A bipartisan section of Congress members supported a bill to revoke CFPB’s (Consumer Financial Protection Bureau) law that protects customers who borrow payday loans.
Payday or small-dollar loans offer quick cash in trade for complete payment plus varying interest rates, usually within a fortnight to 4 weeks after the money is lent. Most borrowers use small-dollar loans to acquire immediate cash when the cost of living shoots up —the normal payday loan seeker earns a total of nearly $30,000 per year and has a FICO score lying in the 500s. Over 19 million families in the United States make use of payday loans.
While such payment plans might look like a logical solution, sometimes paydays come with sky-high rates and fees for payday loan merchant account holders.
CFPB’s law restricted lenders from designing accumulating-interest loan offers that borrowers hassle to pay back. This rule goes further to limit the number of successive loans one can take and demands that borrowers be given longer refund windows.
The bill co-sponsored by six representatives— Tom Graves (R-GA), Steve Stivers (R-OH), Alcee Hastings (D-FL), Collin Peterson (D-MN) and Henry Cueller (D-TX)— and led by Rep. Dennis Ross (R-FL) would revoke CFPB’s rule and stop the bureau from giving a similar ruling in future.
According to these lawmakers, small-dollar loans have enough regulations in all the 50 states, and there’s no need for state laws. They argue that over 1.2 million citizens per year living in Florida rely on her vigilantly regulated payday industry to break even. To these lawmakers, CFPB’s payday lending law is not a rational regulation; instead, they view it as a de facto veto on what Floridians need most.
The main sponsor Denis Ross pointed out that he and his bipartisan group couldn’t watch from the sidelines while a state agency takes away from citizens a lifeline when they need it most. He added that this detrimental rule should be repealed and it’s no wonder they are taking bipartisan action do away with it.
Will these lawmakers succeed in their endeavors? And if they do, will it be for the good or mean more trouble for payday borrowers?
Electronic payments expert, Blair Thomas, co-founded eMerchantBroker in 2010. His passions include writing/producing music, and travel. eMerchantBroker is America’s No.1 payday loan merchant account company, serving both traditional and high-risk merchants.