[HARTFORD, CT] – U.S. Senator Richard Blumenthal (D-CT) applauded news today that the Consumer Financial Protection Bureau (CFPB) has proposed a rule to crack down on abuses in the payday lending industry. Payday loans, which use the borrower’s next paycheck as collateral, often carry annualized interest rates as high as 500 percent and are frequently designed to trap borrowers in a predatory cycle of debt.
“Payday loans are predatory, abusive products that take advantage of disadvantaged borrowers and trap them in vicious cycles of debt, interest payments, and repeat borrowing,” Blumenthal said. “As Connecticut’s Attorney General, and now as a United States Senator, I have fought to protect consumers from the worst abuses of an industry that specifically targets those that can least afford their costly scams. I applaud the CFPB for taking action today to eliminate these ‘debt traps’ and look forward to working with Director Cordray and my colleagues in Congress to finalize protections for working families.”
In 2015, Blumenthal joined U.S. Senator Chris Murphy (D-CT) and a group of 30 other senators in expressing their support for the initial steps the CFPB had already taken to rein in predatory practices in payday loans and similar types of lending, and urged the agency to issue the strongest possible rules to combat the “cascade of devastating financial consequences” of these high-priced loans.