A trade association representing payday and short-term lenders announced this week that it has obtained documentary evidence that the Consumer Financial Protection Bureau suppressed positive consumer testimonials about payday lending from public view, even while it was moving to subject payday lenders to stringent new rules in the name of consumer protection. The press release can be found here.
The Community Financial Services Association of America (CFSAA) obtained the documents under a Freedom of Information Act request filed last December. They reveal that 12,308 of the 12,546 comments submitted to the CFPB’s “Tell Your Story” consumer portal during a five-year period praised the industry and its products and services, or otherwise indicated positive experiences.
“These positive consumer stories, which comprise 98 percent of the payday loan-related submissions, have never been made public before,” the CFSAA said in a statement. “Instead, the Bureau buried these real-life customer stories as it marched forward with proposed rules that would restrict access to credit for millions of Americans.”
The FOIA documents also revealed only an extremely small number of critical payday lending comments were submitted to the CFPB, just 240 or less than 2 percent. Further, the vast majority of these critical comments were either mistakenly categorized as payday lender comments, or they related to scams and unregulated lenders that the CFPB’s proposed rule fails to address, according to the CFSAA.
The allegations come as the independent agency receives comments on proposed rules for payday and other short-term loans, which some say ensnare low-income borrowers in a cycle of debt. The CFPB handled about 5,500 complaints about payday loans last year, according to an annual agency report.
According to the CFSAA, this data is consistent with other data from the CFPB and Federal Trade Commission, as well surveys of payday loan customers. Since the CFPB’s complaint portal came online in 2011, complaints regarding payday loans have represented just 1.5 percent of all complaints, and continue to decline. The FTC found that just 0.003 percent of more than three million complaints recorded in their most recent summary related to payday lending. Customer surveys of payday loan borrowers confirm their overwhelming satisfaction with the product. A GSG/Tarrance survey found that 96 percent of borrowers saw payday loans as useful and a vast majority would recommend the service to others. An earlier Harris Interactive survey of payday loan borrowers found that 97 percent of borrowers were satisfied with the product and 95 percent value having the option to take out a payday loan.