March 19, 2019
Carson City, NV – Nevada Attorney General Aaron Ford urged the Consumer Finance Protection Bureau (CFPB) to take immediate action to protect consumers from abuses in payday lending, vehicle title lending, and other types of high-cost consumer lending. AG Ford is joined by a coalition of 25 other attorneys general in this action.
In 2017, the CFPB announced a new rule that would protect borrowers and ensure they would have the ability to repay loans, while also prohibiting lenders from using abusive tactics for repayment. The rule went into effect in early 2018, but compliance was delayed to August 19, 2019, to give lenders time to develop systems and policies to comply. Now, the CFPB has proposed to further delay compliance to November 19, 2020, more than three years after the regulation was finalized. At the same time, the CFPB is reviewing another rule that would rescind this current rule altogether.
“By further delaying compliance or eliminating this rule altogether, the Consumer Finance Protection Bureau is putting hard-fought borrower protections at risk.” said AG Ford. “Under my leadership, this office will continue to protect Nevada’s consumers using any tools we have at our disposal.”
In their letter to the CFPB, the coalition of attorneys general note that the 2017 rule imposes a number of common sense requirements on payday lenders to ensure that borrowers have an ability to repay their loans. The letter also explains how the current rule prohibits abusive repeated withdrawals in seeking repayment and requiring disclosures related to payment transfer attempts. The attorneys general cite CFPB’s own findings that demonstrate the many ways the short-term payday and title lending model is broken – specifically as a significant percentage of these loans are expected to fail. In fact, 90 percent of all loan fees come from consumers who borrow seven or more times in 12 months. Twenty percent of payday loan transaction series result in default, and 33 percent of single-payment auto title loan sequences result in default.
Attorney General Ford is joined in filing these comments by the attorneys general of California, Colorado, Connecticut, Delaware, the District of Columbia, Hawai’i, Iowa, Illinois, Maine, Maryland, Massachusetts, Michigan, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington and Wisconsin.
To view the issued letter, click here.