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Payday Loans

Consumer Bureau: Payday Loans a Trap

The U.S. consumer watchdog said high-cost, short-term loans often trap borrowers in a cycle of debt, warning in a report on Wednesday that new rules could be on the way for payday lenders and banks making similar loans.The Consumer Financial Protection Bureau said many lenders make small-dollar loans without looking into whether borrowers can afford to pay them back.The loans carry high fees and must be repaid quickly, which can lead consumers to take out multiple short-term loans, the bureau said.The 2010 Dodd-Frank law that created the consumer bureau allows it to prevent financial firms from offering unfair products or otherwise taking advantage of consumers."The potential consumer harm and the data gathered to date are persuasive that further attention is warranted to protect consumers," the bureau's report said."Based upon the facts uncovered through our ongoing work in this area, the CFPB expects to use its authorities to provide such protections."Consumer advocates have long sai...

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