Attorney General Rosenblum Opposes Federal Effort to Delay Payday Lending Protections

March 19, 2019
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Oregon Attorney General Ellen Rosenblum and 24 state Attorneys General today urged the federal Consumer Financial Protection Bureau (CFPB) to take immediate action to protect consumers from abuses in payday lending, vehicle title lending, and other types of high-cost exploitative consumer lending. Although the CFPB, in 2018, imposed a number of common sense underwriting lender requirements to make sure that borrowers could pay back their loan and prevent loan companies from engaging in abusive tactics, the agency recently proposed an additional delay of these new rules. The Attorneys General argue in their comment letter that further delay is unwarranted.

“Payday loans are a loan of last resort, typically incurred by consumers for urgent needs such as to pay rent, buy groceries and pay for everyday necessities. We must do all we can to protect the hardworking families that need these loans in a pinch. The CFBP instituted a thorough review of these rules several years ago, and there is no good reason to delay their implementation. Further delay will only leave vulnerable Americans even more unprotected from exploitative loans,” said Attorney General Rosenblum.

Oregon law currently prohibits certain predatory aspects of payday loans. For instance, in Oregon origination fees and renewals are limited, interest rates are capped at 36% per year and the loan duration must be for at least 31, but not longer than 60 days. Additionally, payday lenders must provide consumers with loan agreements that clearly explain all the fees, interest rates, payment due dates and consequences of late payments and defaults. CFPB’s proposed payday and high interest loan rules will complement Oregon’s existing laws.

In 2017, the CFPB announced a new rule to help protect borrowers and ensure they would be able 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 to August 19, 2019, to give lenders time to develop systems and policies. CFPB has now proposed to further delay compliance to Nov. 19, 2020, more than three years after the regulation was finalized. At the same time, the CFPB is reviewing another rule that would altogether rescind this rule.

In their comments, the attorneys general cite the 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 comes from consumers who borrow seven or more times in 12 months. Twenty percent of payday loan transaction series end in default and 33 percent of single-payment auto title loan sequences end in default.

In filing these comments, Attorney General Rosenblum joined the Attorneys General of California, Colorado, Connecticut, the District of Columbia, Delaware, Hawaii, Iowa, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, New York, Nevada, North Carolina, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, and Wisconsin.

The Oregon Department of Justice (DOJ) is led by Attorney General Ellen Rosenblum, and serves as the state’s law firm. The Oregon DOJ advocates for and protects all Oregonians, especially the most vulnerable, such as children and seniors.