Tell federal consumer protection agency to support strong action against payday lenders

Photo: Aliman Senai

In 2016, the Consumer Financial Protection Bureau approved protections against payday debt traps with triple-digit interest rates, requiring lenders to make sure customers have the ability to repay the high-interest rates.

But earlier this year, the new CFPB director reversed course.

The CFPB plans to roll back the heart of its own protections against sky-high payday loan interest rates, but maybe enough comments from the public could stop officials from revoking these important rules, said Elise Orlick, director, US-PIRG.

The CFPB is accepting public comments until May 15. Click here to fill out a form to send the CFPB your opinions.

The CFPB was created after the Great Recession to protect Americans from reckless financial practices. But under the direction of Kathy Kraninger, the CFPB is moving backward by rolling back payday loan protections, Orlick said.

Sky-high interest rates trap consumers in a cycle of debt that is extremely difficult, or even impossible, to escape.

Payday loan interest rates average at nearly 400 percent, according to the CFPB's research.

On Feb. 6, the CFPB announced its plan to disregard protections, approved in 2016, from predatory payday lending.

Sixteen states and Washington, D.C., have passed measures to cap payday loan interest rates – which, on average, are about 400 percent – at 36 percent APR or less.

But consumers in other states need protection, too. The CFPB is prohibited from setting interest rate caps. So, under the previous Director Richard Cordray, it did the next best thing by requiring lenders to check if a customer can repay the high-interest rates.

The CFPB is vital to protecting consumer rights. It should do what it was designed to do and protect all Americans in the financial marketplace, she said.