SOURCE: The Center for Responsible Lending

Self-Help

September 18, 2014 14:12 ET

FTC, CFPB Take Action Against Payday Lenders

"These cases further emphasize the need for swift, decisive action against predatory payday lending."

WASHINGTON, DC--(Marketwired - September 18, 2014) - This week, the Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB) announced lawsuits against two payday lenders. Both payday lending networks are accused of illegally extracting interest payments and fees from consumer accounts without consumer knowledge or consent. Both agencies have taken legal action to halt the lenders' activities.

Gary Kalman, executive vice president of CRL, issued the following statement:

This week's announcements by the FTC and the CFPB are only further evidence that payday lenders engage in abusive, predatory, and even illegal activities that cost consumers -- in this case -- millions of dollars. These cases further emphasize the need for swift, decisive action against predatory payday lending.

The case against these payday lenders paints a picture of nefarious and criminal activity: the lenders are accused of depositing payday loans into consumer accounts without consumer knowledge or consent -- and the lenders then extracted interest payments and fees from said accounts, what the CFPB characterized as "biweekly cash grabs." When confronted, these companies offered falsified loan documents and even moved forward with debt collection when consumers tried to close their bank accounts. The FTC and CFPB actions will protect consumer bank accounts from these kinds of payday scams.

These cases confirm what's long been known about abusive payday lending: abusive and predatory payday lending practices can create financial devastation for many consumers. We hope that these lawsuits are a preamble to a strong, robust rule on predatory payday lending.

For more information about abusive payday loan practices or to interview an expert on this topic, please contact Catherine An at 202-349-1878 or catherine.an@responsiblelending.org

About the Center for Responsible Lending: The Center for Responsible Lending is a nonprofit, nonpartisan research and policy organization dedicated to protecting homeownership and family wealth by working to eliminate abusive financial practices. CRL is affiliated with Self-Help, one of the nation's largest community development financial institutions.

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