Why are the payday lenders trying to destroy the CFPB?

The Consumer Financial Protection Bureau (CFPB) is a U.S. government agency that makes sure banks, lenders, and other financial companies treat you fairly.

The CFPB was created in the wake of the 2008 recession when reckless financial practices by banks and other financial institutions nearly destroyed the world’s economy.  It was created to resolve consumer complaints, provide consumer education, and file enforcement actions when financial companies refuse to follow the law and it has been a huge success:

• Just look at the wealth of information on their website about financial products
• It is easy to file a consumer complaint and they have made sure that over 3.9 million people have gotten a response to their complaints.
• Their enforcement actions have made companies change their bad practices, bolstered companies that follow the law and brought $17.5 billion in financial relief to over 200 million consumers.

• The CFPB created an Office of Servicemember Affairs to help military families overcome unique financial challenges by providing educational resources, monitoring complaints, and working with other agencies to solve problems faced by servicemembers.

AND the CFPB is on the verge of saving consumers billions more:

• The CFPB launched an initiative to save households billions of dollars a year by reducing exploitative junk fees .
• CFPB Initiates Review of Credit Card Company Penalty Policies Costing Consumers $12 Billion Each Year

AND Breaking News:  CFPB Kicks Off Rulemaking to Remove Medical Bills from Credit Reports.  This proposal would help tens of millions of Americans.  ““Research shows that medical bills have little predictive value in credit decisions, yet tens of millions of American households are dealing with medical debt on their credit reports,” said CFPB Director Rohit Chopra. “When someone gets sick, they should be able to focus on getting better, rather than fighting debt collectors trying to extort them into paying bills they may not even owe.”

So why did the payday lenders file a lawsuit against the CFPB?

An association of payday lenders, the CFSA, filed a lawsuit against the CFPB to stop the CFPB from enforcing its rules intended to curb the payday lending debt trap.  The lower court ruled that the CFPB’s funding is unconstitutional and the case, CFPB v. CFSA,  is now on appeal before the U.S. Supreme Court.

Why are other financial institutions, including the American Bankers Association, supporting the payday lenders appeal?

Look at the two major initiatives begun recently by the CFPB.  If successful, this will cost the banks billions of dollars while putting that money back into consumers’ pockets.

Five reasons why Virginians should support the CFPB.

1. The CFPB has put billions back in Virginia consumers’ pockets and is on the verge of saving consumers billions more by limiting junk fees and credit card fees.
2. The CFPB gives extra assistance to our military families because they believe that “those who serve our country deserve to be treated fairly by financial institutions.”
3. The CFPB has made improvements to the credit reporting system and more improvements are on the way such as eliminating medical debt from credit reports.
4. The CFPB often works with the Attorney General of Virginia to help Virginia consumers. For example:
   • Stopping illegal debt collection against servicemembers. The CFPB and AG forced Freedom Stores and Military Credit Services LLC to provide $2.5 million in redress to consumers filing illegal lawsuits, debiting consumers’ accounts without authorization, and contacting servicemembers’ commanding officers.
   • Stopping an illegal scheme to trick consumers into signing a lease. The CFPB, the Attorney General of Virginia and several other state Attorneys General forced Tempoe, a leasing company,  to provide $35 million in consumer redress and permanently leave the leasing business.  “It’s unacceptable that this company misled consumers and trapped them into lease agreements by making them believe they were signing up for an installment plan or credit sale,” said Attorney General Miyares.
5. The CFPB ensures that markets for consumer financial products are fair, transparent, and competitive. This is good for Virginia consumers AND for Virginia businesses that follow the law and do not try to trick consumers.

— By Jay Speer, Executive Director, Virginia Poverty Law Center

 

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