The trade group representing payday lenders has asked a court for an injunction to block implementation of the Consumer Financial Protection Bureau's (CFPB) small dollar loan rule.
The CFPB small dollar loan rule is scheduled to take effect next year, but a larger threat to payday lenders may come in the form of competing products from traditional banks. Last week, U.S. Bank rolled out its Simple Loan, which charges a similar fee for a small dollar loan but gives the borrower three months, instead of two weeks, to pay it back.
While the move has been cheered by many consumer advocates, the Center for Responsible Lending (CRL) says it still isn't a safe payday loan alternative. The group says the cost of the Simple Loan may be lower than a payday loan's 400 percent APR, but it's still 70 percent or more.