The CFPB Finds Payday and Deposit Advance Loans Can Trap Consumers with debt

The CFPB Finds Payday and Deposit Advance Loans Can Trap Consumers with debt

Sustained Utilization Of Loans Raises Consumer Protection Concerns

WASHINGTON, D.C. —Today, the customer Financial Protection Bureau (CFPB) issued a study on payday and deposit advance loans discovering that for all customers the products result in a cycle of indebtedness. Loose financing standards, high costs, and loan that is risky may play a role in the suffered use among these services and products which can trap borrowers with debt.

“This comprehensive research demonstrates that payday and deposit advance loans place many consumers susceptible to turning what exactly is said to be a short-term, crisis loan right into a long-lasting, costly debt obligations,” said CFPB Director Richard Cordray. “For too many customers, payday and deposit advance loans are debt traps that can cause them to be residing their everyday lives off money borrowed at huge interest rates.”

The report discovered that payday advances therefore the deposit advance loans provided by a tiny but number that is growing of along with other depository organizations are usually similar in framework, function, while the customer security concerns they raise.