Payday Loan Industry Under Scrutiny

Payday loans, also known as paycheck advance, are under considerable amount of scrutiny by State and Federal legislators as many lenders continue to either close their stores or in case of online paycheck advance lenders stop online lending to those residents of that State.

Latest development, as result of financial reform bill, is creation of a new federal B=bureau called Consumer Financial Protection Bureau of CFPB. This federal agency will be responsible for making laws and regulations in regards with the payday industry but it is not up to CFPB agency to enforce it. In fact CFPB lacks legal enforcement authority so it will be up to the States to enforce the rules and regulations made by CFPB.

Some questions how effect CFPB considering the fact that it will not be able to enforce its regulations and there are States like State of Texas where they often want to act as independent as possible where payday loans are permissible with minimal regulations however there are those who believe that leaving it up to the State makes much more sense as States are the one that know their own conditions better.

Bottom line is that payday lending is going under rapid changes are more regulations such as loan cap and fee caps being introduced leaving the whole industry under scrutiny.