Research & Policy

The California Department of Financial Protection and Innovation (DFPI) should restore cost limits for earned wage advances and other fintech cash advances under proposed regulations rather than allow a temporary registration regime with no cost limits for up to four years, the Center for Responsible Lending, Consumer Federation of California, National Consumer Law Center, and Office of Kat Taylor said in comments filed with the Department on November 27. The groups “strongly support the provisions [of the proposed regulations] that make clear that income-based advances are loans and that...

Payday lenders charge exorbitant fees to borrowers without assessing their ability to repay, and the annual interest rates on these loans are in the triple digits.

The undersigned organizations commend the Department of Financial Protection and Innovation (DFPI) for moving to regulate abusive fintech lenders, including earned wage advance providers. We are very pleased to support the proposed rules and encourage the DFPI to vigorously enforce them to ensure that California’s most vulnerable consumers are not harmed. Signatories California Employment Lawyers Association (CELA) CA Labor Federation CA League of United Latin American Citizens (CA LULAC) California Low-Income Consumer Coalition (CLICC) California Reinvestment Coalition (CRC) Center for...

Nearly 500,000 people are currently detained pretrial in jails around the United States, in part due to high bail amounts set by the judicial system that individuals cannot afford. That is a six-fold increase in the U. S. pretrial population from the 1970s, when it was closer to 83,000 people detained. Bail is money required in exchange for release from jail while one awaits trial. With bail costs rising, it has been difficult for individuals and their loved ones to afford paying a court directly for the full bail amount. Instead, they have increasingly turned to for-profit bail bond companies...

On September 25, 2020, Governor Newsom signed AB 1864 (Chapter 157, Statutes of 2020), establishing the California Consumer Financial Protection Law (“CCFPL”) under Division 24 of the Financial Code. The undersigned consumer advocates are encouraged to see that the Department of Financial Protection and Innovation (“DFPI” or the “Department”) is seeking input from stakeholders in developing regulations to implement the CCFPL. We write this comment in response to the following questions regarding registration requirements that the DFPI posed in 3(a)-(b): For what industries should the DFPI...

This set of comments will focus on earned wage access programs and other newer types of payday advance programs. NCLC and CRL have also joined a broader set of comments submitted by the California Economic Justice Coalition on a broader range of issues and a second set in conjunction with the Student Borrower Protection Center on income share agreements. These comments will focus in particular on these questions that DFPI poses: For what industries should DFPI first establish registration requirements under Financial Code section 90009(a)? What are the consumer protection risks posed by those...

Our broad coalition of consumer and business organizations thanks you for the opportunity to comment regarding how the DFPI can best implement AB 1864 (Limón), the California Consumer Financial Protection Law (CCFPL). The CCFPL is an important and significant step forward for California and offers the promise of a bold consumer-facing department that can be at the forefront of consumer protection. We look forward to partnering with you and your team to help make that promise a reality. We must first acknowledge that the on-going COVID-19 pandemic has exacerbated disparities for low and...

Over the past 50 years, wage stagnation, as well as already high and rising housing, health care, and education costs have dramatically increased debt loads for the average family. Moreover, recovery from the Great Recession has been uneven. Data show that families of color, Americans born after 1970, and households earning less than $60,000 annually are the least likely to have recovered the wealth they lost in the financial crisis.2 And now, the COVID-19 health and economic crisis has laid bare existing inequities and will perpetuate these families’ economic struggles. Before the crisis...

In a September 3 letter to Acting Comptroller of the Currency, Brian Brooks, the Californians for Economic Justice Coalition wrote: California has strong interest rate caps on installment loans intended to protect our residents from predatory loans. Understanding that products like payday loans, car-title loans, and high-cost installment loans at sky high interest rates are merely debt traps for borrowers, consumer advocates, community and faith-based organizations, and veterans groups worked closely with legislators and lending industry representatives to reach a final compromise that would...

A few high-cost lenders are evading state consumer protections through rent-a-bank schemes. Through these sham arrangements, these companies are exploding right through the interest rate limits that most states have put in place for good reason, to protect people from high-cost debt traps that drain them of their hard-earned income. In the following states, payday lenders are using banks, which aren’t generally subject to state interest rate caps, to make usurious loans that exceed the state’s rate cap. The banks engaging in these schemes are abusing their charters and enabling predatory loans...

A coalition of 61 consumer, civil rights, and community groups sent letters to three federal bank regulators urging them not to allow their banks to help payday lenders evade state interest rate limits. The groups sent separate letters to the Federal Deposit Insurance Corp. (FDIC), which regulates the only banks currently involved in rent-a-bank schemes; the Office of the Comptroller of the Currency, which regulates a national bank that has been in talks with a payday lender; and the Board of Governors of the Federal Reserve System, whose banks so far do not appear to be engaged in rent-a-bank...

Payday and car-title loans typically carry annual percentage rates (APR) of at least 300%. These high-cost loans are marketed as quick solutions to a financial emergency. Research demonstrates, however, that they frequently lead to debt that is nearly impossible to escape. In addition, these loans are related to a cascade of other financial consequences, such as increased overdraft fees, delinquency on other bills, involuntary loss of bank accounts, and even bankruptcy. For car-title loans, the end result is too often the repossession of the borrower’s car, a critical asset for many people...

An application to file brief and brief of amici curiae, Center for Responsible Lending, National Association of Consumer Advocates, Public Citizen Inc, and Public Good Law Center in support of applelants, Eduardo de la Torre, et al.

Before the Joint Hearing of the California Assembly Select Committee on Youth and California’s Future and Assembly Banking and Finance Committee Graciela Aponte-Diaz presented the following information in her testimony: First, a snapshot of student loan borrowers, nationally and here in California; Second, highlight major issues with student loan servicing; and Finally, I’d like to provide some policy recommendations for our state to ensure student loan borrowers are treated fairly when trying to repay their loans

The California State Legislature and the California Attorney General, Kamala Harris, both submitted comments to the Consumer Financial Protection Bureau in favor of strengthening the proposed rule on payday and car-title lending. Download both of the letters with the link above to read the key points laid out to curb these predatory lending practices.

This paper analyzes California mortgage originations in the post-crisis period, from 2012–2014, using data collected under the Home Mortgage Disclosure Act (HMDA). Similar national analysis provides context for the state-wide observations. Analysis in four large California counties shows the variety of experiences across this large state. The main findings include: National and state-wide analysis reveal a reduction in mortgage credit for the loans that most clearly support homeownership overall. More loans that directly supported homeownership were made in 2000 than in 2014. Some borrowers...

Read Graciela Aponte-Diaz's remarks before the July 2016 CFPB Field Hearing on Debt Collection. The unfair and abusive practices of debt collection in the market can take advantage of financially-distressed consumers or unfairly strip families of wealth. The Great Recession made this financial distress inevitable for many U.S. households. Each year, tens of millions of Americans are pursued by creditors, debt collectors, debt buyers, or attorneys for an overdue bill. And while debt collection plays a role in our economy, it may also expose U.S. households to unnecessary abuses. Debt collection...

Predatory consumer lending is still flourishing in California. Payday lending continues to be pervasive, capturing borrowers who were sold a short‐term loan in a long‐term cycle of debt. But high‐cost debt trap lending has expanded rapidly in the past few years to much larger loans, including some which are secured by and put a borrower’s car at risk. At the same time, some new lenders are demonstrating that larger consumer loans can be made with lower interest rates and with lower likelihood of defaults and charge‐offs, but additional consumer protections are still warranted. It is critical...

CRL, The Public Good Law Center, and the National Association of Consumer Advocates filed an amicus brief supporting an appeal by plaintiffs asserting that loans made by the payday lender CashCall were unconscionable and violated California's Unfair Competition Law. Courts and the common law have long recognized that excessive interest rates and prices are unconscionable and therefore "unfair" and "unlawful." Under the terms of loans made by CashCall, borrowers taking out $2,600 loans would pay $11,000 to pay them back if carried to full term—over four times the amount originally borrowed.

Testimony by Paul Leonard from the May 6, 2015 Informational Hearing on the Consumer Financial Protection Bureau Rulemaking for Payday, Vehicle Title and Similar Loans before the California Senate Banking Committee. The CFPB aims to cover payday and similar loans under its rule regardless of the provider or channel offering the loans (storefront and online; bank/credit union, non-depository, tribal entity). The Bureau’s proposal would create a single consistent regulatory floor, while maintaining the prerogative of states to strengthen its consumer protections as they see fit.

California payday loan borrowers get caught in a cycle of repeat borrowing of 459% Annual Percentage Rate (APR) loans. Reforms are necessary to ensure that payday loans serve their advertised purpose and better protect consumers. SB 515 proposes a series of reforms to allow payday loans to better serve their advertised purpose while making the loans safer for consumers. Read the bill summary >>

SB 515 includes three principal reforms California payday loans: it caps the number of payday loans per borrower at four per year; extends the minimum term of a payday loan, so that borrowers will have more time to accumulate the amounts necessary to repay it; and requires all lenders to apply standardized underwriting guidelines to ensure that borrowers have a reasonable ability to repay their loans.

Payday Loans Create a Debt Trap. For California families living paycheck to paycheck, the high price of a payday loan and the fact that it must be paid off in one lump sum two short weeks later virtually ensures that cash-strapped borrowers will be unable to meet their basic expenses and pay off their loan with their next paycheck. Consequently, too many Californians are forced to pay off one loan and immediately take out a new loan, repeating the cycle over and over. Although payday loans are marketed and publicly rationalized as a short-term loan for an occasional, unexpected expense...

The Foreclosure Reduction Act (AB 278 & SB 900) is designed to provide Californians with better safeguards and fair treatment in the foreclosure process. The California Bankers Association and other industry groups recently released a flawed report purporting to show how the bill will extend the foreclosure process and have detrimental economic consequences. The proponents' claims are unsubstantiated and are a deceptive attempt to derail carefully-crafted protective measures for California homeowners. The industry's report, "Foreclosure Reform in California: An Economic Analysis," is based on...

During the course of negotiations, the Joint Conference Committee on Mortgage Foreclosures has substantially narrowed the scope of the bill and limited the protections to borrowers relative to the version of the bills that were before the Assembly and Senate Banking Committees earlier this year. Specific changes include: Narrower Scope of Coverage: the final bill includes a number of changes which narrow the loans and servicers that are covered by the bill, including Limits covered loans to first liens of owner-occupied, one-to-four unit principal residence mortgages. Previously, coverage...