FOR IMMEDIATE RELEASE: JANUARY 18, 2018
Woodstock Institute Contact: Brent Adams (email@example.com) (312) 368-0310
National Consumer Law Center Contact: Stephen Rouzer (firstname.lastname@example.org) (202) 595-7847
Consumer Bureau Drops Lawsuit Challenging 950% APR Loans
CHICAGO, IL – Today, consumer groups deplored the Consumer Financial Protection Bureau’s (Consumer Bureau) abrupt and unexplained decision to drop a lawsuit against four online payday lenders who preyed on working families by making loans up to 950 percent that were illegal in at least 17 states, including Illinois.
All of the lenders are owned and incorporated by the Habematolel Pomo of Upper Lake Indian Tribe located in Upper Lake, California. The lenders claimed that only tribal law, not state law, applied to the loans. However, in 2014, the Supreme Court made clear that tribes “’going beyond reservation boundaries’ are subject to any generally applicable state law.” The loans to the borrowers were not made on the California reservation.
“Trump appointee Mick Mulvaney’s apparent mission is to transform the Consumer Bureau from a hero to a villain for average Americans” said Brent Adams, senior vice president of policy and communications at Woodstock Institute. “Choosing to stab consumers in the back once again, Mr. Mulvaney is leading an industry heyday that has no end in sight.”
“It’s outrageous that Acting Consumer Financial Protection Bureau Director Mick Mulvaney, who took more than $62,000 from payday lenders while a member of Congress, is now giving a free pass to lenders that are collecting on illegal loans that charge an obscene 950 percent interest,” said Lauren Saunders, associate director of the National Consumer Law Center.
Even in states that allow payday lending, rates are often capped far below 950 percent, and licenses are normally required. In at least 17 states, including Illinois, unlicensed loans are void in whole or in part and cannot be collected.
The action to drop the lawsuit follows an announcement on January 16 that the Consumer Bureau would delay and “revisit” the payday loan rule finalized last fall that stops payday lenders from putting borrowers into an endless cycle of debt.
“Mulvaney has made it clear this week that he sides with the payday lenders, not with the people. One can only guess as to what horror will be unleashed from his office next.” said Adams.
Woodstock Institute is a nonprofit research and policy organization in the areas of equitable lending and investments; wealth creation and preservation; and safe and affordable financial products, services, and systems. Through applied research, policy development, coalition building, and technical assistance, Woodstock Institute works locally and nationally to create a financial system in which lower-wealth persons and communities of color can safely borrow, save, and build wealth so that they can achieve economic security and community prosperity. Woodstock Institute was founded in 1973 near Woodstock, Illinois.
Since 1969, the nonprofit National Consumer Law Center® (NCLC®) has used its expertise in consumer law and energy policy to work for consumer justice and economic security for low-income and other disadvantaged people, including older adults, in the United States. NCLC’s expertise includes policy analysis and advocacy; consumer law and energy publications; litigation; expert witness services, and training and advice for advocates. NCLC works with nonprofit and legal services organizations, private attorneys, policymakers, and federal and state government and courts across the nation to stop exploitative practices, help financially stressed families build and retain wealth, and advance economic fairness.