Nessel joins coalition to protect consumers from payday lender abuse
Attorney General Dana Nessel has asked the Federal Consumer Financial Protection Bureau not to further delay enforcing a rule that would protect consumers from payday lending abuse.
Nessel announced Tuesday that she has joined a coalition of attorneys general in 23 states and the District of Columbia in issuing a letter urging the bureau not to change an August compliance deadline that will put an end to lenders practicing “abusive tactics” when seeking repayment.
The Consumer Financial Protection Bureau announced a new rule in 2017 designed to help ensure that borrowers would be able to repay loans. The rule went into effect in early 2018, but a deadline for compliance was delayed until Aug. 19 to give lenders time to develop policies and systems, Nessel’s office said.
The bureau now is proposing a further delay until Nov. 19, 2020. It also is also reviewing another rule that would replace the current one.
“My office has a responsibility to act when Michiganders are at risk of deceitful and abusive business practices,” Nessel said in a statement Tuesday. “By delaying these protections, more consumers risk becoming victims of predatory and misleading tactics by payday lenders, and that’s more than enough reason for Michigan to step in and speak out.”
The coalition cites the bureau's own findings, which Nessel said showed that 90 percent of loan fees come from consumers who borrow seven or more times in a 12-month period. About 20 percent of loans that are rolled over or followed closely by another loan end in default. About 33 percent of single-payment auto title loans that roll over end in default.
In addition to Nessel, other attorneys general involved in the effort include those from California, Colorado, Connecticut, District of Columbia, Delaware, Hawaii, Iowa, Illinois, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New Mexico, New York, Nevada, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington and Wisconsin.