Shark Week campaign launches to stop predatory lending practices
A liberal group that advocates for racial and economic reform is using Shark Week on the Discovery Channel to call attention to predatory payday lending practices.
National People’s Action (NPA) is comparing marine sharks to payday loan sharks who they say trap 12 million Americans in a devastating cycle of debt annually.
On Monday, NPA launched its second annual #Sharkweek Campaign to Stop Predatory Lending Attacks with a petition that asks the Consumer Financial Protection Bureau (CFPB) to crack down on predatory lending practices that cost more than half of all borrowers who renew their loans more in fees than the loans they take out.
According to CFPB, the average borrower takes out ten payday loans from a single lender in just a year, 94 percent of all borrowers take out another loan within a month and more than half take out a new loan the same day their old loan is due.
The agency is considering proposing new rules for payday lenders to better protect consumers.
In outlining a framework for the rules it’s considering in March, CFPB mapped out two sets of rules — debt trap prevention or debt trap protection — that lenders would be able to chose between.
Under the prevention rules, lenders would have to verify a consumer’s income, debt and borrowing history when determining his or her ability to repay a loan in full and still cover their basic living expenses and loan payments.
Under the debt trap protection rules, lenders would not be required to do an upfront analysis of a borrower’s ability to repay a loan, but all loans would be limited to $500 with one finance charge and lenders would be prohibited from holding a vehicle title as collateral on a loan.
NPA said loan shark attacks are a financial disaster for millions of hard working families, but industry groups argue that stricter regulations will hurt Americans in need of quick cash for a short-term financial emergencies.
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