Consumer Financial Protection Bureau is working on rules to prevent payday lenders from trapping borrowers in debt, but consumer advocates urge the agency to go further.
The initial March 2015 proposal requires lenders either to ensure that borrowers can pay back the loan, interest and fees, or limit the number of loans that a consumer can take in a row. The proposed rules also would limit lenders’ ability to withdraw funds from a borrower’s checking or savings account, which can produce high fees for insufficient funds.
Consumer advocates praised the proposal as a good start. However, Ellen Taverna of National Association of Consumer Advocates wants to see more-comprehensive rules. Lauren Saunders of National Consumer Law Center says she prefers that lenders didn’t have a choice. “Every loan should be based on the ability to pay, first and foremost,” she says.
CFPB says it expects to issue a proposed rule in 2015. Saunders says she hopes that a final rule is in effect in 2016.