CFPB Study Reveals Payday Loans ‘Revolving Door’ of Debt

At a hearing on March 25, the Consumer Protection Financial Bureau (“CFPB”) released the results of a study focused on the payday loan industry. While unsurprising, the findings indicate that borrowers often find themselves in a cycle of debt destined to overwhelm them. The report is a continuation of the CFPB’s 2013 study on Payday Loans and Deposit Advance Products. It is based on data from a 12-month period with more than 12 million storefront payday loans. “This comprehensive study shows that payday and deposit advance loans put many consumers at risk of turning what is supposed to be a short-term, emergency loan into a long-term, expensive debt burden,” said CFPB Director Richard Cordray. “For too many consumers, payday and deposit advance loans are debt traps that cause them to be living their lives off money borrowed at huge interest rates.”