This story appeared in Bank Digest.
The Consumer Financial Protection Bureau has issued a proposed rule that would require lenders to take steps to make sure consumers have the ability to repay their loans and would also prohibit repeated debit attempts that rack up fees. The proposed rule would cover payday loans, auto title loans, deposit advance products, and certain high-cost installment and open-end loans.
The CFPB's press release said the proposal would apply to certain short-term and longer-term credit products that are aimed at financially vulnerable consumers and that the bureau has serious concerns that risky lender practices in the payday, auto title, and payday installment markets are pushing borrowers into debt traps. Comments on the proposed rule must be received by Sept. 14, 2016.
In prepared remarks at a Field Hearing on Small-Dollar Lending in Kansas City, Mo., CFPB Director Richard Cordray said the bureau's proposal "would apply mainstream lending principles to payday, auto title, and certain other high-cost installment and open-end loans.
In addition, the CFPB said it is launching an inquiry into other potentially high-risk loan products and practices that are not specifically covered by the proposed rule. The bureau has issued a Request for Information to solicit public comment on these issues. The bureau is seeking information about forms of non-covered loans such as high-cost, longer-duration installment loans and open-end lines of credit where the lender does not take a vehicle title as collateral or gain account access. It also seeks to learn more about practices that can affect borrowers' ability to pay back their debts. Comments on the Request for Information are due by Oct. 14, 2016.