CHARLOTTE, N.C. — You could see tougher rules so payday loans don't put you deeper in debt.
Federal consumer watchdogs are proposing new laws to "end payday traps."
Payday loans are pretty much outlawed in North Carolina, but residents can still get them online (in some cases) and in South Carolina.
Bertha Johnson takes out payday loans every now and then. She says she's had no problem paying them back, but she hates seeing others get into a deeper hole. "I wouldn't want anybody to be in a situation where they're already devastated and, then, they got to try to borrow money and don't have any way to pay it back," she said.
North Carolina Attorney General Roy Cooper calls that "the debt treadmill." "I've always said that a payday loan is like throwing a drowning person an anchor instead of a life preserver," he said. Cooper offers advice on the AG's website.
Now, a federal agency, the Consumer Financial Protection Bureau, is getting more involved. CFPB's David Silberman says payday loans "can wreak havoc." CFPB is considering:
A cap on interest rates;
A cap on how much you can borrow;
Limits on how often you can borrow;
A cooling-off period between loans;
Background checks (lenders would have to make sure you can afford to pay back the loan)
For the full proposal, click here.
The next step is CFPB will ask payday loan businesses to weigh in, before drafting its proposed rules.
Consumers Union, the group behind Consumer Reports, says on its website that it's been advocating for payday loan reform for years. "We think these kinds of rules are long overdue. But we want to make sure there are no loopholes. The ability-to-pay requirement should apply to short-term and long-term loans alike," it reads.
Payday lenders typically defend their industry by saying they provide a valuable service, giving loans other lenders would avoid. But the lender Johnson likes -- Cash Advance in Fort Mill -- wouldn't talk to Action 9's Jason Stoogenke about it. In fact, when Stoogenke walked up to the doors, the workers kept them locked and stared at him from inside.
So he spoke with a different lender -- a California one -- by phone. Rebecca Gensler thinks the proposed rules would be short on consumer protection, but long on paperwork. "It scares me. I can't get it all done as it is," she said.
WSOC
