In last few decades popularity of payday loans has gone up significantly in the USA. This quick fix solution for financial emergencies has been lapped up by younger generations and with time others are also embracing it. While these short term loans offer breather from problems associated with traditional loans, they come with their share of hurdles for borrowers. The sky- high interest rates of the lenders often make the borrowers take more loans to pay off earlier loans and they end up getting trapped in successive debt chains. To tackle this trend, US official watchdogs and government agencies have stepped up operations against errant payday loan providers and their associates.
While the federal authorities have been stepping up efforts to control menacing activities of a section of payday loan lenders, of late they have turned attention to banks which let the lenders carry on their activities. The US banks that allow payday lenders to operate have come under scanner in recent times with consumer right groups demanding through monitoring of their activities related to online transactions. A number of complaints regarding the banks allowing menacing lenders to access accounts of people have surfaced. A section of the accusers are also saying they did not even apply for loan but found loan sanctioned against their names.
It is not without reasons that people opt for such risk prone financial solutions nowadays. They find the time and formalities involved with typical bank loans cumbersome. The payday loan agencies issue loans much faster ad they do not need much paperwork. Everything can be performed online when you deal with such loan providers. The speed of loan sanction coupled with reduced documentation lure people leading fast paced life to opt for such loans.
As it is, a majority of states in the USA do not support payday lending and others states have put capping limits on interest loans for packages offered by such lenders. Given the fact a financial giant like JPMorgan Chase & Co settled such a lawsuit the last year and then altered its payday loan transaction processing system, proves it is time other financial entities take notice. As it is, the National Consumer Law Center has sent letters along with several other consumer groups to federal banking regulators to crack down on predatory payday lenders in the USA.
The CFPB has recently expanded the consumer complaint database to cover payday loan related problems. Richard Cordray, the CFPB Director said it will give payday loan victims effective means to fight back the menace of errant lenders. The consumers can lodge complaints with the entity regarding unexpected fees and interest charges, incorrect entries in bank accounts and similar topics.
In fact, the CFPB is encoring people to contact who have got loans they did not apply for at all. It is something people face when their social security numbers and bank account number are mishandled. The consumer protection entities have lauded the move of CFPB. The CFSA has also praised the decision of CFPB.
While the government actions and newer norms continue to be planned and implemented to take on predatory payday loan providers, the payday loan industry continues to thrive. On an average, 12 million US citizens use these short term loans every year. Research indicates, the convenience associated with such instant loans lure millions of people but they often fail to pay back in time which forces them to opt for another such loan. This can go on for several months, resulting in most of them staying debt ridden for a major part of a year. While the payday industry insists it is the easiest and cheapest option for consumers, entities like CFPB say the borrowers fail to understand implications of loans and repayment well.
The author writes on short term financial solutions and loans. You can get updates on cash advance or payday loan issues by getting connected with Snug-Loans.Com