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COVID-19 Impact Study on Small Dollar Lending

INTRODUCTION During the COVID-19 pandemic, the U.S. Treasury designated consumer access to small-dollar loans as an essential service. Licensed small-dollar lenders have largely remained operational to provide these essential services. Veritec Solutions has received several inquiries about how the current public health crisis has impacted transaction activity for payday loans (also known as short-term loans, small-dollar loans, deferred presentment loans, and deferred deposit loans). This report provides an overview of actual payday loan activity collected in real-time across multiple states since the onset of the pandemic in early 2020. Veritec Solutions is uniquely qualified to provide this summary report of […]

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CFPB Issues Final Rule on Small Dollar Lending

The Consumer Financial Protection Bureau (CFPB) issued a final rule on July 7, 2020 on small dollar lending. The final rule rescinds the mandatory underwriting provisions of the previous rule issued by the CFPB in 2017. According to the press release issued by the CFPB, rescinding the mandatory underwriting provisions of the 2017 rule “ensures that consumers have access to credit and competition in states that have decided to allow their residents to use such products, subject to state-law limitations.” The entire press release issued by the CFPB, along with a link to the final rule, can be accessed here. […]

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Why small dollar credit is not underwritten and why policy makers can’t force it.

When you compare traditional credit and short-term credit options, you will find very few things in common. Other than both having terms of payment, everything else is very different, including the regulations that control them. One of the most significant contrasts between the two types of credit is what is involved in the credit approval process. One financial CEO even joked of short-term credit approval requirements, “All you need is a pay stub, a bank account and a heartbeat.” This general lack of requirements and underwriting has brought waves of scrutiny in recent years about whether short-term, high cost loans […]

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International Jurisdictions looking at U.S. policy as small-dollar credit expands globally.

Small-dollar, short-term lending continues to expand globally as access to traditional consumer credit tightens. Developed countries are noticing rapid expansions in their small-dollar lending industries, and many are looking for solutions on how to regulate this sector of consumer finance. Consumer advocates are demanding government regulation and are driving associated regulatory bodies to identify best practices for regulating this sector. Many of these regulatory bodies are looking to the United States as one of the oldest and most diversely regulated small-dollar lending marketplaces. The U.S. has 37 states with legal, regulated small-dollar lending. These jurisdictions each have unique regulations and […]

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