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CFPB to Begin Payday Lending Scrutiny

Posted on 1/20/2012

The Consumer Financial Protection Bureau recognizes the need for short-term payday loans, but it's important that the agency ensure such products help consumers, not harm them, CFPB Director Richard Cordray said yesterday at the bureau's first field hearing on payday lending in Birmingham, Ala.

Payday lending "is an important new area for us, and the purpose of this field hearing -- and the purpose of all our research and analysis and outreach on these issues -- is to help us figure out how to determine the right approach to protect consumers and ensure that they have access to a small loan market that is fair, transparent and competitive," Cordray said.

The CFPB will systematically gather data to get a complete picture of the payday market and its impact on consumers, he said. But Cordray emphasized that the bureau already knows about some payday lenders who are engaged in illegal practices, including unauthorized debits on a person's checking account and aggressive debt collection tactics.

"These illegal practices are outrageous," he said. "We want to root them out where we find them, and we want to work with responsible parties in the industry to prevent them from expanding."

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