CFPB Reality Check: Fact Checking the CFSA’s Lame Anti-CFPB Website


The Community Financial Services Association of America (CFSA) launched an error-riddled website (CFPB Reality Check) in an effort to attack the Consumer Financial Protection Bureau. The result was a horrible mix of spin, misstatements, and outright falsehoods just dying for its own reality check.

RHETORIC: The CFPB’s Proposed Rule Will End Payday Lending

  • “Consumers will lose an effective, popular option for managing financial challenges. In the 35 states with payday lending, consumers will be forced to turn to more expensive alternatives or have no options for credit in case of an emergency.” [CFPB Reality Check Website]

REALITY: The Proposed Rule Is Comprised Of Common Sense Regulations To Ensure A Borrowers Ability To Repay So They Do Not Get Caught In A Cycle Of Debt; It’s Not A Ban On Payday Lending 

  • The CFPB’s Proposed Rule Would End Debt Traps By Requiring Lenders To Take Steps To Ensure Customers Can Repay Their Loans. “The CFPB wrote in a blog post, “Today the Consumer Financial Protection Bureau (CFPB) announced it is considering proposing rules that would end payday debt traps by requiring lenders to take steps to make sure consumers can repay their loans. The proposals under consideration would also restrict lenders from attempting to collect payment from consumers’ bank accounts in ways that tend to rack up excessive fees. The strong consumer protections being considered would apply to payday loans, vehicle title loans, deposit advance products, and certain high-cost installment loans and open-end loans. “Today we are taking an important step toward ending the debt traps that plague millions of consumers across the country,” said CFPB Director Richard Cordray. “Too many short-term and longer-term loans are made based on a lender’s ability to collect and not on a borrower’s ability to repay. The proposals we are considering would require lenders to take steps to make sure consumers can pay back their loans. These common sense protections are aimed at ensuring that consumers have access to credit that helps, not harms them.” [, 3/26/15]
  • Yahoo Finance: “In Truth, The CFPB’s Rules Wouldn’t Eliminate Payday Loans—They Would Just Make Them Less Harmful.” “In truth, the CFPB’s rules wouldn’t eliminate payday loans — they would just make them less harmful.” [Yahoo Finance, 3/26/15]

REALITY: 81% Of Payday Loan Borrowers Said They Would Simply Cut Back Expenses If Payday Loans Weren’t An Option

  • Pew Study: 81% Of Payday Borrowers Say They Would Cut Back On Expenses If Payday Loans Were Unavailable. “Even though most borrowers use payday loans for recurring expenses, rather than for emergencies, survey respondents indicated they would use a variety of options to deal with those needs if payday loans were no longer available. In general, borrowers are more likely to choose options—such as adjusting their budgets, delaying bills, selling or pawning personal items, or borrowing from family or friends—that do not connect them to a formal institution. Eighty-one percent of payday borrowers say they would cut back on expenses if payday loans were unavailable.” [Pew Charitable Trusts, 7/2012]

RHETORIC: Payday Lending Are Affordable Alternative to Credit Card

  • “American’s credit card debt is skyrocketing, with the average balance at over $7200. Fees from this type of debt make huge sums of money for banks, particularly as more American’s are forced into high interest rate cards. Payday loans provide competitive pressure to keep fees lower and provide an alternative to maxing out high-interest cards. Without options, consumers will once again have fewer and less desirable options.” [CFPB Reality Check Website]

REALITY: The Average APR Of A Credit Card Nationwide Is Approximately 15%; Payday Loans Average APR Is 339%

RHETORIC: The States Have Done a Good Job Regulating Payday Loans, The Feds Shouldn’t Undermine That Work

  • “Thirty-five states have examined the need for short-term credit, debated and ultimately developed laws and regulations that balance consumer protection and equitable access to credit. Under the CFPB’s proposal, these state laws will be undermined and stripped away.  The consumer will be handed a maze of conflicting and confusing regulations that serves no one well.  States will lose the ability to protect their residents because their existing, effective payday lending laws will be preempted and consumers will return to the days where they had no choice but to default, bounce a check or turn to truly horrific choices. The CFPB’s top down approach will eliminate customer choice and undermine the progress made for citizens when their state lawmakers made these options available for their consumers.” [CFPB Reality Check]

REALITY: Payday Lenders Have Consistently Undermined State Payday Lending Laws By Exploiting Loopholes

  • Cincinnati Enquirer: “Lenders Can Adapt Their Products With Surprising Alacrity” And When Payday Loans Are Regulated In A State They Turn To Different Kinds Of Loans Such As Installment Loans That Are Longer Term But With Triple Digit APR’s. “Last year, Delaware passed a major payday lending reform bill. For consumer advocates, it was the culmination of over a decade of effort and a badly needed measure to protect vulnerable borrowers. The bill limited the number of payday loans borrowers can take out each year to five. “It was probably the best we could get here,” said Rashmi Rangan, executive director of the nonprofit Delaware Community Reinvestment Action Council. But Cash America declared in its annual statement this year that the bill “only affects the company’s short-term loan product in Delaware (and does not affect its installment loan product in that state).” The company currently offers a seven-month installment loan there at an annual rate of 398 percent. Lenders can adapt their products with surprising alacrity. In Texas, where regulation is lax, lenders make more than eight times as many payday loans as installment loans, according to the most recent state data. Contrast that with Illinois, where the legislature passed a bill in 2005 that imposed a number of restraints on payday loans. By 2012, triple-digit-rate installment loans in the state outnumbered payday loans almost three to one. In New Mexico, a 2007 law triggered the same rapid shift. QC Holdings’ payday loan stores dot that state, but just a year after the law, the president of the company told analysts that installment loans had “taken the place of payday loans” there. [Cincinnati Enquirer, 8/11/13]
  • In Ohio, Lenders Ignored Rate Caps And Continued To Issue Payday Loans Under Mortgage Or Other Lending Licenses That Were Never Created For That Purpose. “By 2008, it became clear, even to Ohio’s legislators, that payday loans, while lucrative for lenders, were toxic for borrowers. So a bipartisan group of legislators revoked the exemption and created the Short Term Lending Act, which outlawed two-week loans and capped interest rates at 28 percent. Except, as the Supreme Court pointed out Wednesday, legislators bungled the job. As early as 2009, it became clear that payday lenders simply ignored the new lending license. Instead, they continued to issue payday loans under mortgage or other lending licenses that were never created for that purpose. But legislative efforts to address the loophole payday lenders used to issue these payday clones repeatedly fizzled.” [Cleveland Plain Dealer, 6/13/14]
  • Delaware’s Payday Loan Law That Limited The Number Of Loans Borrowers Could Take Out In A Year Was Bypassed By Lenders Who Said It Only Affected Their Short-Term Loan Product And Not Installment Loans Which Also Charge 398% APR. “Last year, Delaware passed a major payday lending reform bill. For consumer advocates, it was the culmination of over a decade of effort and a badly needed measure to protect vulnerable borrowers. The bill limited the number of payday loans borrowers can take out each year to five. “It was probably the best we could get here,” said Rashmi Rangan, executive director of the nonprofit Delaware Community Reinvestment Action Council. But Cash America declared in its annual statement this year that the bill “only affects the company’s short-term loan product in Delaware (and does not affect its installment loan product in that state).” The company currently offers a seven-month installment loan there at an annual rate of 398 percent. Lenders can adapt their products with surprising alacrity.” [Cincinnati Enquirer, 8/11/13]
  • After Payday Loan APR Cap Was Enacted In New Mexico, Payday Lenders Changed The Loan Descriptions From “Payday” To “Installment”, “Title”, Or “Signature” To Get Around The Law. “In 2007, New Mexico enacted a law capping interest rates on “payday” loans at 400 percent. Many of the lenders quickly changed the loan descriptions from “payday” to “installment,” “title” or “signature” to get around the law.” [Albuquerque Journal, 11/28/14]
  • Payday Lenders Circumvented Maryland’s Payday Loan Rate Cap By Charging A Broker Fee That Along With Interest Would Represent An APR Of 640% Or Higher. “Since the mid-1970s, Maryland has had an interest rate cap of 33 percent on consumer loans of $6,000 or less. For the most part, that’s kept payday lenders out of the state. And it’s earned Maryland a reputation of being tough on lenders that try to exploit vulnerable residents. So regulators were concerned when they started getting complaints about a year and a half ago that payday lenders, mostly over the Internet, had developed a new business model that attempted to circumvent Maryland’s rate cap. A payday lender would charge the most it could under Maryland law for the short-term loan. But to get the loan, consumers had to go through a broker that charged at least $20 per $100 borrowed. That fee wasn’t included in the interest rate on the loan, according to the Center for Responsible Lending. But if you factored in all the fees, Marylanders were paying a rate of 640 percent or higher, state regulators say.” [Baltimore Sun, 4/13/10]
  • Payday Lenders In Florida Claimed They Were Credit Service Organizations Not Subject To Florida’s Payday Lending Law. “Last year, the state Office of Financial Regulation began looking into the practices of EZMoney and Cash America, two Texas-based chains that claim to be “credit-service organizations” not subject to Florida’s payday-loan law. “We’re in the early, fact-finding stages with both of them,” said Ramsden, the agency administrator. “We are aware they’re citing Florida’s credit-service organization law, which was intended to help consumer-credit agencies. In this situation, however, we have payday lenders using it to broker payday loans.” [Orlando Sentinel, 4/1/07]
  • Payday Lenders In South Carolina Bypassed State Laws That Limited The Number Of Payday Loans A Person Can Take Out And Loans Amounts To $550 By Operating In A Category Called “Supervised” Lending Which Are Not Subject To Regulations.  “State lawmakers passed restrictions last May designed to protect borrowers from getting in over their heads with short-term, high-interest loans. The law limited the number of loans to one at a time and capped the amount at $550. Lenders also are required to check a new online database to ensure that customers have no other outstanding loans. After the law took effect, however, a number of payday lenders traded in their payday loan licenses to offer loans in another category known as “supervised” lending. Supervised lenders are not subject to the same limitations as payday lenders. They can set the length of the loan and the interest rate, and customers do not go into the database.” [Editorial, The Herald (Rock Hill, SC), 3/2/10]
  • Three Of Minnesota’s Four Biggest Payday Lenders Operated Under The Industrial And Thrift Statute Which Is Not Subject To The Payday Lending Law—Those Lenders Accounted For 70% Of Minnesota’s Payday Loans In 2006. “A second bill would require all payday lenders to work under the Minnesota Consumer Small Loan Act, passed in 1995 specifically to tighten regulations on payday lending. Three of Minnesota’s four biggest payday lenders have chosen in recent years to operate instead under the state’s industrial loan and thrift statute, which allows them to make bigger loans and charge higher fees. Those lenders accounted for about 70 percent of the payday loans in the state in 2006.” [Star Tribune, 2/24/08]

RHETORIC: One Academic Study Says Borrowers Do Better With Rollovers

“Borrowers who engage in protracted refinancing (or “rollovers”) have better financial outcomes (measured by changes in credit score) than consumers whose borrowing is limited to shorter periods, according to one study.” [CFPB Reality Check Website]

REALITY: Study Cited Was Conducted By Payday Lender Front Group That Was Caught Editing And Revising Academic Research Papers to Benefit Payday Lenders

  • The Study Done By A Kennesaw State Professor Was Commissioned By The Consumer Credit Research Foundation, Who Filed A Lawsuit Seeking To Prevent Documents Related To The Study From Becoming Public. “The study, by KSU data scientist Jennifer Priestley, cast doubt on claims by critics that extended refinancing of payday loans is harmful to consumers’ financial welfare…The study, as Kennesaw State noted prominently, was commissioned by the Consumer Credit Research Foundation, a nonprofit group that says it’s “committed to adding a reasoned and rational voice to the public debate on consumer lending and the availability of short-term credit.” Now another nonprofit group, the Campaign for Accountability, is raising questions about the study. The Campaign for Accountability, which says it works “to expose misconduct and malfeasance in public life,” including “predatory lenders,” on June 10 filed an open records request with Kennesaw State seeking numerous documents related to the payday loan study. On June 19, the Consumer Credit Research Foundation responded by filing a lawsuit seeking to prevent the Board of Regents of the University System of Georgia from releasing the documents sought by the Campaign for Accountability.” [Atlanta Business Chronicle, 6/23/15]
  • The Consumer Credit Research Foundation, Funded By Payday Lenders, Was Found To Have Edited And Revised An Academic Paper They Funded To Make It More Supportive Of The Payday Lending Industry. “The payday loan industry was involved in almost every aspect of a pro-industry academic study, according to emails and other documents reviewed by The Huffington Post. The revelation calls into question a host of other pro-industry academic studies that were paid for by the same organization. While the researchers disclosed their funding source for the 2011 paper “Do Payday Loans Trap Consumers in a Cycle of Debt?” they also assured readers that the industry “exercised no control over the research or the editorial content of this paper.” The assertion was patently false, according to correspondence obtained from Arkansas Tech University through an open records request by the watchdog group Campaign for Accountability. The group subsequently shared the documents with HuffPost. The Campaign for Accountability has filed requests for documents from professors at three other universities — the University of California, Davis; George Mason University; and Kennesaw State University — who produced similar pro-industry studies. So far, it has been met with resistance. Only Arkansas Tech turned over a cache of its records. The emails show that the payday loan industry gave economics professor Marc Fusaro at least $39,912 to write his paper, and paid an undisclosed sum to his research partner, Patricia Cirillo. In return, the industry received early drafts of the paper, provided line-by-line revisions, suggested deleting a section that reflected poorly on payday lenders, and even removed a disclosure detailing the role payday lending played in the preparation of the paper. Hilary Miller, the president of the Payday Loan Bar Association, a lawyers’ group for the industry, worked closely with the researchers on their study. Miller has represented payday lending giant Dollar Financial, and is also the president of the pro-industry group the Consumer Credit Research Foundation.”  [Huffington Post: “Emails Show Pro-Payday Loan Study Was Edited By The Payday Loan Industry”, 11/2/15]
  • CCRF Is Funded By Dollar Financial Group, A Major Payday Lender. “In a related study released Wednesday, the Consumer Credit Research Foundation said it would be cheaper for customers to use payday lenders than to bounce checks. Payday lenders are subject to more disclosure requirements when they make a loan, the study said. A CCRF official says the foundation is funded by Dollar Financial Group, which owns several payday lending operations, and other companies.” [American Banker, 6/10/05]


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