On November 6, the CFPB announced that it now will formally accept borrower complaints regarding payday loans through its online complaint portal and by phone. The CFPB’s complaint taking process launched with the Bureau in July 2011, and the CFPB began publishing complaints through its online complaint database in June 2012. The CFPB started with credit card complaints and has since expanded the complaint program and public database to cover mortgages, debt collection, credit reporting, student and other consumer loans, and other products and services.
For purposes of complaint collection, the CFPB defines a payday loan as a “small loan, generally for $500 or less, that is typically due on [the borrower’s] next payday or the next time [the borrower] receive[s] income.” The CFPB adds that a payday loan also may be known as a “cash advance” or a “check loan.” The complaint categories offered by the CFPB include: (i) unexpected fees or interest, (ii) unauthorized or incorrect charges to a bank account, (iii) failure to credit a payment, (iv) problems contacting a lender, (v) receiving a loan not applied for, and (vi) failure to provide borrowed funds. Separately, the CFPB highlighted servicemember payday loan protections provided by the Military Lending Act and encouraged servicemembers to submit payday loan complaints.
These announcements are the most recent from the CFPB in connection with its sustained and expanding interest in short-term, small dollar products. Indeed, as we’ve reported here in the past, federal and state authorities more generally have increased their scrutiny of companies that offer these products and affiliated parties like payment processors. For its part, earlier this year the CFPB issued a white paper on payday loans and deposit advance products, and the CFPB has repeatedly ranked high on its enforcement agenda short-term products it believes have the potential to trap consumers in a “cycle of debt.” In addition, based on the CFPB’s most recent rulemaking agenda, the CFPB may publicly begin certain rulemaking activities with regard to payday loans and deposit advance products.