Citizen Action Illinois and Allies Comment to CFPB Supporting Protections Against Predatory Paycheck Advance Products
The undersigned consumer, labor, civil rights, legal services and community organizations write in strong support of the Consumer Financial Protection Bureau’s proposed interpretive rule on emerging paycheck advance products, sometimes marketed as “earned wage” products.
Workers should not have to pay in order to be paid, particularly those only earning low wages. We support the CFPB’s efforts to guard against predatory lending in the workplace and to prevent evasion of consumer protection laws by new forms of payday loans.
For the last 25 years, Citizen Action/Illinois and our allies have fought to protect workers from the exorbitant fees charged for payday loans and other short-term, high-interest products. Working with other advocates, we have won a series of strong consumer protections here in Illinois. We have also consistently supported the CFPB efforts at the federal level to provide such protections across the country. And we have opposed industry-backed efforts to evade those reforms through state legislative schemes.
Lenders should not be allowed to disguise 300% APR loans in so-called “tips,” expedited fees, or other junk fees, or by claiming that their loans are not loans. Advances of wages or other income, repaid later, are loans regardless of how they are styled. All payday advances need clear cost and fee disclosures. Low-income workers are particularly susceptible to predatory practices as they often have less access to traditional banking services and products. Predatory lenders target such workers and their excessive fees frequently entrap borrowers in endless cycles of increasing debt and contribute to growing wealth inequality.
Thank you for proposing this important rule.
Sincerely,
Citizen Action/Illinois
Communication Workers of America, District 4
Housing Action Illinois
Illinois Federation of Teachers
Illinois PIRG
Illinois State Association of Letter Carriers
Legal Action Chicago
Main Street Alliance
National Association of Social Workers, Illinois Chapter
Shriver Center on Poverty Law