Research & Policy

A recent blog on the Washington Post site took Senator Elizabeth Warren to task for citing a statistic in a report from the Center for Responsible Lending (CRL). Our report quantified the amount that consumers pay in auto dealer markups. Auto dealers are paid large bonuses to raise the rate on auto loans above the rate that consumers qualify for...

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)...

When colleges and banks team up to market bank accounts to students, protecting students' loan funds may take last place in the deal. Instead of helping students find the best account for them, these deals may push students into accounts with high overdraft fees and other harmful features. CRL research shows that overdraft fees alone on these accounts may reach...

On April 23, 2015, the New York Senate Banks Committee held a public hearing on subprime auto lending. Lisa Stifler (policy counsel at CRL) submitted written testimony on the predatory and abusive practices that have thrived due to the lack of regulation and transparency in auto financing.

Recent enforcement actions against debt buyers by state and federal law enforcement agencies illustrate widespread problems in the debt buyer market that must be addressed. The Federal Trade Commission recommends in its 2013 and 2010 reports that states adopt reform efforts to address these market problems. Based on its review of enforcement actions, industry data, and the FTC's reports, CRL...

Fifteen consumer, student, civil rights, and legal aid groups co-signed a letter to Consumer Financial Protection Bureau Director Richard Cordray in response to the agency's Request for Information about the Student Safe Account Scorecard. The organizations supported the Scorecard and stated: Colleges and universities must begin to put the best interest of students first when negotiation with banks and prepaid...

Fifteen student, consumer, civil rights, and labor groups co-signed a letter (4 pages) in support of the Consumer Financial Protection Bureau's proposed rule on prepaid cards. The groups suggest that the new rule would support similar actions by the Department of Education, aimed to protect students using prepaid cards. The groups state: College students are a key segment of the...

In this letter to Consumer Financial Protection Bureau Director Richard Cordray the Center for Responsible Lending and the National Consumer Law Center respond to the agency's Request for Information about the Student Safe Account Scorecard, which would guide colleges to select safe bank accounts if they enter into marketing partnerships with banks. In the letter, the two organizations support the...

On April 15, 2015, Mitria Wilson testified before the U.S. House Committee on Financial Services: Subcommittee on Financial Institutions and Consumer Credit. The hearing at which Mitria testified was called "Examining Regulatory Burdens on Non-Depository Financial Institutions." In her testimony (19 pages), Mitria offered: An overview of the importance of financial regulations - and the role such regulations currently play...

Debt buyers purchase old debts from creditors for pennies on the dollar and then hire debt collectors or attorneys to force consumers to pay up, often by suing them in court. Recent enforcement actions by state and federal regulators show widespread abuse and improper lawsuits brought to try to collect the old debt. Abuses include things like robo-signing affidavits in...

In response to a request for comment, CRL offered feedback to the Consumer Financial Protection Bureau about the agency's proposed rule addressing prepaid cards. The CFPB's proposed rule would expand consumer protections on prepaid cards in significant respects. The CRL comment focuses on credit products associated with prepaid cards – with a particular focus on overdraft fees. The CRL comment...

This paper's findings highlight that the lack of underwriting for payday loans creates economic distress for borrowers from the very first loan: Nearly half of all payday borrowers defaulted within two years of their first loan. Of borrowers who defaulted, nearly half did so within the first two payday loans. Default does not necessarily signal the end of payday borrowing...

On March 26, the Consumer Financial Protection Bureau offered a first look at proposals under consideration to curb the payday loan debt trap. The consumer agency released information outlining their deliberations at a field hearing in Richmond, VA – at which the agency also heard from a panel of consumer and civil rights advocates, as well as payday industry representatives...

Some colleges and banks enter into exclusive agreements to offer students checking accounts – usually these accounts come furnished with a debit card that prominently displays the school logo and can sometimes be used as student ID. For banks, these exclusive agreements mean a captive audience for their bank products (checking accounts, credit card accounts) and usually a customer for...

On March 26, the Consumer Financial Protection Bureau offered a first look at proposals under consideration to curb the payday loan debt trap. The consumer agency released information outlining their deliberations at a field hearing in Richmond, VA – at which the agency also heard from a panel of consumer and civil rights advocates, as well as payday industry representatives...

In this letter (2 pages), six consumer and civil rights groups ask Members of Congress to oppose H.R. 685, The Mortgage Choice Act of 2015. The groups argue that the bill would raise the cost of mortgages for millions of prospective homebuyers by allowing higher fees and creating a loophole in the landmark Dodd-Frank Wall Street Reform and Consumer Protection...

In "Do Defaults on Payday Loans Matter?" author Robert Mann uses a difference-in-difference regression-based analysis to analyze "harm" in the payday lending market. He finds that little difference in changes in credit scores between payday defaulters and non-defaulters and uses this as evidence that payday loans do not cause harm. However, this study suffers from significant conceptual and technical flaws...

In "Payday Loan Rollovers and Consumer Welfare," Jennifer Lewis Priestley analyzes proprietary payday loan data for borrowers who received payday loans from 2006-2009 in California, Florida, Kansas, Missouri, Oklahoma, Texas and Utah to estimate the impact of payday rollovers on consumer welfare (as measured by changes in Vantages Score). The author finds that payday borrowers who engage in protracted refinancing...

In this letter (2 pages), 16 consumer, civil rights, and housing groups ask Members of Congress to oppose H.R. 650, The Preserving Access to Manufactured Housing Act 2015. The groups argue that the bill would roll back protections established by the landmark Dodd Frank Wall Street Reform and Consumer Protection Act and hurt low and moderate income families. The groups...

The letter states... On August 20, 2014, the Department received a joint memorandum from the American Bankers Association (ABA) and Consumer Bankers Association (CBA),1 arguing that the Department did not have authority under Title IV of the Higher Education Act (HEA) to promulgate rules on campus banking products of the scope proposed during negotiated rulemaking in spring 2014. The ABA's...

A new bipartisan poll of likely 2016 voters finds that voters across party lines strongly oppose unfair lending practices and support financial regulations and enforcement by the Consumer Financial Protection Bureau. Strong Bipartisan Support Download the full memo (PDF) In particular, voters of all parties oppose a range of common payday lending practices, and strong majorities across party lines want...

In February 2013, the American Fair Credit Council, an association of debt settlement companies, released a report that claimed to assess the outcomes of debt settlement services by the industry. This report, "Options for Consumers in Crisis: An Economic Analysis of The Debt Settlement Industry," was commissioned by the AFCC, and fails to demonstrate that debt settlement leaves consumers better...

Media outlets continue to report on the potential dangers of the rise in subprime auto lending. Auto lenders, particularly in the subprime auto lending market, are increasingly using risky practices to fuel lending growth. The New York Times, Fortune, NPR and other news outlets reported on recent news in the subprime auto loan market, providing opportunities to explain both the...

This letter strongly urges the opposition of H.R. 527, the Small Business Regulatory Flexibility Improvements Act of 2015 (SBRFIA). SBRFIA expands the reach and scope of the Regulatory Flexibility Act and would increase unnecessary and lengthy regulatory delays, increase undue influence by regulated industries and encourage convoluted court challenges.