Prosperity Now Applauds Consumer Financial Protection Bureau’s Regulations on Predatory Small-Dollar Lending Industry
Organization stands ready to mobilize resources if Congress, industry take steps to weaken or block implementation of Bureau’s rule
Washington, D.C. — Today, the Consumer Financial Protection Bureau took a major step to protect financially vulnerable consumers in the marketplace by issuing long-awaited regulations on the short-term, small-dollar lending industry, which includes payday and auto-title loans. The rule, which will become effective 21 months after it is published in the Federal Register, has the potential to rein in a predatory industry that strips over $8 billion dollars each year from the pockets of hard-working individuals and families through a range of predatory practices that trap consumers in an unrelenting cycle of debilitating long-term debt.
“What the Consumer Financial Protection Bureau has achieved today is truly remarkable. After many years of research, talking to stakeholders and considering over a million public comments—the most in the agency’s history—the Bureau has crafted a final rule that strikes at the heart of a highly predatory industry that is known for charging high fees and triple-digit interest rates that trap consumers in cycles of debt that are extremely difficult to escape,” said Andrea Levere, president of Prosperity Now. “By requiring lenders to assess a borrower’s ability to repay their loan without the need to reborrow or fall short on other financial obligations for a number of loan products, the Bureau’s final rule continues to move us on a path to ending the payday debt trap. As the rule now moves towards implementation, these regulations need to be preserved and protected.”
Prosperity Now applauds the Consumer Financial Protection Bureau for taking meaningful steps to stop the debt trap created by payday, auto-title and other predatory small-dollar lenders. However, as the rule moves toward enactment, it is likely that Congress, with the backing of the industry, will mount an attack to weaken, repeal or block this critically important regulation from taking effect. If and when Congress takes steps to undo the Bureau’s progress on this issue, Prosperity Now is prepared to push back against these efforts in partnership with our community members and other consumer advocates in order to protect the millions of consumers that use small-dollar loans and sorely need these protections.
Prosperity Now (formerly CFED) believes that everyone deserves a chance to prosper. Since 1979, we have helped make it possible for millions of people, especially people of color and those of limited incomes, to achieve financial security, stability and, ultimately, prosperity. We offer a unique combination of scalable practical solutions, in-depth research and proven policy solutions, all aimed at building wealth for those who need it most.