Washington, D.C. — Today, Rep. Maxine Waters, ranking member of the House Committee on Financial Services, and 103 members of the House, submitted a comment letter to the Consumer Financial Protection Bureau (CFPB) urging the Bureau to strengthen its proposed rule to stop the debt trap caused by payday and car title loans.
With rates that average 391 percent nationally, these loans too often trap borrowers in a long-term cycle of debt, cause financial hardship and trigger costly overdraft fees. The letter urged the Bureau to require lenders to consider a borrower’s ability to repay a loan in full and on time without additional borrowing or forgoing basic living expenses.
“We applaud Ranking Member Waters and the 103 members of the House that called on the Consumer Financial Protection Bureau to issue a strong final rule that will protect consumers from abusive lending,” said Tom Feltner, Director of Financial Services at Consumer Federation of America. “As the letter recognizes, the CFPB proposed rule is a good first step, but contains too many loopholes such as allowing back-to-back loans with no consideration of a borrowers’ ability to repay. The CFPB must revise its proposal to prevent debt traps and ensure that borrowers can truly afford the loan without forgoing basic living expenses such as housing, groceries and child care.”
The Bureau is soliciting comments on the proposed rule through October 7.
Contact: Tom Feltner, 202-618-0310
The Consumer Federation of America is an association of more than 250 non-profit consumer groups that, since 1968, has sought to advance the consumer interest through research, education, and advocacy.