Loan shark loopholes: New regulation proposal won't do enough to rein in predatory payday lenders, consumer groups say
The Consumer Financial Protection Bureau proposed new regulations on Thursday that could help rein in predatory payday loans, short-term lendings that come with high interest rates that often exceed 300 percent.
Consumer protection groups, however, warn that they may not do enough.
Payday lenders disproportionately target poor Americans who need money fast to pay for costs like late bills. The average payday loan is $375, yet it takes five months and $520 in fees to pay off, frequently trapping borrowers in predatory debt spirals.