The Consumer Financial Protection Bureau recently rescinded a rule that was originally created by the agency in 2017 to stop “payday debt traps.” The old rule required so-called payday lenders to check that a borrower would have the ability to repay their loan when the time came. Payday loans are typically for small-dollar amounts and due in full by the borrower's next payday. Annual percentage rates may range higher than 300%.
The CFPB said the change, lauded by the lending business, ensures that consumers will still have access to needed credit and ensures access to a competitive market. Consumer advocates opposing the change said the move "prioritizes preserving lenders’ revenues" over the agency's statutory purpose of protecting consumers.