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payday lending
Trump CFPB Accused of Siding With 'Bottom-Feeder' Payday Lenders Over Struggling Workers
"A policy of 'hear no evil, see no evil, punish no evil' is a sure-fire way to promote lawless behavior," said one advocate.
Mar 31, 2025
"Regulatory relief for small loan providers" was how the Trump administration described its decision not to prioritize enforcing a rule meant to protect people who are financially struggling from predatory payday lenders—but one consumer protection advocate said Monday that the announcement signals a policy that that is certain to "promote lawless behavior" by corporations.
The Consumer Financial Protection Bureau (CFPB), whose actions aimed at protecting working families and consumers from big banks and other corporations have been attacked for years by Republicans, announced last Friday that under the Trump administration, it will not enforce a rule meant to safeguard people from fees they accrue when payday lenders repeatedly attempt to debit their accounts.
Part of the 2017 payday loan rule, the bounced payment rule was set to go into effect on Sunday—barring payday lenders, "buy now, pay later" (BNPL) lending services, and other predatory lenders from continuing to make attempts to debit bank accounts after a loan customer's payment bounced twice. The lenders would be required under the rule to gain the customer's permission after two failed attempts to retrieve the payment.
When the CFPB announced last year that the rule was set to go into effect on March 30, 2025, it noted that it had "found one instance of a lender making 11 failed withdrawal attempts in one day"—subjecting the consumer to "a pile of junk fees" including nonsufficient (NSF) funds fees, overdraft charges, and others.
Adam Rust, director of financial services for the Consumer Federation of America, said Monday that the CFPB had "sided with bottom-feeder payday lenders at the expense of vulnerable borrowers struggling to make ends meet."
"The CFPB is designed to be a law enforcement agency," said Rust. "A policy of 'hear no evil, see no evil, punish no evil' is a surefire way to promote lawless behavior."
The agency said it would also not enforce rules applying to vehicle title loans, which can have high interest rates and are banned or limited in at least 30 states.
Lauren Saunders, associate director of the National Consumer Law Center, noted that former CFPB Director Kathy Kraninger, the U.S. Supreme Court, and the 5th Circuit previously upheld "the bare minimum protection against multiple NSF fees on unaffordable loans."
"It's outrageous that the CFPB will not enforce the law that prohibits payday lenders and other 200% APR lenders from continually debiting people's accounts, subjecting them to multiple NSF and overdraft fees," said Saunders. "Buy now, pay later lenders that make unaffordable loans should not be allowed to keep hitting your bank account after payments bounce twice. It's unconscionable to have greater protections for payday lenders than for people struggling to afford basic necessities."
A Pew survey in 2013 revealed that 1-in-4 payday loan customers faced an overdraft fee due to the lender's attempt to collect a payment from an account with insufficient funds.
The CFPB said it was contemplating "issuing a notice of proposed rulemaking to narrow the scope of the rule."
"By allowing payday lenders to repeatedly debit borrowers' empty bank accounts," Nadine Chabrier of the Center for Responsible Lending told Consumer Affairs, "the CFPB's political leadership is giving a free pass for payday lenders to kick people when they're down."
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CFPB Aims to Protect Workers From Paycheck Advance Fees
"The CFPB's actions will help workers know what they are getting with these products and prevent race-to-the-bottom business practices," said the director of the bureau.
Jul 18, 2024
With inflation rising in recent years, driven by corporate greed according to numerous analyses, the number of people in the U.S. who have relied on paycheck advance products has skyrocketed—but a rule introduced Thursday by the Consumer Financial Protection Bureau is aimed at ensuring that lenders who provide these products are transparent with financially struggling workers about the fees they can incur.
The CFPB proposed a rule clarifying that paycheck advances, sometimes marketed as "earned wage" products, are consumer loans and are therefore subject to the Truth in Lending Act.
The federal law requires lenders to disclose all fees, interest, and total costs consumers will incur before they use the product.
According to a study released by the CFPB as it announced the new proposed rule, the number of paycheck advance transactions processed by employer-partnered firms ballooned by 90% from 2021-22. More than 7 million workers used paycheck advances to access $22 million over that time period in order to pay for their housing, utilities, and other essentials.
The study notes that "the mismatch between when a family receives income and when a family must make payments for expenses" is a major driver of demand for consumer credit and other products like paycheck advances.
"To reduce their costs, employers have a strong incentive to delay the payment of compensation to workers, which drives demand for short-term credit," reads the analysis.
As such, said Rohit Chopra, director of the CFPB, paycheck advances "are often marketed to and designed for employers, rather than employees."
"The CFPB's interpretive rule will level the playing field and promote competition among short-term small-dollar lenders."
"The CFPB's actions will help workers know what they are getting with these products and prevent race-to-the-bottom business practices," he said.
Th bureau's report focuses on employer-sponsored paycheck advances, which have been increasingly used over and over by the same workers. Employees took out an average of 27 paycheck advance loans per year, according to the CFPB, with the average transaction totaling $106.
"The share of workers in our sample using the product at least once a month increased from 41% in 2021 to nearly 50% in 2022," wrote the CFPB.
The bureau noted that while employers sometimes make paycheck advances fee-free for their employees, workers usually pay fees themselves, including expedited service fees and "tips" that the online services request when completing the transaction.
In the sample the CFPB reviewed, employers paid for less than 5% of the fees incurred by workers
"Across our sample of surveyed companies, in 2021 and 2022, roughly 90% of workers paid at least one earned wage product-related fee," said the bureau. "Among the companies in our sample that collect fees, the average cost per transaction ranged from $0.61 to $4.70. When workers paid a fee, the average size was approximately $3.18. Workers paid an average of $68.88 per year in fees."
Some services provide subscriptions for workers who used paycheck advances regularly; those who utilize them can pay as much as $14.99 per month in subscription fees, according to the CFPB.
"In recent years, workers have seen big increases in wages, but junk fees and high rates on financial products not only chip away at these gains—they take advantage of workers," acting Labor Secretary Julie Su said in a statement.
Adam Rust, director of financial services for the Consumer Federation of America, said the proposed rule shows that "an advance on wages is still a loan that has to be repaid, and no amount of hair-splitting can change it."
"Workers have always relied on wages to repay advances from lenders," said Rust. "Policymakers should be skeptical whenever lenders insist on regulatory exemptions from rules that apply to their competitors. The CFPB's interpretive rule will level the playing field and promote competition among short-term small-dollar lenders."
The CFPB is among several federal agencies that right-wing operatives, many of whom worked in the Trump administration, have pledged to abolish under the policy agenda Project 2025.
Under the Biden administration, in addition to taking aim at paycheck advances, the CFPB has proposed a rule to cap credit card late fees at $8, a move that would save Americans $10 billion per year; prevented discrimination by small business lenders; and fined Wells Fargo $3.7 billion for illegal activity.
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'Shameless Corporate Shill' Mick Mulvaney Tells SCOTUS to Destroy Agency Trump Let Him Lead
"It's time to stop pretending this case is anything but a brazen power grab by corporate criminals and their loyal bagmen," one researcher said of a payday lender trade association's attack on the CFPB's funding structure.
Jul 11, 2023
Critics of Mick Mulvaney are calling out the former Republican congressman and Trump administration official this week for submitting an amicus brief to the U.S. Supreme Court urging the justices to gut a federal agency he once directed.
The case Mulvaney weighed in on Monday, Community Financial Services Association of America (CFSA) v. Consumer Financial Protection Bureau (CFPB), involves the payday lender trade association challenging the agency's funding structure.
After then-President Donald Trump appointed him as acting director of the CFPB in November 2017, Mulvaney spent the next year trying to sabotage it. He was fiercely criticized, with U.S. Sen. Elizabeth Warren (D-Mass.), who played a key role in establishing the bureau, saying in 2018 that "this is what happens when you put someone in charge of an agency they think shouldn't exist."
Revolving Door Project senior researcher Vishal Shankar said in a statement Tuesday that "by authoring an amicus brief supporting his former campaign donor, Mick Mulvaney has again proven himself to be a shameless corporate shill."
"As a congressman and CFPB director, Mulvaney repeatedly tried to kill the CFPB after raking in whopping sums from big banks and predatory lenders who wanted the bureau dead," Shankar noted. "Now, with the help of his disgraced former lieutenant, Mulvaney wants SCOTUS to finish the job. It's time to stop pretending this case is anything but a brazen power grab by corporate criminals and their loyal bagmen."
"As a congressman and CFPB director, Mulvaney repeatedly tried to kill the CFPB after raking in whopping sums from big banks and predatory lenders who wanted the bureau dead."
Mulvaney's brief—which names Eric Blankenstein, a Trump appointee who resigned from the CFPB in 2019 over racist blog posts, as one of his two attorneys—claims that "how the CFPB is funded is contrary to the separation of powers that undergirds our entire system of constitutional government."
"It gives a single director control over hundreds of federal workers and hundreds of millions of dollars," the document states. "It deprives Congress of any meaningful oversight of one of the most impactful federal financial services regulators. By extension, it denies the American citizenry the opportunity to effect change, even if a majority of them want to do so."
Accountable.US spokesperson Jeremy Funk warned in response to the filing on Monday that "if the Supreme Court gives those with an ax to grind against the CFPB what they want, it will likely lead to the worst rollback of consumer protections in U.S. history."
"Financial industry stooge Mick Mulvaney and hate crime denier Eric Blankenstein may be the least credible former Trump officials to weigh in on whether the CFPB should keep protecting consumers from industry abuse and discrimination," Funk declared.
"If the idea is to make predatory lenders who filed this baseless lawsuit look good in comparison, these would be the right-wing trolls to do it," he continued. "It says it all about the merits of this case that it's being pushed by a coalition of predatory lenders, industry money chasers, an author of racist internet ravings, and a seminal architect of the insurrection."
Among the other backers of the CFSA's argument is former Trump attorney John Eastman, infamous for his contributions to the former president's "Big Lie" about the 2020 election, which led to the January 6, 2021 attack on the U.S. Capitol.
Along with also taking aim at Mulvaney—who was hired as a CBS contributor last year—experts at the Revolving Door Project have blasted Eastman's brief.
"If the CFPB weren't so popular, corrupt bankers and their proxy members of Congress would have succeeded in killing it legislatively," Jeff Hauser, the project's executive director, said Tuesday. "Since the CFPB is too popular to take on legislatively, sellout has-beens like Mulvaney and Blankenstein are shifting to Plan B, seeking action by a judiciary which is as corrupted by big money as it is blinded by right-wing zealotry."
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