Attorney General William Tong issued the following statement today denouncing the Consumer Financial Protection Bureau's (CFPB) decision to abandon its own Payday Lending Rule that protects low-income consumers from the abusive practices of the payday and auto title loan industries.
The CFPB announced its plans Wednesday to overhaul Obama-era payday loan regulations that require lenders to ensure borrowers can afford to repay their loans.
"Payday lenders often target the most vulnerable of our population – senior citizens, low-income and middle class families, and the disadvantaged. The Payday Lending Rule was intended to protect these borrowers from becoming financially trapped in a revolving cycle of high-interest debt and staggering fees. Rather than protecting our consumers, the CFPB has sided with the same abusive lenders it has a duty to oversee. The CFPB has an obligation to stop these abusive lending practices, and prevent abuse of hardworking families," said Attorney General Tong.
The average payday loan borrower earns about $30,000 per year, and about 58 percent have trouble meeting their monthly expenses, according to the Pew Charitable Trusts. The average payday borrower is in debt for nearly half the year because they borrow again to help repay the original loan. The average payday borrower spends $520 per year in fees to repeatedly borrow $375, according to the Pew Charitable Trusts.
"While our state has some of the strongest laws in the country to combat abusive payday lending, Connecticut consumers still need robust federal protections. This starts with implementing and building on regulations that were put in place to protect the hardest-hit consumers," said Attorney General Tong.