LANSING, Mich. (WXyZ) — Michigan Attorney General Dana Nessel Wednesday joined a multi-state coalition to protect consumers from payday lender abuse.
Nessel urged the Federal Consumer Protection Financial Bureau to take immediate action to address the ways short-term payday and title lending model leads to abuses in payday lending.
“My office has a responsibility to act when Michiganders are at risk of deceitful and abusive business practices,” Nessel said. “By delaying these protections, more consumers risk becoming victims of predatory and misleading tactics by payday lenders, and that’s more than enough reason for Michigan to step in and speak out.”
CFPB announced a new rule in 2017 that would help protect borrowers and ensure they would have the ability to repay loans while also prohibiting lenders from using abusive tactics when seeking repayment. The rule went into effect in early 2018, but compliance was delayed until Aug. 19, 2019 to give lenders time to develop systems and policies. CFPB has now proposed to further delay compliance until Nov. 19, 2020 – more than three years after the regulation was finalized. The CFPB is also reviewing another rule that would altogether rescind this one.
Together, these actions would put at risk hard-fought borrower protections. The CFPB’s own findings showed 90 percent of all loan fees come from consumers who borrow seven or more times in 12 months. Additionally, 20 percent of payday loan sequences (loans that are rolled over or followed by another loan in close succession) end in default and 33 percent of single-payment auto title loan sequences end in default.
Other states in the coalition include: California, Colorado, Connecticut, Delaware, Hawaii, Iowa, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, New York, Nevada, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, Wisconsin and the District of Columbia.