The CFPB’s report on pay day loan re re payments: establishing the phase for restrictions on collection practices?

The CFPB’s report on pay day loan re re payments: establishing the phase for restrictions on collection practices?

The CFPB has released a report that is new “Online Payday Loan Payments,” summarizing information on returns of ACH payments created by bank clients to repay certain payday loans online. The latest report is the next report released by the CFPB associated with its cash advance rulemaking. (the reports that are previous granted in April 2013 and March 2014.) In prepared remarks from the report, CFPB Director Cordray guarantees to “consider this information further even as we continue steadily to prepare regulations that are new address problems with small-dollar financing.” The Bureau suggests so it still expects to issue its long-awaited proposed guideline later on this springtime.

The Bureau’s news release cites three major findings of this CFPB research. Based on the CFPB:

  1. 50 % of online borrowers are charged an average of $185 in bank charges.
  2. 1 / 3 of online borrowers hit with a bank penalty end up losing their account.
  3. Duplicated debit efforts typically don’t collect funds from the buyer.

The report includes a finding that the submission of multiple payment requests on the same day is a fairly common practice, with 18% of online payday payment requests occurring on the same day as another payment request while not referenced in the press release. (this is as a result of a variety of factual situations: a loan provider splitting the amount due into split re payment demands, re-presenting a formerly unsuccessful re re payment demand in addition as a frequently planned demand, publishing re payment needs for split loans on a single day or publishing a repayment ask for a formerly incurred cost for a passing fancy time as being a request for a scheduled payment.) The CFPB discovered that, when multiple repayment needs are submitted for a passing fancy time, all payment needs succeed 76% of that time period, all fail due to inadequate funds 21% of times, and another payment fails and a different one succeeds 3% of the time. Read more