WASHINGTON (11/7/13)--Consumers can now submit complaints about unexpected fees or interest, unauthorized or incorrect charges and other issues related to payday loans to the Consumer Financial Protection Bureau.
The CFPB said consumer payday loan complaints can also address:
- Payments that are not being credited to a taken out loan;
- Problems contacting the lender;
- Receiving a loan that was not applied for; or
- Not receiving money after a loan application is filed and accepted.
The complaints will be forwarded to the offending party in an attempt to resolve the issue. The complaints, CFPB said, will also help the bureau identify business practices that may pose risks to consumers. The CFPB will use the information provided in the complaints as it works to supervise companies, enforce federal consumer finance laws, and write rules and regulations.
The CFPB on Wednesday also reminded servicemembers and their families that the Military Lending Act prevents lenders from charging an annual percentage rate of 36% or higher on payday loans, auto title loans, tax-refund anticipation loans and other types of consumer loans.
New materials addressing payday loan issues have also been posted on the AskCFPB portion of the bureau's homepage.
A CFPB study found that most payday loans are for several hundred dollars and have finance charges of $15 or $20 for each $100 borrowed. A typical two-week term can equate to an annual percentage rate ranging from 391% to 521%, the CFPB noted.
The Credit Union National Association has commended the CFPB's efforts to ensure payday lenders will be subject to appropriate standards and accountability, but said these efforts must focus on unregulated abusers. CUNA has also called on the CFPB to avoid crafting one-size-fits-all regulations that would harm credit unions as it addresses payday loan issues.
Some credit unions offer members payday loan alternatives. Under federal rules, credit unions are generally limited to an annual percentage rate of no more than 18%, although there is some flexibility under the National Credit Union Administration's short-term, small amount loan program.
That program permits federal credit unions to charge an interest rate that is a maximum of 10 percentage points above the established usury ceiling at that time. Currently, this amounts to an interest rate ceiling of 28%.
Most credit unions offering payday loan alternatives also limit fees, provide member financial counseling and encourage members to open savings accounts.