A sweeping new set of federal rules cracking down on unfair payday loans and other forms of predatory lending may be on the way.
The Consumer Finance Protection Bureau on Thursday announced it is considering regulations that would end “payday debt traps” by requiring lenders to make sure consumers can repay their loans and restricting them from collecting on loans in ways that tend to rack up more debt.
“Today we are taking an important step toward ending the debt traps that plague millions of consumers across the country,” CFPB Director Richard Cordray said in a news release. “Too many short-term and longer-term loans are made based on a lender’s ability to collect and not on a borrower’s ability to repay. The proposals we are considering would require lenders to take steps to make sure consumers can pay back their loans. These common sense protections are aimed at ensuring that consumers have access to credit that helps, not harms them.”
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