A problem with a personal loan? The feds want your complaint
The Consumer Financial Protection Bureau has expanded its database of consumer complaints to include payday loan issues. The CFPB is the first federal agency with the regulatory authority to oversee this industry.
“Before the Office of Consumer Affairs, consumers who had problems with payday loan products had few places to turn,” CFPB director Richard Cordray said in a statement. “By accepting consumer complaints about payday loans, we will give people a greater voice in this market. “
The CFPB has said it will accept customer complaints about:
- Unexpected fees or interest
- Unauthorized or incorrect charges on their bank account
- Payments that haven’t been credited to their loan
- Contact problems with the lender
- Not receiving money after applying for a loan
The CFPB also wants to hear from anyone who received a loan that they did not apply for. This can happen when the lender mishandles personal information, such as a bank account number or social security number.
“We are delighted that the CFPB is accepting complaints regarding payday lenders,” said Lauren Saunders, lawyer at the National Center for Consumer Law. “The payday loan is one of the most abusive forms of lending. It’s time for someone to take a close look at them.
The Community Financial Services Association of America (CFSA), a trade group that represents payday lenders, also praised the CFPB’s announcement.
“The CFSA strongly supports the CFPB’s efforts to tackle illegal or unethical lending practices, and we believe the recently launched complaints portal will help both regulators and consumers identify the bad actors on the market. market, ”he said. in a report. “Prior to the launch of the portal, many of our members voluntarily signed up to participate in the process whereby they will work through the CFPB to quickly handle and resolve a complaint with a client. “
An attacked industry
Payday loans are big business. About 12 million Americans use a payday loan service each year, according to a report from Pew Charitable Trusts published last month. These small, short term loans are usually less than $ 500. It is a way for a person without credit to obtain a loan. But, it often comes at a high cost.
With most payday loans, borrowers have to repay the loan the next time they are paid. And they are usually required to give the lender access to their checking account to repay this loan.
Pew research found that most payday loan clients cannot make the full payment when due, so they take out a new loan every two weeks. It can go on for months. The bottom line: The average borrower spends $ 520 in interest to pay off a $ 375 loan.
The industry insists that it is providing “a valuable service” to clients who want and need these loans.
“Payday loans are often the cheapest option for many people,” said Amy Cantu, CFSA director of communications. “Our clients have done the math and they choose the payday loan because it is the cheapest option for them.
Where is it? In a report released earlier this year, the CFPB concluded that “some consumers may misunderstand the costs and risks”, particularly those associated with repeat borrowing.
“We all agree that people should have access to help when they are in trouble, but payday loans don’t help,” said Nick Bourke, director of Safe Small-Dollar Loans Pew Research Project. “By taking a third of the borrower’s next paycheck, payday loans just make ends meet. “
Based on his research, Pew called for tighter regulation of this market in order to make small loans safer and more affordable.
How to complain
Complaints can be filed online, by phone (toll free at 1-855-411-2372 or TTY / ATS at 1-855-729-2372), by fax (1-855-237-2392) or by mail (CFPB, PO Box 4503, Iowa City, Iowa 52244).
Each complaint is forwarded to the company which is invited to respond within 15 days on the measures taken or envisaged. The complaint and the response are published in its public database. The CFPB plans to close all cases, except the most complicated, within 60 days.
The CFPB accepts complaints about mortgages, credit cards, student loans, auto loans, money transfer services, credit reports, and debt collection.
You can get clear and unbiased answers about payday loans via Ask for CFPB or by calling the CFPB toll-free at 1-855-411-2372.