Payday Loan Industry Finally Being Forced To Clean Up Its Act

Payday loan industry has successfully avoided regulation by shifting from type of loan service to another.
What is a payday loan?  The payday lender industry includes payday loans, title loans, short-term loans or quick money loans.  Each of these services have had the same result – lending to very low income, charging outrageous fees and interest with the goal to keep the poor borrower on the financial hook as long as possible or until bankruptcy is filed.
An example: in 2010 Arizona voters banned traditional payday lending.  Before the ink was try on the new law payday loan stores converted into auto title loan stores.  The end result was the same – extremely high interest rates (some as high as 500 to 700%).  Some of the payday loan stores moved to Indian reservations, to the Internet or to other countries, all with the intent of avoiding regulation.
The heyday of these bottom feeders will be over early next year.  The Consumer Financial Protection Bureau “CFPB” is doing its job in establishing regulations to protect the consumer. The new regulations will require that payday loan companies first determine a customer’s ability to repay the loan within the term of the loan before entering into the loan.  The regulations will also limit the amount of times a customer could renew the loan (some people are perpetually paying on the same loan taken out several years earlier).  According to a 2014 study by the CFPB approximately 60 percent of all loans are renewed at least once, with almost a quarter of the loan renewed at least seven times. According to industry officials they expect payday loans to drop between 59 percent to 80 percent.
Read more from CFPB about payday debt traps
Given the history of the payday loan companies I can only assume they will find another way to continue gouging the most vulnerable of consumers – low income, single parents and minorities.  I try to avoid political statements, but cannot help myself.  In our wonderful country why do some find it acceptable to prey on those who cannot help themselves?  Should we stand by while the greedy put shackles on those who are just trying to feed their family?  Perhaps Jesus (oops now I am bringing in the church) had the right idea – destroy the benches of all money changers in the Temple.
Now, I am not implying that all lending should be stopped.  I am suggesting that the CFPB is correct that over-reaching lenders need to be regulated so as to protect consumers (perhaps from themselves).  It is sad that the only time we see regulations or laws enacted is when bad people do bad things.  Personally, after thirty years in the field of consumer related laws, I am pleased that a regulatory agency like the Consumer Financial Protection Bureau is committed to its name – consumer protection.
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