Attorney General Mark R. Herring issued the following statement regarding the Consumer Financial Protection Bureau’s proposed rules to protect consumers from predatory lending and debt traps.
“I’m really encouraged to see the CFPB stepping up to address predatory lending in a way that could offer financially vulnerable Virginians some badly needed protection from these products which, in many cases, do nothing but trap borrowers in an expensive, endless cycle of debt. Virginia has developed an unfortunate reputation as a place where predatory lending thrives, and unfortunately the General Assembly hasn’t been willing to fight for Virginia consumers. The CFPB proposals, including an “ability to pay” test, expansion of safer loan products, and limits on overdrafts or multiple loans, can be important safeguards for Virginia consumers. My team and I will be closely reviewing the proposed rule in the coming weeks.”
According to the State Corporation Commission, in 2015, Virginia payday lenders made more than 350,000 loans totaling more than $137 million to more than 112,000 borrowers. The average borrower took out more than 3 loans per year at an average annual interest rate of 231%.
Virginia car title lenders in 2015 made more than $161 million in loans to more than 134,000 borrowers with an average APR of 221%. More than 20,000 borrowers had their car repossessed and more than 16,000 had their car sold.
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