Payday Lending Trade Group’s CFPB Lawsuit Based on Deception, Lies

CLAIM: CFSA Says the CFPB “Ignored the Input of Small-Dollar Loan Customers” and Incorrectly Categorized Comments Supporting Lenders 

REALITY: CFSA Orchestrated a Premeditated and Deliberate Attempt to Sabotage the CFPB, Now Defends Hundreds of Thousands of Bogus Comments


WASHINGTON, D.C. – Today, Community Financial Services Association of America (CFSA), the payday lending industry’s lead trade group, filed suit against the Consumer Financial Protection Bureau (CFPB) in an effort to block the bureau’s rule protecting consumers from the worst abuses of predatory short-term lenders. The CFSA’s lawsuit is based on a lie designed to cover up its premeditated and deliberate attempt to mislead and overwhelm the CFPB and stop the implementation of its new rule at any cost. From the CFSA’s press release announcing the lawsuit:

Throughout the rulemaking process and during the rule’s public comment period, the Bureau ignored the input of small-dollar loan customers. Serious concerns arose during the comment period over the inaccurate categorization of comment letters, and the questionable and inconsistent process through which the Bureau posted comment letters for public viewing as it rushed to finalize the rule. Questions also arose about whether the CFPB was appropriately reviewing and considering all public comments as required by the APA.

Time and again the CFSA and the predatory lenders it represents have demonstrated why they simply cannot be trusted to deal honestly with the CFPB and the American people. They said they wanted to overwhelm the bureau with public comments to stop it from finalizing its payday lending rule and now they are defending the comments of hundreds of thousands of supposedly different individuals who used the exact same language and personal anecdotes in their comments defending the industry. The deception is breathtakingly transparent,” said Karl Frisch, executive director of Allied Progress.

He continued, “Mick Mulvaney has a responsibility to defend the CFPB from such baseless attacks. If he truly is not influenced by the tens of thousands of dollars he received in campaign cash from payday lenders belonging to this trade group, he will do the right thing and mount a vigorous defense of the bureau’s constitutionality and payday lending rule.”

The CFSA’s assertion that the CFPB ignored the comments of payday loan borrowers and incorrectly categorized comments that opposed the bureau’s tough rule is nonsense.

The Reality:

  • REALITY: 40% of Comments Opposing the CFPB Payday Rule Weren’t Sent or Authorized by the People Associated with Them. A survey conducted by Mercury Analytics found that 40% of opposing the CFPB payday lending rule weren’t sent or authorized by the people who associated with them. “A survey conducted by Mercury Analytics for the Journal last year [in 2017] found that 40% of the comments in a batch of 13,000 comments opposing the CFPB rule weren’t actually sent or authorized by the people who associated with them.” [James V. Grimaldi, “Lawmaker Seeks Probe into Fake Comments on Payday-Lending Rule,” The Wall Street Journal, 02/05/18]
  • REALITY: In Mere Minutes, Hundreds of Pro-Payday Consumer Testimonies Submitted to the CFPB Containing Identical Language Were Found. Allied Progress found that hundreds of positive consumer testimonials about payday loans sent to the CFPB contained identical language. [“Group Alleges Cut-And-Paste Job In CFPB Comments Favorable To Payday Loans,” Morning Consult, 09/26/16]
  • REALITY: Payday Lending Used Misleading Rhetoric, Elements of Coercion, and “Scary Warnings” to Get Customers to Comment on the Payday Lending Rule. 

Payday lenders used “high-pitched rhetoric and scary warnings” in to mobilize customers to file comments opposing the CFPB’s payday rules. “With high-pitched rhetoric and scary warnings, the payday lending industry is attempting to mobilize its borrowers to flood the CFPB with comments opposing the agency’s efforts to issue rules regulating the industry. Individual payday lenders, such as Advance America, are providing Internet links to trade group websites that make the process of commenting as simple as… well, taking out a payday loan.” [David Baumann, “Payday Lenders Mobilize Consumers With Dire Warnings,” Credit Union Times, 09/05/16]

Critics of the payday lending industry suggested “that the letter-writing involve[d] an element of coercion or pressure, directly or implied.” One consumer advocated “called it ‘disingenuous’ for the lenders to boast that the letters reflect the true opinions of the typical payday borrower.” “There’s nothing wrong with writing to the government, said David Rothstein, a former advocate for non-predatory resources at Neighborhood Housing Services of Greater Cleveland and now a principal at the Cities for Financial Empowerment Fund. That is, ‘as long as the customers and clients know what they’re writing about and what they’re asking for,’ he said. In this case, however, the payday lenders are ‘providing the pen and paper and, let’s not forget, providing the cash for the loan.’ This suggests that the letter-writing involves an element of coercion or pressure, directly or implied. Rothstein called it ‘disingenuous’ for the lenders to boast that the letters reflect the true opinions of the typical payday borrower.”[Stephen Koff, “Payday lenders get thousands of borrowers to complain to government about rules meant to protect them,” Cleveland.com, 08/22/16]

  • REALITY: The Payday Industry Planned to Bombard the CFPB with Hundreds of Thousands of Comments to Bog Down the Agency and Delay the Payday Rule.

At its 2016 annual meeting, the Community Financial Services Association of America (CFSA) “plotted to bombard the” CFPB with “hundreds of thousands” of comments before the deadline on the payday rule. In March 2016, at the “annual meeting of the Community Financial Services Association of America (CFSA), the payday lending industry’s trade group,” “the industry plotted to bombard the Consumer Bureau with comments and studies suggesting regular people would be the real losers—even if their own oversized profits were obviously the focal point.” Payday industry “leaders stressed the need to deliver hundreds of thousands of such comments before the deadline on the payday rule, which is [October 7, 2016]. They suggested getting employees, landlords, suppliers, bankers, neighbors, state and local politicians, and even pastors to write letters.” [David Dayen, “How Predatory Payday Lenders Plot To Fight Government Regulation,” Vice News, 08/18/16]

At the same gathering, the existence of “a team of three full-time writers” that could assist with letter-writing was announced by a corporate defense firm. Tony Dias of corporate defense firm Jones Day “asked lenders to ‘get every customer that comes into your store… to write out a handwritten letter and tell the bureau why they use the product, how they use the product, and why this will be a detriment to their financial stability.'” Dias said his office would “‘have a team of three full-time writers'” to assist them. [David Dayen, “How Predatory Payday Lenders Plot To Fight Government Regulation,” Vice News, 08/18/16]

Dennis Shaul, CEO of the Community Financial Services Association of America (CFSA), said that one goal of getting customers to submit comments was to bog down the CFPB and delay the payday lending rule. Dennis Shaul, CEO of the Community Financial Services Association of America (CFSA), the payday lending industry’s trade group, said that, if the CFPB “has to wade through hundreds of thousands of comments—from homeowners to political officials and academics—to which they must respond, ‘then they are necessarily bogged down.'” He added, “‘If the rule is delayed, operators are still continuing to be in existence and presumptively to make a profit.'” [David Dayen, “How Predatory Payday Lenders Plot To Fight Government Regulation,” Vice News, 08/18/16]

  • REALITY: The Majority of Payday Borrowers Feel Taken Advantage Of and Want More Industry Regulation. The Pew Charitable Trusts found that 55% of all payday borrowers feel that payday loans take advantage of borrowers and 72% of all payday borrowers favor more regulation of the payday industry. [“Payday Lending in America: How Borrowers Choose and Repay Payday Loans,” The Pew Charitable Trusts, February 2013]

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