Consumer protection took a big step forward in June 2016, when the Consumer Financial Protection Bureau (CFPB) proposed important new federal rules governing high-cost consumer lending products, including payday and auto title loans. The proposals came after years of public comments and input gathered at CFPB events across the nation. (Click here to learn more about the proposed rules.)
Alabamians played a key role in the development of these new regulations. The CFPB held its very first field hearing on payday lending in Birmingham in 2012, and President Barack Obama met with Arise and other state advocates in Birmingham in March 2015 before delivering a speech calling for consumer-friendly reforms of payday and title lending.
These loans come at a high cost in Alabama, where they can carry interest rates of 456 percent a year (payday loans) and 300 percent a year (title loans). The CFPB has broad power to regulate these loans, but importantly, it does not have the authority to reduce rates. Only states can do that.
Arise will continue to work for state-level payday and title lending reform alongside its partners in the Alliance for Responsible Lending in Alabama (ARLA). In the meantime, these new federal rules represent a critical opportunity to improve the landscape of short-term lending in Alabama. Read policy analyst Stephen Stetson's fact sheet to learn what the new rules would do, why they need improvement, and how you can help strengthen them.