The CFPB has announced that its consumer complaint system is now accepting complaints about payday loans.  In describing the issue involved in a complaint, a consumer can choose from the following:

  • Unexpected fees or interest
  • Unauthorized or incorrect charges to their bank account
  • Payments not being credited to their loan
  • Problems contacting the lender
  • Receiving a loan they did not apply for
  • Not receiving money after they applied for a loan

Consumers with a complaint about a lender’s collection practices on a payday loan are directed to submit a debt collection complaint.

The CFPB has progressively expanded its complaint system since it was launched in July 2011 for only credit card complaints.  The system now also takes complaints about mortgages, bank accounts or services, student loans, vehicle or other consumer loans, debt collection, credit reporting and money transfers.   

The CFPB uses the complaints its receives to prioritize and prepare for examinations and investigations.  Under Dodd-Frank, the CFPB has supervisory and enforcement authority as to payday lenders regardless of their size.  We expect the CFPB to quickly begin using payday loan complaints to identify which lenders it will examine and/or target for enforcement.  Also, consistent with its past practice, the CFPB can also be expected to soon add such complaints to its public database.

In a statement issued in response to the CFPB’s announcement, the Community Financial Services Association, the leading payday lending trade group, expressed support for “the CFPB’s effort to address illegal or unethical lending practices” and its belief that “the newly launched complaint portal will help both regulators and consumers identify bad actors in the marketplace.”  The CFSA also indicated in its statement that many of its members had voluntarily registered to use an online company portal to view and resolve any complaints about them received by the CFPB. 

The CFPB continues to consider possible rulemaking for payday loans, having issued a white paper this past April with its initial findings on payday loans and deposit advances.  We have been critical of the white paper’s failure to address the very real benefits of payday loans or the question whether (and when) such benefits outweigh the costs.  The paper’s methodology and data has also been criticized by industry.