Relief may be on the way for those individuals who have been burdened by debt as a result of payday loans. In January, the Consumer Financial Protection Bureau (“CFPB”) announced that it would be implementing new regulations to eliminate abuses such as high fees and charges that pose a challenge to consumers in the payday loan industry.
Opponents of the proposed regulatory changes at American Banker claim that such changes are essentially crippling “the small-dollar, payday loan market, destroying a lifeline of credit for millions of responsible, low-and middle-income Americans.”
As defined by Market Place, payday loans are usually small sums of money borrowed at high interest rates and repaid upon receipt of the borrower’s next paycheck.
A report by the Center for Responsible Lending (“CRL”) indicated that these companies have made $2.5 billion in fees since 2005 in Florida alone. The report was also indicative of the rapid increase in lending, showing a growth in the number of transactions, total loan volume and total fees charged.
Still focusing on Florida, the loan industry earned a total of $311 million, $124.5 million more in fees from lenders between 2010 and 2015. Annual transactions went up by $5.3 million in the past 10 years, and annual volume increased by $1.4 billion. The state has more payday loan businesses than Starbucks franchises in operation.
The CRL report also revealed that 83% of Floridians’ payday loans were owed by individuals who already had a minimum of seven loans per year. Borrowing was especially high amongst senior citizens as well as individuals the Latino and black communities. To read more, please click here.