New CFPB Rule Affirms Protections from Predatory Lenders
For Immediate Release Media Contact: Linda Frame, 304.419.1454
Yesterday the Consumer Financial Protection Bureau (CFPB) issued federal regulations to protect people from the abusive payday lending industry. The "PaydayFreeLandia" Coalition - a group of civil rights, labor, faith-based and community organizations from the 15 states, including West Virginia, where predatory payday lending is illegal - issued the following statement:
We commend the CFPB for recognizing the devastating harm that payday lending causes millions of Americans. Payday lenders charge borrowers excessive fees and shockingly high interest rates - typically between 300 percent and 400 percent - to ensnare them in a long-term cycle of debt. The CFPB clearly recognizes our states' authority to keep payday lending out, and its new rule affirms that strong interest rate caps, like we have in our states, are the best defense against predatory payday lending.
"The CFPB's rule states that:
Certain States have fee or interest rate caps (i.e., usury limits) that payday lenders may find are set too low to sustain their business models. The Bureau regards the fee and interest rate caps in these States as providing greater consumer protections than, and thus as not inconsistent with, the requirements of the final rule.
The Bureau recognizes that States may wish to prevent more harms than are prevented by this rule, and they are free to do so because, as noted earlier, this rule should be considered a floor and not a ceiling."
"We must end the payday loan debt trap, once and for all. Our coalition will continue to press the CFPB to crack down on illegal payday lending," said Linda Frame, West Virginia Center on Budget and Policy Operations Manager. "We urge Congress to build on the CFPB's rule by setting a strong national interest rate cap. Congress should not attack these new, modest protections for borrowers in states where high-cost lending is legal. The experience in our states clearly demonstrates that people are much better off without predatory payday loans."