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).

Media Headlines
Predatory Lending

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.

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

Update on 2019 – Fifty-fourth Arizona State Legislature
In the current legislative session we see the push for deregulation continuing. The Arizonans’ for Responsible Lending (ARL) consumer coalition website provides updates on bills as they progress, blog posts with links to articles in the media, and news on the Arizona Regulatory Sandbox (see 2018, below).

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 (a product series from the NCLC)

High-Cost Lending

The debt trap caused by short-term payday loans is well known. Payday and car title lenders are now increasingly moving into high-cost longer-term installment loans and lines of credit that can be a deeper and longer debt trap. Both short- and longer-term payday and title loans rely on high-interest rates and coercive tactics to ensure the lender’s ability to collect rather than the borrower’s ability to repay.
Specific State Solutions
High-Cost Loans

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
Specific State Solutions
Debt Collection
Family Financial Protection Act
Model Act for States 

Specific State Solutions
Medical Debt
Medical Debt Collection Act
Model Act for States

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.

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