VPLC Pushes CFPB to Keep Consumer Protection Rules in Place for Lenders
Thursday, May 16th, 2019
FOR IMMEDIATE RELEASE:
May 16, 2019
VIRGINIA COALITION PUSHES CONSUMER FINANCIAL PROTECTION BUREAU TO KEEP CONSUMER PROTECTION RULES IN PLACE FOR LENDERS
“I took out my first loan around three years ago when my husband got sick and we began to fall behind on bills. It wasn’t very long until I took out two more loans just to stay afloat. I was so ashamed that I had to take out these loans that I kept them a secret from everyone, including my husband. Something needs to be done to stop these companies from targeting people in similar situations.”
RICHMOND, VA –Virginia Poverty Law Center (VPLC) and other Virginia-based organizations have submitted public comment to the Consumer Financial protection Bureau (CFPB) urging the agency not to gut rules adopted in 2017 aimed at protecting consumers from predatory loans.
After five years of research, outreach, and review of over one million public comments, the CFPB mandated that all lenders must consider the ability to repay loans in November of 2017. The rule takes aim at the proliferation of payday debt traps that keeps people around the country in the cycle of poverty.
“After graduating college in 2013, I was desperate for money to pay off my bills. I went to Cashnet USA and took out a loan for $500,” one Virginia resident described to VPLC. “It was impossible to pay off the initial loan, so I took out another loan to pay off the first loan. Even though I have a full-time job with a decent salary, I did not have enough money to pay these loans back on top of my modest living expenses. As a result, I continued to take out loans to the point where I had up to four different loans out at the same time, all to pay off the other loans.”
A Fredericksburg resident shared her experience with VPLC: “I took out my first loan around three years ago when my husband got sick and we began to fall behind on bills. It wasn’t very long until I took out two more loans just to stay afloat. I was so ashamed that I had to take out these loans that I kept them a secret from everyone, including my husband. Something needs to be done to stop these companies from targeting people in similar situations.”
Without considering the ability to repay, consumers may risk losing more if they are unable to make payments. As one Chesterfield resident said, “I got a $4,000 car title loan from Loan Max, and I have repaid about $3,200. I couldn’t make the payments, so I paid a debt settlement company to negotiate a settlement for an additional $4,800. I couldn’t afford the settlement payments, and now I think they are going to repossess my car.”
VPLC included nearly 100 similar stories from Virginians suffering from these types of loans along with its public comment.
Virginia Poverty Law Center (VPLC) is a 501(c)3 nonprofit organization committed to leading and coordinating efforts to seek justice in civil legal matters for low-income Virginians.