FOR IMMEDIATE RELEASE
October 6, 2017
Maine’s Congressional Delegation Should Support New CFPB Payday Lending Rule Aimed Toward Curbing Abuses
AUGUSTA, MAINE (October 6, 2017) – A new rule released yesterday by the Consumer Financial Protection Bureau (CFPB) will reduce the harms to Maine families of payday lending. However, the rule is under attack by the very lenders who profit from this kind of short-term, high-interest lending. The Maine Center for Economic Policy urges our Congress Members to defend the new rule.
“For years, payday lenders have preyed on Maine consumers struggling to make ends meet, charging annual interest rates as high 217% and trapping them in an endless cycle of debt,” said Jody Harris, associate director at the Maine Center for Economic Policy. “The CFPB’s new rule is a key first-step that protects vulnerable consumers and working families from predatory lenders.”
Payday lending costs Maine families half a million dollars per year. These lenders drive borrowers into financial distress raiding their bank accounts and pushing second and third loans to pay off the first. Borrowers take out on average 10 payday loans a year and routinely pay more in fees than the amount they borrow. Marketed as a quick fix for a cash shortage, payday loans often force consumers into a spiral of unpaid bills, overdraft fees, closed bank accounts, and even bankruptcy.
“In issuing its new rule, the CFPB recognizes the harm of the payday lending trap, which robs people of their ability to recover from a financial shortfall by pulling them deeper into debt. We are pleased to see the CFPB put safeguards in place for Maine families, like requiring payday lenders to determine whether a borrower can afford to repay the loan—a routine practice already required of banks, credit unions, and credit card companies,” said Harris.
But now, the payday lending industry is pressuring Congress to overturn the new consumer protections pushing legislation that would overturn the new rule. “Maine’s Congressional Delegation must do all that they can to stop predatory lenders from cheating Maine people for profit,” said Harris.
The full CFPB rule can be found here: https://www.consumerfinance.gov/policy-compliance/rulemaking/final-rules/payday-vehicle-title-and-certain-high-cost-installment-loans/