SUBSCRIBE TO OUR FREE NEWSLETTER
Daily news & progressive opinion—funded by the people, not the corporations—delivered straight to your inbox.
5
#000000
#FFFFFF
5
#000000
#FFFFFF
payday lending
Dismantling the Consumer Financial Protection Bureau Hurts US Consumers
Congress can’t allow the White House to eliminate an agency that’s helped millions of Americans, with billions of dollars returned to them by scams, fraudsters, and megabanks that prey on low-income citizens.
Feb 20, 2026
Over the past year, the Trump administration has sought to gut the Consumer Financial Protection Bureau through cuts and layoffs, and by hamstringing its enforcement powers, claiming the agency is hurting large banks through overregulation. Acting CFPB Director Russ Vought has sought to reduce the agency's staff by 90% and to freeze spending since February.
A group of 21 states, plus the District of Columbia, sued the Trump administration in December to stop it from defunding the CFPB. The administration responded by telling the court that the government is legally barred from seeking new funding from the Federal Reserve, the bureau’s primary source of money, alluding to the fact that the agency will eventually go broke later this year. The next step in the case will be the DC Court of Appeals to hear arguments in late February.
The CFPB's enforcement actions, like the 22 pending cases against banks, highlight its vital role in safeguarding consumers from unfair practices, which the current threats jeopardize.
So, what does this mean for the country? The CFPB's weakening could leave consumers vulnerable to predatory practices, unfair fees, and fraud, risking their financial stability.
The Biden administration's pressure on banks and financial institutions on the issue led them to agree to refund more than $240 million to customers, a win secured by actual, formal regulation. Trump and Vought have rolled that back, too.
The CFPB’s Small Dollar Rule was created to curb abusive payday lending practices, especially repeated debit attempts that drain bank accounts and trigger cascading overdraft and Non-Sufficient Funds (NSF) fees. That goal is sound and worthy. The problem is not the rule’s intent, but how it operates alongside bank fee structures and in a financial marketplace devoid of smart, progressive-minded credit options.
The small dollar rule makes automatic repayments—which help keep the cost of borrowing to the bare minimum—incredibly tricky to execute. After two consecutive failed payment attempts, covered lenders generally cannot try again unless the borrower specifically authorizes another attempt, which can leave payments stalled when ordinary life disruptions intervene. Regulators have warned that charging multiple NSF fees tied to re-presented transactions can harm consumers. This is true not just because a single missed payment can still trigger NSF fee collection and financial harm, undermining a rule meant to protect borrowers acting in good faith. It’s also because lenders are now further limiting credit to the most high-risk borrowers, including gig economy workers, who are also those most in need of emergency credit, forcing them to borrow via ultra-expensive bank and credit union overdrafts and NSFs. And when payments are not made, inevitably, borrowers’ personal credit ratings take a hit. Of course, this affects poor people and those with bad credit harder than anyone else.
Trump and Vought's shuttering of the CFPB without fixing this situation, including by pushing banks hard to provide credit to consumers at lower cost and even by standing up a viable alternative to current credit options through something like Postal Banking, would make the problem of high-interest debt worse for Americans. Moreover, because Trump and Vought refuse to act against extortionate overdraft and NSF fees, as the Biden administration did, they’re exposing consumers to high-cost debt, where they effectively borrow from the bank, too. The Biden administration's pressure on banks and financial institutions on the issue led them to agree to refund more than $240 million to customers, a win secured by actual, formal regulation. Trump and Vought have rolled that back, too.
The CFPB has largely helped people when they have problems with a financial institution, product, or transaction by allowing customers to submit complaints, which the agency then works on their behalf. Since its inception, 98% of the 9 million total complaints have received “timely responses” from the institutions or companies to which customers reported them to the CFPB. Of all the complaints, almost 400,000 were submitted by US military members, and nearly 200,000 were submitted by seniors.
The results have been staggering. CFPB data as of December, 2024 shows a whopping $21 billion has been returned to more than 205 million Americans who were financially harmed by institutions. In addition, over $5 billion in civil penalties have been imposed on guilty banks and individuals.
Congress can’t allow the White House to eliminate an agency that’s helped millions of Americans, with billions of dollars returned to them by scams, fraudsters, and megabanks that prey on low-income citizens. And if the Trump administration is determined to do so, it’s time for congressional Democrats to focus on developing credit alternatives that can allow consumers to escape some of the financial madness.
Keep ReadingShow Less
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."
Keep ReadingShow Less
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.
Keep ReadingShow Less
'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."
Keep ReadingShow Less
Private Equity Is Turbocharging Damage of Payday Lending Industry
Payday lending is inherently predatory and private equity is turbocharging its abuses, enlarging the burden it places on low-income individuals and borrowers of color.
Jan 14, 2023
Predatory lending is an easily overlooked business that has damaged communities of color and poorer people for decades. It traps borrowers in never-ending cycles of debt with high-interest loans on coercive terms. But when Wall Street private equity gets in on the predatory lending industry, it amplifies the magnitude of financial exploitation.
Private equity, put simply, is supercharging the payday and predatory lending industries as it does in any other industry. Private equity has the money — big money — to buy control of lenders and reach more people with greater levels of abuse than they could before. That means more of the infamous debt traps that characterize predatory lending.
Over the last decade, private equity brought additional financial resources, and in some cases, a new level of sophistication, to the subprime lenders they acquired, often enabling the payday and installment lenders they acquire to buy competitors. Only a few months ago, private equity firm Park Cities Asset Management took control of Elevate Credit.
Elevate is a notorious predatory lender. “Elevate raked in over a half billion dollars in 2013 alone. And they showered over $210,000 of that cash on federal lobbyists to attempt to hinder regulations of the payday loan industry,” according to the website Payday Lending Facts. In August 2022, a federal judge in Virginia gave final approval to a settlement involving Elevate Credit, where the company agreed to pay $33 million to resolve litigation related to a predecessor company’s dealing with various tribes.
Private equity firms own more than 5,000 payday lending stores in America and provide capital for several startups’ online payday loans, a 2017 report from Americans for Financial Reform showed. The predatory lender, Mariner Finance, had only 57 branches in seven states in 2013. It now has roughly 480 branches in 22 states, nearly a decade after the Wall Street private equity firm Warburg Pincus – headed by former U.S. Treasury Secretary Tim Geithner – acquired it. In addition to that financial power, private equity has access to bond markets to fuel its expansion.
Private equity firms Diamond Castle Holdings and Golden Gate Capital merged Checksmart Financial and California Check Cashing Stores into Community Choice Financial in 2011, and over the years, acquired or rolled up other companies like CURO and Direct Financial Solutions to build what is now a network of nearly 500 locations nationwide.
Predatory lenders owned by private equity firms create incentives for their employees to mislead consumers on loan requirements. Private equity firms often pressure employees at predatory lenders they own to sell what are known as “add-on products.” For example, a lender may insert credit insurance on auto or personal loans or try to add high service fees.
"Mariner’s policies and business practices are set and directed by headquarters, leaving minimal discretion to branch managers and loan officers to extend loans that work best for consumers according to their needs and financial condition,” Pennsylvania Attorney General Josh Shapiro wrote in a 2022 lawsuit against Mariner Finance. “The primary directive is to sell.”
For example, finance companies like predatory lenders often charge consumers all payments for any add-on products as a lump sum at origination. Essentially, even if a product expires years earlier during the loan term, consumers are still required to make payments on these add-ons. They often use illegal debt collection tactics to create a false sense of urgency to lure overdue borrowers into payday debt traps. Private equity-owned payday lender, ACE Cash Express, was one of the first companies in 2014 to be fined by CFPB for that business practice.
Mariner Finance, which specializes in personal loans of $1,000 to $25,000, with interest rates of up to 36 percent that can be inflated by additional fees. Fortress Investment Group owns similar installment lender OneMain Financial, while the Blackstone Group ― founded by billionaire Stephen Schwarzman ― controls Lendmark Financial Services, which in general, charge up to 30 percent in interest rates for its loans.
Payday loan lenders commonly charge fees of $15 for every $100 borrowed, which equals a 400 percent interest rate for a two-week loan. They prey on low-income and minority borrowers with arbitrary fees that are often more than what is permitted by their local states. “A high rate isn’t automatically a form of predatory lending—it may be higher because of your creditworthiness—but an unusually high one is definitely a red flag,” attorney Andrew Pizor with the National Consumer Law Center pointed out.
Predatory lenders target Black borrowers specifically. In Houston, while African-Americans make up only 15.6 percent of auto title lending customers and 23 percent of payday lending customers, 34.8 percent of the photographs on these lenders’ websites depict African-Americans, per a 2021 study by Jim Hawkins and Tiffany C. Penner of the University of Texas. Black Americans make up roughly 13 percent of the total American population, but end up with 23 percent of all storefront payday loans,” Pew Trusts reported.
Payday lending is inherently predatory and private equity is turbocharging its abuses, enlarging the burden it places on low-income individuals and borrowers of color. About 18 states across the country have a 36 percent rate cap or below to fight this problem, but many predatory lenders operate nationally. Congress must step in with a usury cap that applies nationwide. Stronger protections are the only way to stop the damage caused by predatory lenders, who now increasingly have the financial muscle of private equity behind them.
Keep ReadingShow Less
Payday Loan Sharks Have Good Friend in Government: Democratic Party Chair
In backing bill to delay or block payday lender regulations, DNC chair Debbie Wasserman Shultz is aligning herself with the Republican Party
Mar 01, 2016
Sketchy payday loan sharks, whose short-term, high-interest loans trap millions of Americans in a cycle of debt, have a new ally on Capitol Hill--Democratic National Committee chair Debbie Wasserman Schultz is reportedly pushing a bill that would "gut" forthcoming industry regulations.
According to a memo seen by the Huffington Post, Rep. Wasserman Schultz (D-Fla.) is co-sponsoring legislation (pdf) to delay new rules from the Consumer Financial Protection Bureau (CFPB), meant to crack down on abusive payday lending that profits off deceptive terms, automatic "rollovers," staggering fees, and interest rates averaging over 300 percent annual percentage rate (APR).
The so-called "Consumer Protection and Choice Act" would delay those rules for two years and "permanently block them in any state that enacts the sort of ineffectual, industry-crafted regulatory sham Florida adopted in 2001," ThinkProgress reports.
In December, 265 civil rights, labor, and consumer advocacy groups signed a letter opposing the legislation, which they decried as "an attempt to codify industry-backed practices that do little to protect consumers."
In backing the bill, the HuffPo notes, Wasserman Shultz is aligning herself with the Republican Party, which has "assailed the agency from every conceivable angle--going after its budget, attempting to tie its hands with new layers of red tape, fomenting conspiracy theories about rogue regulators illegally shutting down businesses and launching direct attacks on payday loan rules themselves."
She is also going against public opinion. Last year, a poll by Americans for Financial Reform and the Center for Responsible Lending showed that nearly two in three voters have a negative view of payday lenders. The same survey showed respondents viewed payday lenders as predators rather than resources by a margin of more than 3:1.
The move also puts Wasserman Schultz--who has come under fire for the DNC's perceived pro-Hillary Clinton bias--at odds with U.S. Sen. Elizabeth Warren (D-Mass.), who conceived of and established the CFPB and who has denounced payday lending schemes for targeting the poor.
As Eric Levitz of New York Magazine's Daily Intelligencer said Tuesday--his tongue firmly in his cheek: "With such brave legislators leading the Democratic Party, it's difficult to understand how Bernie Sanders can get so mad at the 'Establishment'."
Keep ReadingShow Less
See More
Most Popular
To inform. To inspire. To ignite change for the common good.
News & Opinion
Trending
Common Dreams, Inc. Founded 1997. Registered 501(c3) Non-Profit
Privacy Policy