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Dear Member of Congress:

The undersigned civil rights, consumer, labor, faith, veterans, seniors, and community organizations, strongly urge you to oppose H.R. 4018, the “Consumer Protection and Choice Act.” This harmful bill would limit the Consumer Financial Protection Bureau’s (CFPB) ability to protect all consumers against high-cost payday, car title, and installment loans. In addition to delaying the Bureau’s rule-making for two years or longer, H.R. 4018 would allow the payday industry to avoid federal regulation altogether by pushing an industry-backed proposal based on a Florida law1 that has proven ineffective at stopping the payday loan debt trap.

In 2016, the CFPB is expected to release important new rules that will help protect borrowers from abusive small dollar lending. The CFPB’s rule will require payday lenders to follow the example of other commercial lenders in implementing a number of critical, common sense safeguards that enjoy broad public support2—including a requirement that lenders fully consider a borrower’s ability to repay a loan without taking out a new loan or deferring other necessary living expenses.

More than 5003 civil rights leaders, women’s groups, affordable housing providers, faithbased organizations and consumer rights groups from nearly every state in the country, as well as over 100 Senators4 and House members5 support the CFPB’s effort to protect consumers from abusive payday lender practices.

Additionally, H.R. 4018 would allow abusive small-dollar lenders to go on doing business as usual if states enact laws similar to a Florida law, putting in place so-called ‘industry best practices.’ Instead of protecting consumers, H.R. 4018 and the industrybacked Florida law would do more harm to consumers by putting a stamp of approval on:

  • Triple digit interest rates: Under Florida law, the typical payday loan costs about 300% annualized interest (APR)—an exorbitant rate of interest that wreaks havoc on households who are already struggling financially, and was illegal in all states until relatively recently;
  • Back-to-back lending without considering borrowers’ ability to repay - Rollover bans and cooling off periods are insufficient to protect borrowers from long-term financial harm. In spite of the industry-backed Florida law, 88% of repeat loans were made before the borrower’s next paycheck;
  • A long-term cycle of debt - Limiting borrowers to one loan at a time has failed to provide relief in Florida, where 85% of payday loans are issued to borrowers with seven or more loans per year; and
  • $280 million in fees drained from lower-income Floridians per year as a result of repeat lending at abusive rates and $3.6 billion in fees drained annually from consumers across the country.

As a result of these shortcomings, Florida civil rights consumer advocacy, faith, and asset building groups across the state6 have voiced their strong opposition to the adoption of the Florida law as a template for the CFPB or any other state to follow.

H.R. 4018 is not an effort to reform the payday loan market—it is an attempt to codify industry-backed practices that do little to protect consumers. Low-income consumers deserve strong protections and timely action.

The CFPB must be allowed to consider every possible way to stop the payday debt trap and take much-needed steps to protect consumers from abusive lending. We urge you to oppose H.R. 4018 and any other effort to block meaningful consumer protections for borrowers targeted by abusive payday, auto title, installment and other high-cost small dollar lenders.


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