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Consumer Protection and Choice Act: Friend or Foe?

charlene crowell, Consumer Protection and Choice Act
Charlene Crowell

* Who would object to a bill with the title: “Consumer Protection and Choice Act“? What’s not to like? There is a lot not to like about this bill. Consider the following:

Consumer Protection and Choice Act

The Consumer Protection and Choice Act, also  known as H.R. 4018 is designed to severely limit the Consumer Financial Protection Bureau’s (CFPB) ability to rein in predatory lending like car-title, payday and high-cost installment loans.

For consumers, the only ‘choice’ is to allow unsuspecting borrowers to select loans from any number of debt trap products.

If passed, the bill would both sanction triple-digit interest rates and the excessive rollover loans that convert short-term loans into long-term debt traps.

It would also undermine stronger state laws that brought consumer victories to a diverse set of states including Arizona, Ohio, North Carolina, Virginia and others.

Since the late 2015 Capitol Hill introduction, advocates in multiple states already find themselves fighting efforts to weaken enacted state protections.

Sometimes you just have to wonder what Members of Congress are thinking about.

The Consumer Protection and Choice Act bill was first filed last November with only five co-sponsors. By mid-December the co-sponsor list grew to 24 representing districts in seven states.

Most notably, 10 Florida Representatives signed on as co-sponsors sponsors that are both Democratic and Republican, Black, Latino and Anglo.

It is clear the payday industry is pushing hard to undermine key consumer protections. Americans for Financial Reform, a nonprofit consumer advocacy organization determined that since 2013, payday lenders have spent $13 million on campaign donations and lobbying.

The good news is that consumer advocates in many states are helping to fuel a barrage of media coverage. In California, Missouri, Michigan, Pennsylvania and other locales, news articles, commentary and editorials are singing of chorus of ills against H.R. 4018.

This elevated attention has led to calls for Florida’s Rep. Debbie Wasserman Schultz to resign her post as chair of the Democratic National Committee.

Rep. Alcee Hastings, co-chair of the Florida delegation, an original bill sponsor and member of the Congressional Black Caucus, used a guest blog  in the Huffington Post to defend the measure both he and Ms. Wasserman Schultz support.

“I acknowledge that some people have been harmed by small lenders,” wrote Rep. Hastings. “Yet such cases are far more common in areas that lack thetough standards present in Florida.”

It is simply inaccurate to characterize Florida’s laws governing payday loans as ‘tough’. According to the Center for Responsible Lending, the costs of payday loans in Florida reach upwards of 300 percent.

Sunshine State data show that on average, Florida payday loan borrowers are suck in eight loans a year, generally one right after another. These consumers are caught in a debt trap that largely resembles other states with weak or ineffective laws.

“If the Consumer Financial Protection Bureau (CFPB), moves forward with implementing the current rules they have proposed, it would put 70 percent of the industry out of business,” continued Rep. Hastings.

That too is untrue. Once CFPB’s rule is finalized, consumers will still have access to small dollar loans – but in a changed marketplace. The worst lenders will face their own choice: change their practices or exit the market. CFPB should be applauded for giving lenders a chance to change.

Payday, car-title or high-cost installment loans affect millions of
consumers each year. People who needed only a few hundred dollars become trapped in costly and lengthy predatory loans that worsen – not improve financial dilemmas.

Whether by regulation or legislation, it is time to break this cycle of debt that harms all borrowers and disproportionately affects those of color.

A broad coalition of concern comprised of more than 250 state and local advocate and national organizations including the NAACP, made an unprecedented appeal to Members of Congress.

“This harmful bill would limit the CFPB’s ability to protect all consumers against high-cost payday, car title, and installment loans,” wrote the coalition. “

When it comes to predatory lending, maybe it’s time to remind some members of whom they represent.







Charlene Crowell


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