Bonamici Applauds Action to Crack Down on Predatory Lending

WASHINGTON, DC [06/02/16] – Congresswoman Suzanne Bonamici (OR-01) issued the following statement after the Consumer Financial Protection Bureau (CFPB) released a draft rule to protect consumers from predatory lending practices and crack down on some of the worst abuses in the industry.

“In Oregon, I’ve met with workers who have to resort to payday loans simply to pay their rent or basic living expenses,” said Bonamici. “The draft rule from the Consumer Financial Protection Bureau—an agency that has consistently sought to protect consumers from predatory practices—is a great step in cracking down on some of the worst abuses in the payday lending industry. These unconscionable practices hurt workers simply trying to make ends meet and hurt the economy. Oregon has some of the most aggressive laws in the country to address predatory payday lending, and this action from the CFPB will further protect consumers across the country. I look forward to working with the CFPB to protect hard-working families from these predatory lending practices.”

Under the CFPB’s draft rule, borrowers must pass a credit check and be found able to repay the loan in order for a lender to make high-interest or high-fee loans. The rule also prohibits payday lenders from offering more than two extensions to an original loan if a borrower is unable to pay off that original loan. Frequently, distressed borrowers are forced to take out additional payday loans just to cover the debt incurred from the previous payday loan, and this draft rule will help curb that ruinous cycle.

As a member of the Oregon House of Representatives, Bonamici helped write Oregon’s laws to rein in predatory payday lending. In Congress, Bonamici has introduced legislation—the Stopping Abuse and Fraud in Electronic (SAFE) Lending Act of 2016—to give consumers more control over bank withdrawals from payday lenders, require that lenders abide by the laws of the state in which they are lending, and ban third party “lead generators” that collect applications and auction them to payday lenders. You can read more about the legislation here.

“Payday lenders frequently trap consumers in exorbitant loans that lead to endless debt cycles. This must be stopped,” Bonamici continued. “My SAFE Lending Act will crack down on the online and offshore lenders who often use loopholes to get around state laws—including Oregon’s.”

The SAFE Lending Act of 2016 would:

• Give Consumers Control over Their Own Bank Accounts by preventing third parties from gaining control of consumers’ accounts through remotely created checks. It also allows consumers to cancel a debit in connection with a small-dollar loan to prevent an Internet payday lender from emptying a checking account;
• Close Loopholes and Create a Level Playing Field In State Law Enforcement by requiring all lenders, including banks, to abide by state usury rules governing small-dollar, payday-like loans. Only states, not the federal government, have usury laws; and
• Ban Lead Generators and Anonymous Payday Lending, including banning anonymously registered websites offering payday loans and “lead generators” who falsely identify themselves as payday lenders.