National Payday Rule Could Save North Dakota Millions

For immediate release:

Contact: Scott Fry, 701-224-0588 ext 106

National Payday Rule Could Save North Dakota Millions

But Advocates Say Rule Still Needs Work, Strengthening  

June 2, 2016 – “Today, the Consumer Financial Protection Bureau unveiled a proposal for a new national rule on payday and car title lending that has the potential to save North Dakota residents millions if changes are made before the rule is finalized,” Lorraine Davis, Native American Development Center, Executive Director said.

“The Consumer Financial Protection Bureau’s proposed rule on payday and car title lending is a good beginning, but there is still much work to be done to ensure this rule truly protects consumers from the legalized predatory lender preying on our communities,” Waylon Hedegaard, of the ND AFL-CIO. “Fortunately, this is just the opening offer. Our community will be working hard over the next few months to help the CFPB understand the importance of closing loopholes in what is otherwise a well-thought out proposal. In doing so, they can shut the debt trap once and for all.”

Payday and car title loans with interest rates that average 487 percent drain over $6 million in fees annually from the pockets of North Dakotans who can least afford it, according to a report by the Center for Responsible Lending.

Advertising as a way to meet short-term financial needs, the actual business model of these loans is designed to trap borrowers in debt for years on end, extracting fees that quickly add up to far more than the amount borrowed.

The North Dakota Economic Security and Prosperity Alliance (NDESPA), of which the ND AFL-CIO and the Native American Development Center are partners, and advocates around the country have been pushing for a rule that simply requires these lenders to do what any responsible lender does already – to determine whether a borrower is likely to be able to pay back the loan, without defaulting on basic necessities like rent and groceries, and without immediately taking out another loan.

While the CFPB rule does create such an affordability standard, the rule also allows for too many exemptions and leaves open too many loopholes for that standard to meaningfully reduce the harm of predatory lending.

The rule will be finalized in approximately 90 days. In the meantime, consumers are encouraged to comment and suggest changes to the final rule that will close loopholes and remove exemptions. Comments can be offered at stoppaydaypredators.org/ndespa.

The press release, press advisory, and report can be found at the following links:

Press Release; Press Advisory; Payday Lending Report

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