In response to a new report from the Consumer Financial Protection Bureau about bank fees faced by payday
loan borrowers, Liana Molina, director of community engagement at the California Reinvestment Coalition,
released this statement:
“This new report shows that the sky is the limit for costs faced by payday loan borrowers. The CFPB found that
half of online payday loan borrowers face an average of $185 in bank penalties due to debit attempt overdrafts or
fails. Worse, more than one-third of those online payday loan consumers who get hit with the bank penalties will
see their accounts closed involuntarily by their bank, meaning they’ll likely be forced to use more costly services
like check cashers or prepaid cards that can include lots of fees.
This report is another indicator that much is amiss in the payday loan market. For too long, the myth of payday
loans as a “one-time fix for a financial emergency,” has been accepted. In reality, four out of five payday loan
borrowers can’t afford to pay back their loans. Instead, the great majority of payday loan customers get caught in
a hamster wheel of endless loan renewals and the high costs that go along with them.
The California Reinvestment Coalition has successfully worked to limit the damage caused by these lenders in
California through local ordinances that prevent them from saturating neighborhoods and communities. We look
forward to supporting strong rules from the CFPB to better regulate an industry that has run roughshod over its
customers for too long.”