Payday Loan Rules And Regulations Still Too Weak?

By Shawn Lee Martin


New rules that went into effect this last spring brought on by the Consumer Protection Bureau have been touted as great progress!

They are helping make payday loans less risky but are the new payday loan rules and regulations still too weak?

Many are concerned they have not taken their efforts far enough.

In this article, we will explore these new rules and regulations, what they are and how they may affect the use of payday loans and if they are strong enough to make a difference in today’s borrowing trends.

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Some Facts

Last years numbers recorded by the Consumer protection Bureau report that an average of 5.5 people in the USA took out payday loans in 2015 and about a quarter of these loans were taken out online. The online loan numbers are estimated to be growing in 2016.

It is reported that the average person using these loans took out a minimum of 8 loans in a years time with most exceeding 300% API in interest.

Payday loan companies, especially the online entities would hit their customers bank accounts for payment multiple times per loan regardless of funds being available, leaving the customers with large bank charges and closed accounts in many cases.

They would also grant multiple loans to individual borrowers without regards to income and living expenses or the ability to pay these loans back leading to debt traps.

This has all been standard practice for many of these companies and the CPB has been using these numbers and legislating solutions to make the playing field more user-friendly.

Let’s take a look at what the CPB is and what it has accomplished in the payday loan industry so far.

Consumer Protection Bureau

This is a federal agency that monitors financial institutions and how they do business. The idea is to make sure these institutions are treating everyone fairly in their day to day business practices.

Some of this agency’s functions include:

  • collecting complaints 
  • Proposing legislation
  • Suing people and companies that do not comply with the laws
  • Conducting investigations 

How they are related to this article is through their proposed rule that would end payday loan traps that became law this year. (2016)

This rule asked for and was granted the following:

  • Full-payment test
  • Principal payoff option for certain short-term loans
  • Debit attempt cutoff
  • Less risky longer-term lending options

These rules do make the playing field a bit more even but are they enough?

Some of the concerns being voiced are loopholes in the new rules that still exist.

Two of the biggest concerns are loan companies ability to still grant up to six loans to a customer without a complete and full review of their ability to pay back these multiple loans.The new rules also do not cover any longer term loans these companies are beginning to offer as alternatives to the short-term high-interest payday loans.

This video from last year explains the new rules that are now in force.


While most people agree with the work this agency does and are grateful they are here to help protect consumers they would like more changes.

Getting these rules passed is a difficult process at best.

The CPB is up against huge lobbying efforts to negate any  progress they are proposing.

We support their efforts and encourage them to continue fighting for fair lending practices on all platforms.

Have an opinion?

We want to hear from you, please leave us a comment below!

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2 thoughts on “Payday Loan Rules And Regulations Still Too Weak?”

  1. Hey Shawn
    When are these financial institutions going to learn that lending money without doing a proper background check is going to lead us all back into another recession?
    The CPB is doing a vital job in protecting the economy.
    Too many institutions taking a chance for a quick payout and not doing their due diligence.
    Good article.

    1. Hi, Kieth!

      I believe many of these lenders do not care as they are raking in the money AND they know they will make even more if the economy does indeed go into a recession.

      I agree, the CPB and individual states like for example New York and Minnesota are making a big difference in this industry!


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