Payday Loan Lenders Look to Self-Imposed Regulations
By Paul RizzoPayday Loan Writer
The payday cash loan lending industry, often under attack by consumer groups, rolled out a new list of best practices Wednesday at a time when Democrats in U.S. Congress have threatened more scrutiny over high-cost loan products.
The Community Financial Services Association of America said it has launched a $10 million “national public education campaign aimed at informing consumers about the responsible use of payday advances.” The group represents many of the payday lenders providing loans that are often due when the borrowers get their next paycheck.
The trade group said its members would offer an extended repayment plan for borrowers having trouble paying off short-term loans. The extra time will come without any new fees or accrued interest, the trade group said.
Also, the trade group said its members will “refrain from advertising the payday advance services for frivolous uses.”
Bad credit payday loan stores have frequently attracted scrutiny from consumer groups, in part because some borrowers take out the short-term loans and then continue rolling the credits over, racking up more and more fees.
Last year, Congress passed a law that cracked down on cash advance payday loan companies operating around military bases. Also, with growing home foreclosure rates attributed to high-cost subprime mortgage loans, lawmakers have said they want more scrutiny over industry lending practices.
Members of the trade group include Allied Cash Holdings LLC, Advance America, Check ‘n Go, Moneytree, Inc., and Check Into Cash, Inc.
