Consumer complaints in payday lending are down, report shows
Payday lenders say a drop in consumer complaints shows there is no need to regulate the industry.
The Consumer Financial Protection Bureau’s Monthly Complaint Report, released Wednesday, showed a 12 percent decrease in the number of payday lending complaints from consumers from June to August this year over the same time last year.
The Community Financial Services Association of America (CFSA) said payday loans make up less than 1.5 percent of the total complains submitted to the CFPB.
The report reaffirms what the industry has long known: consumers value payday loans as a high-quality source of credit during times of need,” CFSA CEO Dennis Shaul said.
According to the report, CFPB has handled approximately 702,900 complaints about various financial products as of September 1, 2015. Payday loan complaints showed the greatest percentage decrease in complaints in that three-month period in 2014 to the same period in 2015, dropping from 526 complaints to 463 complaints.
CFPB outlined a framework for the rules it’s considering in March to crackdown on predatory lending practices that trap borrowers in a cycle of debt, but lenders fear the rules will eviscerate the industry.
CFSA, however, said Wednesday’s report proves how misguided the rules are.
“The truth is that banning payday lending does nothing to address the needs of consumers; rather, it simply eliminates a responsible credit option and forces consumers to turn to inferior alternatives, including dangerous, illegally-operating lenders,” Shaul said.
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