Research & Policy

The 193 labor, civil rights, consumer, legal services and community groups and academics joined in this letter to express opposition to the draft Earned Wage Access Consumer Act. In the guise of offering protections, the bill obscures its true effect: to exempt fintech cash advances from the Truth in Lending Act, to endorse a form of loan that makes workers...

Consumers who took out small loans using cash advance apps paid triple-digit annual interest rates, experienced high levels of repeat reborrowing, and incurred more bank overdraft fees.

CRL submitted a comment on the CFPB’s Notice of Proposed Rulemaking on overdraft fees for very large institutions. We advocate for a $6 benchmark and safe harbor for courtesy overdraft fees. We argue the proposed rule is a required and important step towards better protecting consumers that would be greatly improved by eliminating the potential for financial institutions to evade...

The National Consumer Law Center, on behalf of its low-income clients, and the Center for Responsible Lending write with recommendations on how FHA should shape its post-COVID loss mitigation waterfall. As the market turns from a response to COVID-19 to identifying permanent policies informed by lessons learned from the pandemic, FHA has an opportunity to strengthen the options it makes...

This legislation purports to provide a safe harbor for financial innovation, but too often, “innovation” is synonymous with a lack of meaningful safeguards for consumer financial products. Creating these regulatory “sandboxes” for companies would force agencies to shirk their statutory duties to enforce the law and protect consumers and instead prioritize allowing risky and unproven products into the marketplace before...

The Department of Education’s newly launched income-driven repayment (IDR) program, “Saving on a Valuable Education (SAVE),” represents a significant step forward in improving the affordability of federal student loan repayments for millions of borrowers. SAVE accomplishes that goal by basing repayment on a realistic estimate of a borrower’s discretionary income considering the borrower’s family size and reducing the amount of...

Read a new report from CRL and California Policy Lab on the Department of Education’s latest income-driven repayment plan, SAVE which could revive the homeownership dreams of millions.

The Center for Responsible Lending submitted a comment to the Board of Governors of the Federal Reserve System (Federal Reserve Board), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) regarding the large bank regulatory capital rule. While we commend the Agencies for seeking input on this important topic, we have significant concerns...

The undersigned organizations, which together represent a broad cross-section of regulated banks, credit unions, and consumer protection organizations, wrote a letter in thanks for introducing the Close the Shadow Banking Loophole Act, and to express their support for this critical legislation which would close the industrial loan company (ILC) loophole in current law. Americans for Financial Reform Bank Policy Institute...

The Center for Responsible Lending, Housing Policy Council, Mortgage Bankers Association, and National Consumer Law Center (on behalf of its low-income clients) wrote to the Department of Veteran Affairs (VA) to recommend that the VA pursue payment reduction targeting rather than interest rate targeting as part of their upcoming VA Servicing Purchase (VASP) loss mitigation option.

The Center for Responsible Lending and the National Consumer Law Center (on behalf of its low-income clients) wrote a comment letter to FHA Commissioner Julia Gordon to applaud FHA for developing a program to provide payment relief in this current interest rate environment.

In the 1990s payday lenders partnered with banks to create a practice known as Rent-a-Bank. This practice exploits a provision of federal law that allows banks to export their interest rates across the country, ignoring state laws meant to protect borrowers from abusive high-rate lending that can lead to a debt trap. While predatory lenders originally used store-front payday locations...

The Center for Responsible Lending, Leadership Conference on Civil and Human Rights, NAACP, National Association of Latino Community Asset Builders (NALCAB), National CAPACD, National Urban League, and UNIDOS US joined in a letter to support "that CDFI certification is truly reserved for mission-driven, community development organizations."

Payday loans, high-cost small loans averaging $350 that usually must be repaid in a single payment after two weeks, are designed to create a long-term debt trap for consumers. A 36% annual percentage rate (APR) cap on payday loans (including fees) is the best way to stop the cycle of debt. To date, 20 states and the District of Columbia...

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...

Watch the recorded testimony of Mitria Spotser before United States House of Representatives Committee on Financial Services on the importance of protecting consumers in an evolving marketplace.

Buy Now, Pay Later (BNPL) or pay-in-four products allow consumers to purchase goods in four equal, often interest-free installments over a set time period (often 6 weeks). BNPL is often available directly at checkout on an e-commerce website (like Amazon or Apple) or through a third-party smartphone or web application. Examples of third-party BNPL providers include Affirm, AfterPay, Klarna, Splitit...

In a letter to the author of the Earned Wage Access Consumer Protection Act, advocates warn: "In the guise of offering protections, the bill obscures its true effect: to exempt fintech cash advances from the Truth in Lending Act, to endorse a form of loan that makes workers pay to be paid, and to facilitate new evasions by payday lenders."...

In a letter to the House of Representatives' Financial Services Committee, consumer advocates warn that the Financial Services Innovation Act of 2023 would facilitate evasion of existing consumer protection laws and regulations. Citing the foreclosure crisis around 2008 and other examples, the letter states: "Blind endorsement of 'innovations' leads to consumer harms." The bill, currently a discussion draft, was considered...

States are grappling with how to regulate earned wage advances (EWAs) and other fintech cash advances that purport not to be credit. These loans often closely resemble payday loans, with fees that multiply into rates above 300% and cycles of reborrowing that result in workers paying to be paid. State legislatures and regulators should not adopt industry-backed approaches, like those...

Many people involved in the criminal legal system live on the economic margins. Most defendants are unable to hire their own lawyer due to indigency. In North Carolina, the average person in prison doesn’t have a high school diploma. The cost of involvement in the criminal legal system can quickly add up to thousands of dollars, but the people expected...

New data from the bipartisan polling team Lake Research Partners and Chesapeake Beach Consulting shows that voters across the political spectrum overwhelmingly support the ongoing mission of the Consumer Financial Protection Bureau (CFPB) to regulate the financial industry and protect consumers. The survey also revealed strong support for maintaining the secure, independent funding mechanism for the CFPB. These new findings...

In September, the Supreme Court heard oral arguments for a lawsuit that could abruptly and permanently close the Consumer Financial Protection Bureau – which would not only harm consumers and businesses but would also cause economic chaos.

The income-driven repayment plan prevents unpaid interest from increasing a borrower’s loan balance, and ensures remaining balances are forgiven after a certain number of years.

Consumers are increasingly accessing small short-term loans through digital cash advance and Earned Wage Advance (EWA) online applications. Consumers can receive advance amounts up to $750 per pay period while using these apps. Some companies contract with employers to provide this product while others work directly with consumers. In the direct-to-consumer model, the advances are often marketed as “free,” but...