The Consumer Financial Protection Bureau (CFPB) announced last week that it will begin collecting consumer complaints on payday loans.
The Bureau’s Office of Consumer Response is adding payday loans to its list of previously accepted complaints on bank accounts, mortgages, debt collection, credit cards, credit reports, money transfers, student loans, and other consumer loans. Now consumers will also be able to submit complaints about payday loan issues, including:
- Unexpected fees or interest
- Unauthorized or incorrect charges to their bank account
- Payments not being credited to their loan
- Problems contacting the lender
- Receiving a loan they did not apply for
- Not receiving money after they applied for a loan
As with other complaints, the CFPB will accept complaints via its online system, through referrals from other regulators, as well as by phone, email or fax. After ensuring that complaints meet certain criteria, the CFPB passes them along to the appropriate financial institution or company. Institutions are then expected to respond to the complaint within a given period of time and consumers receive tracking information to monitor the status of their complaint and resolution. In addition, the CFPB publishes the majority of complaints on its public consumer complaint database.
Woodstock recently released a policy brief comparing Illinois’ complaints by issue and product to the national complaint data. As part of that brief, we offered recommendations to the CFPB, one of which was expanding their system to include payday loans, installment loan, and title loan complaints. We are thrilled that the CFPB has started to move forward on collecting complaints on high-cost loans.
While advocates in Illinois fought for over a decade to regulate payday lending in Illinois, these short-term, high-cost products still trap consumers in other parts of the country in cycles of debt. And even residents of states with consumer protection regulations can fall prey to online lenders that circumvent state law or bank payday products (also known as deposit advance loans) that closely resemble the short-term, triple-digit interest rate loans advocates sought to eliminate. By accepting complaints on payday loans, we hope the CFPB can both assist consumers in addressing their loan issues and concerns and also collect valuable information on the worst payday loan practices and abuses that will be useful as it crafts rules for regulating the payday lending industry. Consumers interested in filing complaints can do so at the CFPB website.
We urge the CFPB to continue to expand its complaint system for consumers by accepting installment loan and auto title loan complaints in the coming months.