Payday Loans and Deposit Advance Products

Book excerpt: During the past year, the Consumer Financial Protection Bureau (CFPB) has engaged in an in-depth review of short-term small dollar loans, specifically payday loans extended by non-depository institutions and deposit advance products offered by a small, but growing, number of depository institutions to their deposit account customers. This review began with a field hearing held in Birmingham, Alabama in January 2012. At that event, CFPB Director Richard Cordray noted that "the purpose of the field hearing, and the purpose of all our research and analysis and outreach on these issues, is to help us figure out how to determine the right approach to protect consumers and ensure that they have access to a small loan market that is fair, transparent, and competitive." Director Cordray went on to state that "through forums like this and through our supervision program, we will systematically gather data to get a complete picture of the payday market and its impact on consumers," including how consumers "are affected by long-term use of these products."