Report Examines Payday Lending Abuses

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A new report from the Public Interest Research Group in Michigan has taken a look at nearly 10,000 complaints filed with the Consumer Financial Protection Bureau about payday lenders and found serious abuses. It’s recommending some changes to federal law to protect people. Kelly Griffith, with the Center for Economic Integrity, says they have to avoid a loophole that would allow companies to make up to six loans to each borrower per year before verifying income.

“”We call this sort of a business-as-usual situation, because if you don’t determine a borrower’s ability to repay right up front with the first loan and every loan, then these six loans are just going to do irreparable harm, and the lender has no motivation to change their business model,” Griffith said.

The report recommends a rule that would force lenders to determine, ahead of time, a borrower’s ability to pay and still afford necessities like rent and food.