This describes Kansas City payday loans and how they provide small-dollar credit to consumers that need cash.
Consumer Financial Protection Bureau (CFPB) Director Richard Cordray recently testified before the House Financial Services committee about his agency’s plan to adopt strict regulations on small-dollar loans.
Despite receiving five years’ worth of consumer complaints that show Kansas City payday loans have a far lower complaint rate than other products like mortgages, student loans, credit cards, and debt collection, the CFPB fails to acknowledge the real need among consumers for these small-dollar loans.
In his testimony, Cordray noted that 14 states currently ban payday loans. He said that consumers in these states “seem to get by just fine.”
The truth is every day, nearly 11,600 consumers in these 14 states seek payday loans online. In the 4th quarter of 2016 alone, about 2.7 million payday loans were requested from consumers in these same 14 states.
Even when payday loans are banned, the demand does not decrease. Research indicates these consumers face greater financial strain by bouncing more checks, filing more complaints about illegal loans and debt collectors, and filing for bankruptcy more often, the Federal Reserve has found. States like Washington and Montana – states which have recently adopted restrictions on small-dollar loans – have reported similar consequences for their consumers.
According to the CFPB consumer complaint portal data, about one-third of all payday loan complaints originate from the 14 states that ban these short-term loans. This means a large amount of these complaints are against unregulated, unlicensed, and largely illegal lenders. While legal and illegal lenders are lumped together in this data, the CFPB still reports that payday loan complaints are down 28%. These complaints account for just 1.5% of all complaints the CFPB has received.
At Waldo Financial, we have advocated for a simple fix to protect consumers from unlicensed, illegal lenders: a national registry of regulated lenders. While this solution was specified in the Dodd-Frank Act that created the CFPB, it has not been a priority for the agency. This registry could help protect consumers from cash-grab schemes that pose as reputable online lenders. Rather than attempting to lump in the actions of illegal payday loan lenders with law-abiding businesses, the CFPB should instead focus on stopping these offenders from taking advantage of consumers.
Waldo Financial licensed lender regulated by the Missouri Division of Finance. Waldo Financial offers Kansas City payday loans to the local community.
If you are facing a short-term financial difficulty, contact Waldo Financial to apply for a cost-effective Kansas City payday loan.