Consumer Protection
Middle and low-income consumers must navigate myriad, potentially dangerous financial products and services designed to trap them in an unending cycle of debt. Corporations and industries are constantly evolving to circumvent common sense state and federal regulations enacted to prevent unfair, deceptive and unconscionable practices such as triple-digit small loans (payday loans, title loans).
Banks, mortgage lenders, insurance companies, cryptocurrency and the financial technology era all pose additional risks and challenges for unsophisticated or desperate consumers. As the economic divide continues to widen, so do the types of financial products and services targeted specifically to financially disadvantaged individuals and families.
People of color—particularly Black people—have been treated unfairly and unequally for generations in the area of personal finance and beyond. Centuries of racism have denied Blacks, Native Americans and many immigrants an equal opportunity to build a solid financial foundation.
Economic Inequities: the impact of systematic racism on your finances | Consumer Action, Fall 2020
Consumer Action also maintains a Library of Publications in Spanish (en Español).
Arizonans for Responsible Lending
The Center for Economic Integrity maintains a consumer coalition website with regularly updated information on issues such as Earned Wage Advance (i.e. worker payday loans), Car Title Lending, and Rent-A-Bank Lending; blog posts with links to articles in the media; Letters sent; and updates on bills at the state legislature as they progress – see below. In recent years we have seen the push for deregulation continuing.
Maintain Arizona’s Small Loan Law
- Support Arizona’s 36% or LESS interest rate cap for all small loans
- Require Auto Title Lending to comply with 36% APR limits
- Resist special interests and corporate efforts to obtain special exemptions to the current law
- Monitor and report corporate actions intended to circumvent the law
- Encourage innovative approaches to meet consumer’s cash flow & savings needs
- Research current and emerging trends within the informal economy
Arizona Voters Overwhelmingly Support 36% Rate Cap
Update on 2024 – Fifty-sixth Arizona State Legislature, Second Regular Session
Update on 2023 – Fifty-sixth Arizona State Legislature, First Regular Session
Update on 2022 – Fifty-fifth Arizona State Legislature, Second Regular Session
Update on 2021 – Fifty-fifth Arizona State Legislature, First Regular Session
Update on 2020 – Fifty-fourth Arizona State Legislature, Second Regular Session
Update on 2019 – Fifty-fourth Arizona State Legislature, First Regular Session
Update on 2018 – Fifty-third Arizona State Legislature
The Arizonans’ for Responsible Lending coalition was extremely active during the 2017-18 state legislative session. The public policy landscape with regards to consumer issues has changed drastically since the most recent presidential election. Hard-won consumer protections to reign in abusive and deceptive payday and title lending practices have regressed with new federal appointees to the Consumer Financial Protection Bureau. Lobbyists for the predatory lending industries have been emboldened by the changes.
At the state level, there has been a shift from consumer protections to more industry friendly deregulation. ARL was able to stop several deregulation bills from obtaining a hearing but were unsuccessful for the first time since 2008, in stopping a potentially devastating new law, “Arizona Regulatory Sandbox Program” (RSP) created by passage of HB 2434 this year. The RSP authorizes financial services companies subject to licensing and supervision to “test” innovative products, services, and business methods for two years without a license or regulatory supervision or coverage by all consumer protection laws in a program overseen by the Office of Attorney General.
The ARL coalition sent a letter to the AZ Attorney General outlining concerns and offering up suggestions to better protect consumers prior to the law going into effect. Predatory payday lending remains illegal in Arizona thanks to the hard work of this coalition. Predatory auto title and other high-cost installment lending continue to plague vulnerable consumers in spite of several bills that were introduced last session to limit these predatory lending practices.
What States Can Do to Help Consumers
Debt Collection
As the Federal Trade Commission has noted [1], the current system of debt collection fails to provide adequate protection for consumers, and significant reforms are necessary to ensure that the system is fair and efficient. The FTC has called on states to pass laws that better protect consumers in the debt collection process, including:
- adopting measures to make it more likely that consumers receive adequate notice so that they will defend themselves in litigation;
- requiring collectors to include more information about the debt in their complaints; and
- taking steps to address lawsuits on time-barred debts
Every state has a set of exemption laws, intended to prevent creditors from pushing debtors and their families into destitution. Exemption laws preserve basic items of property from seizure by creditors, so that debtors can to continue to work productively and support themselves and their families. These laws are intended to protect at least subsistence wages and essential property from seizure by creditors. A report by the NCLC [2,3] surveys the exemption laws of the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands. Despite the importance of state exemption laws, this report finds that not one state meets five basic standards.
[1] Repairing a Broken System: Protecting Consumers in Debt Collection Litigation and Arbitration (FTC, July 2010)
[2] No Fresh Start in 2019: How States Still Let Debt Collectors Push Families into Poverty (NCLC, November 2019)
[3] No Fresh Start: How States Let Debt Collectors Push Families Into Poverty (NCLC, October 2013)
Consumer Financial Protection Bureau
CFPB Comment Period Closed Oct 7th, 2016
Thousands of people from across the country-veterans, seniors, single parents, and families struggling to make ends meet-shared their personal stories of what it’s like living in a never-ending debt trap and facing serious financial harm, such as losing cars and being unable to pay rent and other essential living expenses.
“CFPB has engaged in a long and thorough process to research these industries and evaluate potential rulemaking approaches. Now more than ever they should put forth a strong rule that is free of loopholes and can stop the debt trap and provide a level playing field for lenders across the board.”
— Mike Calhoun
The Consumer Financial Protection Bureau (CFPB) is a federal regulatory agency whose primary responsibility is to make sure banks, lenders and other financial institutions treat YOU the consumer fairly.
The CFPB implements and enforces federal consumer financial laws to ensure that all consumers have access to markets for consumer financial products and services that are fair, transparent, and competitive.
CEI Comment Letter Submitted to the CFPB Sep 27, 2016
Initial analysis of the CFPB rule on payday and auto title lending