Several members of the CFPB’s Consumer Advisory Board yesterday urged the bureau to consider rules that would enhance consumer protections for small-dollar payday loans, press reports said.
Board members, who were participating in their second meeting, asked the bureau to look at limiting the number of times a borrower may roll over such loans; mandating longer loan-repayment periods to cut down on loan renewals; and requiring lenders to verify borrowers’ ability to repay.
CFPB Director Richard Cordray noted in his opening remarks that the telltale sign of such products is that their success is based on a substantial percentage of users rolling over their debts on a recurring basis.
Cordray noted that there is a demand for short-term credit products that are structured to facilitate repayment and can help consumers who use them responsibly. “We want to make sure that consumers can get the credit they need without jeopardizing or undermining their finances,” he said. “Debt traps should not be part of their financial futures.”
Read Cordray’s opening remarks.
Read a list of Consumer Advisory Board members.