up in states that have attempted to regulate payday lending.
“Today we are taking an important step toward ending the debt traps that plague millions of consumers across the country,” said Richard Cordray, director of the bureau. “Too many short-term and longer-term loans are made based on a lender’s ability to collect and not on a borrower’s ability to repay.”