CFPB Now Accepting Payday Loan Complaints
November 14, 2013 - Posted by Patrick McNeil
Last week, the Consumer Financial Protection Bureau (CFPB) began accepting complaints from borrowers who encounter issues with payday loans.
Payday loans are generally for $500 or less and provide a quick route to credit for consumers who may otherwise not qualify, though many must be fully repaid in a short period of time. In fact, payment is often due when the borrower is next paid, and many lenders require advance access to borrowers’ checking accounts.
According to a CFPB report released earlier this year, this repayment structure and lack of underwriting creates for many consumers a cycle of indebtedness. “To the extent these products are marketed as a short-term obligation,” the report says, “some consumers may misunderstand the costs and risks, particularly those associated with repeated borrowing.”
The Center for Responsible Lending notes that these consumers are disproportionately African American and Latino, and found in a 2009 study in California that “Payday lenders are nearly eight times as concentrated in neighborhoods with the largest shares of African Americans and Latinos as compared to white neighborhoods, draining nearly $247 million in fees per year from these communities.”
Established by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the CFPB began overseeing payday lenders in January 2012, and currently accepts complaints about credit cards, mortgages, bank accounts and services, private student loans, consumer loans, credit reporting, debt collection, and money transfers.
To see what types of payday lending complaints the CFPB is accepting and how to submit them, visit their website here.