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.
This is an important moment in the history of consumer protections and financial reforms.
Payday lending has resulted in debt traps for consumers across the country. Marketed as quick and easy ways to ride borrowers until the next payday, the typical payday loan has annual interest rates of nearly 400%. The typical payday loan borrower is indebted for more than half of the year with an average of nine payday loan transactions. Extensive research – conducted by federal agencies and non-governmental organizations alike – have found payday loans to be a debt trap.
- CRL Statement on CFPB Payday Announcement