Seniors were the largest age group of payday loan borrowers in California last year but a new CFPB rule will better protect borrowers.
Dear CRC Supporter:
Yesterday, the CFPB released a new rule that will protect working families from predatory loans and the financial heartaches they create.
This rule is a victory and is a testament to the power of community organizing by CRC, our members and our allies. Borrowers will benefit from new safeguards requiring lenders to better assess their ability to repay a loan and from restrictions preventing lenders from making multiple, unsuccessful attempts to debit their bank accounts, a practice that results in costly overdrafts and closed bank accounts.
As the CFPB began its work to write this rule, CRC members and their clients courageously stepped up to share their experiences. Working with our partners, we organized listening sessions with the CFPB and with our Congressional representatives where Californians talked about how they got caught in the payday loan debt trap- a cycle of costly rollovers that are profitable for the industry, but that extract precious income and assets away from working families.
In 2015, CRC partnered with CRL-California and California LULAC to organize the first ever California Consumer Leadership Academy. Eight courageous women participated in this day-long training, shared their experiences, and crafted strategies on how to stop predatory lending practices in our communities.
At the CFPB’s field hearing where it announced its draft proposal of the rule, I shared the story of a Santa Cruz borrower who had worked with a CRC member after getting a payday loan and then being illegally harassed for repayment of it. We applauded the CFPB’s initial proposal, while also highlighting where we thought the safeguards could be stronger.
Once the public comment period opened, we activated consumers, CRC members and allies, and engaged with local, state, and federal elected officials to ensure the rules were as strong as possible. Consumers shared their stories in the media and we helped them to file CFPB complaints. Local mayors voiced their support. As a result of CRC and our member’s organizing efforts, the LA County Board of Supervisors passed a unanimous motion in support of strong rules. California state legislators, as well as our two senators and more than half of our congressional delegation (led by Representative Maxine Waters) weighed in with their support.
Over 100 California nonprofits also weighed in with the CFPB and our message was loud and clear: California families need a strong CFPB rule that protects their income and assets from predatory lenders.
We applaud the CFPB for its thoughtful approach to this rule and we want to extend our gratitude to our members and allies who worked tirelessly to organize and to protect our communities from predatory lending. We’re also grateful to the Silicon Valley Community Foundation for their support of this work.
We anticipate the industry will attempt to get this rule overturned- either through the courts or the Congressional Review Act, but rest assured we will continue our advocacy in support of this rule and the other work the CFPB is doing to stand up for Main Street.
My statement on the rules is now available on CRC’s website and you can read a CFPB fact sheet about the rules here.
Thank you for your support.