Pew: Proposal to Dismantle Payday Loan Rule Would Harm Millions

Pew: Proposal to Dismantle Payday Loan Rule Would Harm Millions

WASHINGTON—The Pew Charitable Trusts warned today that the Consumer Financial Protection Bureau’s plan to rescind core provisions of its payday loan rule would leave millions of Americans at risk of becoming trapped in a cycle of debt.

The rule, finalized in 2017 and previously scheduled to take effect this August, was based on years of extensive research and was designed to take a balanced approach by curbing harmful lending practices while keeping credit available to consumers. Today’s proposal would eliminate the rule’s ability-to-repay provision—the central consumer protection measure that curbs unaffordable loan terms.

The sole piece of the 2017 rule remaining would be a payment measure that would be largely inconsequential without the rule’s core affordability protections.

Alex Horowitz, senior research officer with Pew’s consumer finance project, said of the CFPB announcement:

“This proposal to remove critical safeguards would let payday lenders rely on their ability to withdraw payments from borrowers’ checking accounts rather than setting payments that they know borrowers can afford. Eliminating these protections would be a grave error and would leave the 12 million Americans who use payday loans every year exposed to unaffordable payments at interest rates that average nearly 400 percent.

“This proposal is not a tweak to the existing rule; instead, it’s a complete dismantling of the consumer protections finalized in 2017. The rule was working. Lenders were making changes even before it formally took effect, safer credit was already starting to flow, and harmful practices were beginning to fade.

“The 2017 safeguards were grounded in an extensive body of sound research; by contrast, the case the bureau offers for overturning the rule and allowing loans that are clearly unsafe is poorly substantiated.

“Both borrowers and responsible lenders would suffer if the CFPB were to finalize today’s proposal to eliminate its well-balanced consumer protections and deregulate 400 percent interest loans issued to millions of struggling Americans.

“The bureau should withdraw this harmful proposal.”


More information on the regulatory landscape for small-dollar loans is available at

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