It's high time something was done about Payday Loan outfits fleecing poor people. Payday loan borrowers pay more in fees than original loan. CNN Money:
The Consumer Financial Protection Bureau is taking aim at these short-term loans that carry high interest rates to try and keep borrowers from falling into an endless cycle of debt.
The bureau has proposed new rules that would require payday lenders verify a ability to afford a loan and restrict some lending and fee practices.
The good news is these rules don't require Congressional
Obstruction approval, and can go into effect as early as September.
The new rules include:
Payday loan companies can't roll over a loan up to 30 days after a loan is paid off. This ends the "debt trap" where consumers go from one payday loan company to the next and never get out of debt.
These companies must ensure that the consumer has the ability to pay off the loan before issuing it. That sounds self-evident, but no. Payday loan companies have been known to actually market "refinancing" a short-term loan in order to get even more interest payments from the borrower.
And finally, these companies cannot debit a customer's checking account without warning. As you can imagine, grabbing your payment from a consumer's checking account before pay day means overdraft fees from the pay day loan outfit AND the consumer's bank account, digging an even deeper debt hole for the borrower.
Google has banned all payday loan advertisements from their site. What really needs to happen is for banks (and the Sanders idea of Post Office Banking comes into play here, too) to be able to offer short term solutions to those seeking debt relief. Passing living wage laws would also help.
It's past time to protect citizens from those vultures who prey on the poor.