Tens of Thousands of Handwritten Comments Support Reconsideration of Small-Dollar Lending Rule

May 16, 2019 | Federal & CFPB Regulations

The Community Financial Services Association of America (CFSA) projects that tens of thousands of small-dollar loan customers will have submitted handwritten comments in support of the Consumer Financial Protection Bureau (CFPB)’s Notice of Proposed Rulemaking (NPRM) to rescind portions of its 2017 small-dollar lending rule – once all comments are received and uploaded to Regulations.gov. In comments already publicly accessible, customers describe their experience taking out small-dollar loans and the importance of protecting their access to short term, small-dollar credit.

“Under former Director Cordray’s leadership, the CFPB ignored the very people who use small-dollar loans and who will be affected the most by its rulemaking and instead proceeded with a rule that was drafted based on a predetermined, partisan agenda unsupported by evidence,” said Dennis Shaul, CEO of CFSA. “We hope that under the new leadership of Director Kraninger, the Bureau will engage in a more transparent and balanced rulemaking process that genuinely considers input from Americans who rely on this vital form of credit.”

Commenters from around the country submitted letters during the NPRM comment period telling personal stories of how small-dollar loans helped them and their families:

  • “I have used payday loan numerous times… when I had difficulties making ends meet. I am grateful for this service because it had help me avoid late fees and other penalties. Please keep this option open for individuals like me living from paycheck to paycheck.” – Nubia Garcia, Alexandria, VA
  • “Please don’t shut down the payday loans. It has been very beneficial to me. The government should not have a right to keep us the consumers from getting loans. So please protect my rights to borrow.” – Joel Warton, Hopewell, VA
  • “Payday advance helped me to get the funds I need when I had extra bills for the month. Very friendly people and made me feel like a special customer. Great to know you have a little cushion when your paycheck is a little short for the week.” – Melody Lodge, Saginaw, MI
  • “Able to pay my bills when they are due and not have to worry about being broke and not running out of gas. If you closed down or stopped allowing me to come here I would be in financial trouble.” – Larry Ray Jr., Winfield, MO

In addition to the expected tens of thousands of handwritten letters, nearly 6,800 comments have come in through an online portal that allowed customers to electronically customize and submit comment letters, and those numbers may increase as well. Overall, the vast majority of comments currently available to view in the government’s portal support reconsideration, a trend that is expected to continue as handwritten letters are uploaded over the coming weeks.

During the comment period for the 2017 small-dollar loan rule, more than one million small-dollar loan customers spoke out in record numbers against the rule and the negative impact it will have on their ability to access credit. Serious concerns arose, however, over the inaccurate categorization of these comment letters and the inconsistent process through which the Bureau posted comments for public viewing. This included batching hundreds of handwritten letters together rather than treating them as individual comments. The Bureau is required under the Administrative Procedure Act (APA) to review and consider all of these public comments, but the agency failed to follow the law and may have violated the APA as it rushed to finalize its rule.

In October 2018, the Bureau announced it would issue NPRMs to reconsider the rule’s mandatory underwriting requirements and to address the rule’s compliance date. The Bureau’s proposal suggested there was insufficient evidence and legal support for the underwriting provisions prescribed in the 2017 final rule and expressed concern that these provisions would reduce access to credit and competition in the states that allow small-dollar lending. In early February 2019, the Bureau announced a NPRM to rescind parts of the 2017 rule and began a 90-day comment period to solicit public input on the proposed rule.

The Bureau will now review all comments received during the comment period as mandated under the APA prior to issuing a final rule.

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