***For Immediate Release***
October 5, 2017
Contact, Jeff Sheldon
Nebraska Appleseed Communications Director
Office: (402) 438-8853
Mobile: (402) 840-7289
New rule a good first step to protect Nebraskans against predatory lending
CFPB rule makes progress, but Legislature still must pass true reform to end exploitative lending
Today, a group of Nebraska advocacy organizations – Nebraska Appleseed, Voices for Children in Nebraska, and the Women’s Fund of Omaha – released the following joint statement on a new rule released by the Consumer Financial Protection Bureau (CFPB) regarding the payday lending industry.
The rule, finalized after an extended period of public comment, takes important steps to protect consumers from some of the payday lending industry’s most-exploitative practices and will cover short-term loans issued by payday lenders, auto title lenders, installment lenders, banks, credit unions, and most other loan providers.
Among other things, the new rule:
- Requires a lender to reasonably determine that the consumer will be able to make payments on the loan while also meeting other financial obligations and basic living expenses without needing to re-borrow over the next 30 days,
- Requires lenders to notify borrowers when they plan to deduct funds from their bank account, and
- Restricts a lender’s ability to repeatedly attempt to deduct funds from a borrower’s bank account.
“As advocates for Nebraskans with low incomes, who are particularly at risk for the exploitative practices of payday lending, we applaud the Consumer Financial Protection Bureau’s newly released rule protecting consumers from harmful payday loans,” the statement reads. “For too long, payday lenders have issued predatory, unaffordable loans to hard-working Nebraskans who often struggle to make ends meet and have no other option for credit to address an emergency or short-term need.
“Everyone will need access to credit at some time, and the CFPB’s new rule is a good first step toward protecting Nebraska consumers. However, the rule falls short of curing all of the problems caused by predatory lending and leaves a lot of work for the Nebraska Legislature. Effective reform must occur at the state level and ensure that Nebraska borrowers have access to credit with reasonable prices and fees and manageable payments that can be made in installments.
“The CFPB has taken an important step forward, but now our legislature must act in the coming session to ensure hard-working Nebraskans are adequately protected from falling victim to predatory lending practices.”
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