CFPB Proposes New Rules For Payday Loans
Charles Pascal Cohen
Pay day is not as sweet when the thought of paying many times what you borrowed looms over your head.
Last week, the Bureau of Consumer Financial Protection (CFPB), wielding its rulemaking power, set in motion a plan to regulate payday loans.[1]
Concerned with the payday industry’s repeat short-term lending, penalty fees, and high default rates, the CFPB has proposed a new rule for the $38.5 billion industry that “would require lenders to determine whether borrowers can afford to pay back their loans. The proposed rule would also cut off repeated debit attempts that rack up fees and make it harder for consumers to get out of debt.”[2] The proposed rule addresses the fundamental drawback of loan rollovers trapping borrowers in a cycle of debt.
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