New Consumer Financial Protection Bureau rule rolls back borrower protections

Monday, Jul 20, 2020

Under a new Consumer Financial Protection Bureau (CFBP) rule, payday lenders can make loans to borrowers without determining whether they can afford to pay them back. Payday loans can carry interest rates up to 400 percent.

While some lawmakers say the rule will help families access financing, consumer advocate groups disagree. According to CBSnews.com, they say the rule will harm those with less access to traditional lending, especially low-income families and people of color.

“At a time of unprecedented financial challenges, the CFPB has rolled back much-needed, yet insufficient, consumer protections, making it even easier for payday lenders to trap Americans in a devastating cycle of debt,” Rachel Gittleman, Financial Services Outreach Manager with the Consumer Federation of America, said in a statement.

The rule rolls back 2017 requirements for payday lenders to reasonably determine a borrower’s repayment ability.