Bad Consumer Payday Loans Just Got Worse

President Obama passed new regulations that would curb the public fleecing by the bad consumer payday loans. The regulation was to take effect on January 16, 2019.

It was designed to help stop the poor from being trapped in these predatory Payday loans. However, the Trump Administration decided to suspend the rule indefinitely.

Then, announced they had reviewed the regulation and decided it was too restrictive. Therefore it was declared unnecessary to make sure that people had the ability to pay back the consumer payday loans before they approved them. Washington was now protecting Wall Street, and not the people of this country.

Table of Contents

What Exactly Is A Bad Consumer Payday Loan

The consumer payday loan is a very short term loan with outrageous interest rates that gouge the consumers, usually the poorest population who can least afford it. These are designed for people who need cash quickly, and only for a short period of time. So, this interest cost and fees, results in a minimum annual rate close to 400% interest.

These are very high interest loans. Whenever the minimum annual percentage rate for the quick payday loan is close to 400%, they are definitely very bad consumer loans.

Do the math! Some even use deceptive practices to take advantage of consumers. Read more details in my 14 Day Payday Loans Review.If a borrower continues to refinance this loan, they could see a 3900% interest charge!

How did the Obama Regulations Help Control The Bad Consumer Payday Loan

Under the Obama administration, a watchdog agency was formed called the Consumer Financial Protection Bureau (CFPB) In an attempt to clamp down on this shady industry, they implemented a rule requiring the lenders to reasonably qualify their customers.

CFPB Logo For Bad Consumer Payday Loans

Once they determine the customer had the ability to repay the loan, they would be more likely to avoid defaults and escalating costs and fees.

This would save the borrowers from the trap of refinancing over and over, but that is of course how these slimy Payday Loans make their huge profits! So, of course this is the last thing people in the Industry want in the law!

Public Interest Widely Supported This Regulation

Originally, public interest groups widely supported this rule. It contained provisions and exemptions for smaller loans, that required less than the detailed “ability to pay” determination. It would only require a simple credit check.

The rule also addressed longer term loans of 36% interest or higher. It required the borrowers consent before any monies could be withdrawn from their accounts. And this only applied when the account was in default by two payments. This would limit the lender on attempts to take monies from checking accounts.

A standard notification was also required before any direct withdrawal. This would allow the consumer the opportunity to pay before the funds were withdrawn.

Corporate Profits Take A Hit

It was originally calculated  these changes would reduce the industry profits by two thirds. But, it would also help to keep this segment of lending industry regulated.

The Payday Loan Trap

The FTC has protected consumers from these lending predators for quite some time and refunded millions to grateful victims.

$505 million back for payday loan customers

FTC Returns Money to Consumers Harmed in Alleged Payday Loan Scheme177.7 million was returned to borrowers.

Trump Eliminating Bad Consumer Payday Loan Regulations Hurt The Poor

The Trump suspension of the rule by Mick Mulvaney is a complete reversal of the CFPB.

Mulvaney has been known for his war against the consumer, and protecting the lending industry. The whole idea behind the CFPB was for the protection of the consumer.

Now, Mulvaney has opened the door for these thieves to practice their deceit and make gobs of money, while creating suffering for people who can least afford it.

Who Wins – The Bad Consumer Payday Loans Industry

The industry was preparing for the rule as it was in place, and their was no real need for it to be removed. Except for the Trump administration to continue the extreme vengeance bent on removing any regulations Obama put in place that offered the slightest help for the consumer.

Sadly, now even these modest protections are being striped away as Mulvaney continues the Trump attack upon the consumer. Most of the problems, happened when borrowers, missed a payment.  Then they just pay the fees and refinance, and they keep repeating this until they rack up a huge debt they can’t ever afford to pay.

Consumer Protections Stripped Out

Now Mulvaney and his review board has determined that it is too hard on this segment of the lending industry. So they removed all the safeguards that protected the consumer.

  • Make sure the borrower has the ability to pay the loan back – (no longer required)
  • Credit checks – (no longer required)
  • limit collection attempts on personal accounts – (no reasonable limits).
  • Place limits on the number of times the loans are refinanced – (no reasonable limits).

Now, if someone can’t save the money to pay it off, they can continue to refinance over and over again. Eventually they may owe double or triple the original amount, in a few months time. If you have a checking account, they can attach the entire amount in your account. They are not concerned how you will pay any other bills.

A Consumer Protection Agency Protects The Thief – Consumer Payday Loans

Mulvaney is not concerned with the cries of the poor, he wants to line the pockets of the rich. It is all about providing profits for his base supporters, the Payday Lending Industry.

Empty Pockets From A Quick Payday Loan

He is revamping the agency, so that it helps more sleazy outfits to take advantage of the poor.This was not the intention of this agency.

It is clear his goals are to dismantle any limits on this fraudulent industry and allow them to continue the attack on the American consumer.

Not surprising, Mulvaney received thousands in contributions from none other than the Payday Lending Industry.

Consumer Payday Loans Effect On The Economy

These outrageous fees and interest rates being charged mostly to the poor, are in effect sucking money out of the economy.The poor, unlike the wealthy, have no choice.

They must spend what meager income they have, just to survive. Paying the bills, buying food, and keeping the older cars on the road, all goes right back into the economy.

However, borrowers caught in these deceptive loans, lose what little money they had to live on. Poor people don’t have extra money to save.

Families suffer, along with the utility companies, the grocer, banks and everywhere the poor man spends his money to survive. Doing away with the regulations designed protect the borrowers is going to make things worse.

The Poor Get Poorer And The Rich Get Filthy Rich

Once Payday Lenders fleece the poor, all that money goes right back into the pockets of the rich and powerful. And each year the Payday Lending Industry, lobbies politicians to remove more and more regulations.

A Dollar Pulling Man With A Rope And Collar Signifying Control With Quick Payday Loan

Each year the remaining regulations let the financial industry get their hands deeper and deeper into all our pockets. The poor get poorer, and when they can’t pay their huge debt, the economy suffers again.

Corporations Control Us

The corporations that are behind this lending are wealthy people. Corporations don’t spend the money on their own businesses, they buy other businesses to make themselves even more money, and of course eliminate the competition at the same time.

After they buy another business, they lay people off to save money. That takes more money out of the system, out of the economy.  All the while claiming it will create jobs. But, in the end there will actually be fewer jobs. And this is how the rich get filthy rich.

Update: With the recent election of Joe Biden, their could be some hope for the regulations that protect the consumer will once more be put in place. This will likely come about with a complete change in the Consumer Protection Agency favoring consumers once again!

The Wealthy Don’t Spend Their Money -They Invest

Wealthy people invest their money.They buy expensive art to hang on their walls, art that appreciates just hanging there. But, that money only benefits one person. Either the painter, or the previous owner.

The painter will spend the money to eat and surviving. If a wealthy person sold the painting, he will likely invest the money again. That cycle keeps the money from going back into the economy. They don’t spend the money, they invest it!

It never goes back into the economy! The wealth gets passed on to the family heirs. Consequently, the estate passes tens of millions tax free to their next of kin. As a result, the  appreciation of investments is never taxed. So, when do the wealthy pay their fair share anyway?

How Corporations Invest Their Money – Buying Other Corporations

Giving corporations breaks on taxes and regulations, only causes the corporations to get bigger. In addition, they do stock buybacks that benefit the corporate heads and board members the most, because they own the most stocks. And they own thousands if not millions of shares of stock!

Consumer Payday Loans Regulations Need to Benefit Everyone

Everyone needs to think about what they hear nowadays. Giving money to the rich, in tax cuts, never works! Such a small percentage of the money gets back into the system, it is a gift to the rich. Give that money to the poor man and he will spend most of it and save very little. It is a much bigger boost to the economy, always will be!

This is the same effect, that reducing regulations that favor the rich will also have. And for the same reasons. A poor man can’t afford this amount of debt load, so he will get wiped out, and lose everything he has. The rich man wins, the economy loses again.

Government Help Site – Not For Borrowers

It is hard to imagine that CFPB, a government help site, set up for helping the consumer, is being rearranged to help the fraudulent Payday lending industry. These same fraudulent practices that have reported to the FTC, time and time again, are now going to get help from our government! It is completely unbelievable, but so is Donald Trump and this whole republican administration.

If you have any questions or comments, please leave them below. I always reply to all comments. Thank you for visiting my site, please come back.


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20 thoughts on “Bad Consumer Payday Loans Just Got Worse”

  1. Thanks for this post and shedding more light on these loans. This is exactly what I like about articles like this one. It brings awareness of stuff I wouldn’t have found otherwise. I have taken this loan before and I definitely regretted that I did. The interest was killing.

    Thanks, this is a great post.

    • Hi Ayodeji,
      You are welcome. I hope that I reminded you of just how bad the Payday Loans are! At 400% it is so outrageous, almost unbelievable that people would even go through with it! Thanks for leaving a comment!

  2. Hi Admin! Your narrative on how Obama’s regulations to curb public fleecing by Consumer payday loans is quite informative. Often times in governance, there is lack of continuity and this affects the masses greatly, if there is continuity and good understanding between the Obama’s led administration and that of Trumps, I don’t think Trump would have out rightly restricted such a regulation. Now the masses continue to suffer from such hash decision. It is quite saddening that at the end, consumer protections were stripped out.

    • Hi Gracen,
      Trump wants to overturn everything Obama did, and yes he deliberately choose people who were hardliners and don’t have a soul! The republicans are know for helping business, they will take away any government aid to the poor and gave a 30% tax CUT to the top 1% richest billionaires in this country! You and I will pay higher taxes every year because of it.Trump helped the payday Lending Industry to continue to gouge the poor. Thanks for the comment,

  3. OMG! Payday loan is really bad. It attracts a very high interest rate which might not be too convenient for the public to bear most especially the poor.Chas, kindly do some research and update us with real interest free loans or grants if possible. Thanks for the great post, will definitely check back.

    • Hi Geebehn,
      Payday loans are terrible!The poor are the ones who have no cash to spare, so they take out this loans because they have nothing else. It’s a total outrage.I will have to check into the free loans, they used to offer O% interest transfer deals on credit cards for like 6 months, but I am not sure you can even find those deals anymore. Thanks for leaving a comment and thanks for coming back as well,

  4. 400%? REALLY. That’s a whole lot of money to pay back. I find companies that give such loans to be very dubious and greedy. They’re like Devil’s incarnate, they give fast loans, claiming to help, and in turn get to drain the consumer. Thank God for the Obama regime who brought some watchdog agencies to checkmate such companies. 

    • Hi Dhayours,
      Yep 400% at a minimum, it can go as high as 3900% if you keep refinancing every two weeks. They are the greediest of the greedy!Well, they did, but Trump overturned it all and they are gone now!No, they now have the green light to gouge people! Thanks for leaving a comment,

  5. Thank you for shedding light on this hurtful practice. I don’t see any payday loan establishments back home anymore and not sure if that’s state legislation about interest rates or what. I HAVE seen a couple in my adoptive state though.

    Are there local interest rate caps in place maybe? I don’t exactly know. I just know that you definitely need to stay away from payday and car title loans! Yikes!

  6. Thank you for sharing ¨Bad Consumer Payday Loans Just Got Much Worse¨. I had the worst experience in my life with these payday loans. It was some years back (2005-6) when I needed cash immediately. At the time I thought they were better than loan sharks – a big mistake.It was partly ignorance, as well as necessity, because I didn´t know the full implication of ¨continuous payment authority¨(CPA). CPA is a type of regular automatic payment where and individual gives a vendor permission to take money from a credit or debit account whenever the vendor feels money is owed . They are often used by payday lenders, porn website and subscription sites such as those for magazines. Even when I contacted my bank to stop payment (zero balance in my account), CPAs continued to arrive every fortnight. Only the company could cancel the CPA, I couldn´tI contacted an attorney who told me the best way was to cancel my bank account. By the time I did it I owed the bank $350 in overdraft fees.

    • Hi Enrique,

      You are welcome! Thank you for sharing your true life experience with my readers! most people just do not understand the true dangers when I say they are truly Bad Loans! I tell everyone to cancel their accounts to stop payment in my checklist. Even then, you must be careful not to reopen an account, or simply change numbers on credit card accounts. They will automatically forward and attach again. You must change banks or credit card companies to be sure you are protecting yourself. Thank you for the great comment!  


  7. Thanks for this great review, I knew nothing or little about consumer payday loan until today, the large costs associated with payday loans it can be difficult to get out of them, and it is important to pay debts by the date of maturation. If one finds that he’s  unable to pay back your loan under the short-term terms, you could be facing an interest rate that continues to climb higher and higher,  which I will say isn’t recommendable for the poor but just the rich.

    • Hi Seun,
      You are welcome.My goal is to inform people of scams to avoid, and by far this is a huge trap! people don’t understand how this can ruin their lives in a short period of time. If a borrower pays on time he will STILL pay the equivalent of 400% interest. This meas you end up paying about one third of the loan in interest! For example, if you borrow $1500, the costs will be approximately $500!! A horrible cost!
      And that is if you pay on time!!!
      The rich never deal with such nonsense, they use cash advances on their credit card or lines of credit through their banks!
      But, more often than not they have the cash in the bank. Thanks for leaving a comment,

  8. I think Payday loans are great. Because they work for poor people.Only who need money loans emergency. Buyer Payday credits are transient advances with preposterous financing costs that gouge the purchasers, generally the most unfortunate populace who would least be able to manage the cost of it. These are intended for individuals who need money rapidly, and just for a brief timeframe. Along these lines, this intrigue cost and expenses result in a base yearly rate near 400% intrigue.

  9. I think Payday loans are great. Because they work for poor people.Only who need money loans emergency. Buyer Payday credits are transient advances with preposterous financing costs that gouge the purchasers, generally the most unfortunate populace who would least be able to manage the cost of it. These are intended for individuals who need money rapidly, and just for a brief timeframe. Along these lines, this intrigue cost and expenses result in a base yearly rate near 400% intrigue.

  10. Thanks for reviewing the payday loan. I just don’t know why I hate loans;  I hadn’t heard of payday before, but am glad you brought it to my attention. I have done a lot of research about collecting different types of loans and I probably don’t have to tell you how many times I have run into programs that promise minimal work will lead to huge amounts of money but the unfortunate part is that i always get scammed.

    I appreciate your post because i am gonna flee from any form of loan and create my own business

    • Hi Abioye,
      You are welcome! The consumer payday loan is not a program, but a lending company. They charge you 400% interest to lend you money for two weeks!! I would hope that i never ,ever have to go that route! I am too frugal! I hope you check out my secrets to making money online to help with your new business! Thanks for leaving a comment,

  11. This is so bad, these kinds of loans should not be allowed and to suspend the law is so bad. I agree with what you are saying that the money is only getting invested over and over. The law getting suspended will not help the average Joe at all, but instead put them into a horrible spiral of debt. They will end up loosing everything. Great article that definitely is worth reading. Good work! 

    • Hi Alexandra,

      Yes, Payday loans are bad enough, now we have the government helping them.They hurt everyone, you and me as well. I hope nobody ever helps these legal scammers. Thanks for leaving a comment.



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