WASHINGTON — U.S. officials are taking their first crack at writing rules for payday loans, responding to concerns that the short-term, high-rate debt can trap consumers in a cycle of borrowing they can’t afford.
The Consumer Financial Protection Bureau is exploring ways to require payday lenders to make sure customers can pay back their loans, according to people familiar with the matter.
The bureau is seeking to establish the first federal regulations for the $46 billion industry, which has historically been overseen by states.
Payday loans are typically less than $500. Borrowers provide a lender with a personal check dated for the next payday or permission to debit their bank accounts two weeks later, with a finance charge added.