The Midas Collaborative Supports CFPB PayDay Rule, Pushes for Stronger Protections
The Midas Collaborative (Midas) and other consumer advocates and community organizations submitted comments to the Consumer Financial Protection Bureau (CFPB) that support the rule to regulate the high-cost loan industry, also known as “payday lenders”. As a strong consumer-protective state, Massachusetts does not have a preponderance of these short term loans that target low income residents and military families. However, current state regulations could be threatened by changes in national regulation, so the strongest possible federal rule is supported by Midas. Payday loans cost consumers up to 300% in interest and fees for loans as low as $300.
As one of the few states without payday lenders, Midas recognizes the importance of strong regulations against predatory lenders who essentially trap vulnerable residents in insurmountable debt. The rule is a critical step in stopping the harmful effects of unaffordable loans, but it must be strengthened to ensure it stops the debt trap for low-wage workers across the state. The current Massachusetts statute, known as the Small Loan Law, caps interest rates at 23%, effectively banning payday lending within the state. This protects consumers’ income and reduces their exposure to abusive debt collectors, as outlined in Midas’ “Massachusetts Debt Trap” report.
Read the full press release here.