Payday and Other Small Dollar Loans

More than 100 community, consumer, civil rights, and faith organizations wrote to vigorously oppose the OCC’s proposed rule to gut the longstanding "true lender" anti-evasion doctrine. The proposed rule would trample state interest rate limits and unleash predatory lending in all 50 states, further exacerbating the economic impacts already experienced by COVID-19.

The Consumer Financial Protection Bureau (CFPB), under Director Kathy Kraninger, gutted a 2017 CFPB rule aimed at stopping the debt trap caused by payday and car title loans. This action will have a harmful impact on American consumers and their families, including a disproportionate number of people of color. Download the one-pager to learn more.

For years, predatory lenders have sought ways to avoid state interest rate limits. One scheme has been the “rent-a-bank” scheme. Under this scheme, a non-bank lender finds a bank willing to be the nominal originator of the non-bank lender’s high-cost loan, because banks are generally exempted from complying with state interest rate laws. State regulators, state attorneys general, and consumers...

From the amicus brief: This case concerns the authority of the Office of the Comptroller of the Currency (OCC) to extend the privileges of national banks to entities that do not accept deposits and are not banks in any traditional or legal sense. The foremost reason why non-banks will seek out a “special purpose national bank” is to take advantage...

Industrial loan companies (ILCs) or industrial banks (IBs) (together, “ ILCs”) typically enjoy the privileges of traditional banks but pose two significant risk factors unique to ILCs: They are not subject to the Federal Reserve’s supervision, which occurs at the consolidated level (i.e., the ILC’s parent company, the ILC, and their affiliates); and They permit the intermingling of commercial and...

The Center for Responsible Lending (CRL) joined with a coalition of civil rights, community, consumer, and faith organizations in two public comment letters warning the Federal Deposit Insurance Corporation (FDIC) that its proposed rule for chartering additional underregulated Industrial Loan Companies (ILCs) would expand predatory, high-interest lending. The plan would grant the predominantly online non-bank companies that are approved for...

Americans of all partisan identities,and across all regions of the United States,strongly support enacting new consumer protections on high-interest lending during the coronavirus crisis. Americans are highly supportive of prohibiting all high-interest loans during the crisis and of capping interest rates for consumer loans, according to a new bipartisan poll from Lake Research Partners and Chesapeake Beach Consulting. Download the...

Payday lenders see chaos and crisis as a profit opportunity—this pandemic is no different. In many states, payday lenders are working to be declared essential businesses so that they can continue to prey on families even as financial insecurity increases. However, these loans that trap people in a cycle of debt are never essential--and in a crisis they are even...

On March 26, 2020, five federal agencies (the OCC, FDIC, Federal Reserve, CFPB, and National Credit Union Administration (NCUA)) issued brief joint guidance to “specifically encourage” financial institutions to offer “responsible small-dollar loans” to both consumers and small businesses during the COVID-19 crisis. This guidance contains troubling language that could be read to permit banks to make payday loans. Banks...

A diverse coalition of community organizations signed on to this letter to Congress urging them to protect Americans from price gouging during this unprecedented COVID-19 crisis, by enacting a 36% APR cap on all loans. Congress should amend the Military Lending Act (MLA) to extend to ALL consumers the credit protections provided to members of the Armed Forces and their...