Taking the Pain Out of Payday Loans

Consumer Reports has been working with the Consumer Financial Protection Bureau (CFPB) to protect people from the unfair practices of payday lenders. Their short-term loans, reported to be a $46 billion industry, offer quick access to money—generally $500 or less—and usually require repayment on a person’s next payday. But with unaffordable terms (such as interest rates of 300 percent or more), the loans can trap unsuspecting borrowers in a cycle of debt.

According to the CFPB, most consumers who take out payday loans can’t afford to repay them. What’s more, lenders often repeatedly attempt to debit the bank accounts of borrowers, which can cause overdraft fees. Half of borrowers from online payday lenders have been charged, on average, $185 in penalties per loan.

We’ve been pushing for tougher standards, and the CFPB recently proposed new rules for payday lenders as well as for those offering auto-title and other high-cost loans. Companies would have to make sure that borrowers are able to pay off their loans, factoring in a cushion so that they can also afford basic expenses. Lenders would be barred from repeatedly debiting bank accounts as well. After a public comment period, the CFPB will work to finalize those rules.

The proposal has great potential, but we’re concerned that it contains some loopholes and exemptions that may still permit risky lending practices.

“We look forward to working with the agency to finalize rules that require sensible underwriting, promote fair pricing, and add safeguards to prevent repeat borrowing,” says Suzanne Martindale, staff attorney for Consumers Union, our policy and mobilization arm. Go to ConsumerReports.org/payday for more on this issue.

Drug-Free Chicken on Your Pizza

Pizza Hut is the latest agent for change in the fight against the overuse of antibiotics. By April 1, 2017, it will no longer top pizza with chicken raised on antibiotics that are important in human medicine.

About half of the antibiotics produced globally are used to promote growth and prevent—not treat—disease in food animals. This overuse can cause resistant bacteria to spread through our environment. A new report from the United Kingdom states that by 2050, that could lead to the death of 10 million people per year.

We’re meeting with members of Congress about legislation to reduce antibiotic use in animals and have asked the White House to push for improved data on the use of the drugs on farms. We’ll keep you posted.

Making Our Ideas Heard

One idea can shape a life. But if you share that idea, you might be able to change many lives.

In June, representatives from Consumer Reports attended the Aspen Ideas Festival and spoke out on behalf of consumers on a number of critical issues in talks with industry and advocacy leaders.

At the top of the list was education debt, a pain point for millions of Americans. The broken system leaves families and young people with crushing debt while providing the industry with handsome profits. Marta L. Tellado, our president and CEO, led a discussion over lunch in which she reinforced that “we’re at a tipping point where the path to upward mobility is being questioned.” See our special report, "The Student Debt Crisis: Lives on Hold," at ConsumerReports.org/studentdebt.

The pharmaceutical industry is another one that’s built to offer relief but causes great pain. Lisa Gill, who leads our Best Buy Drugs initiative, took part in an in-depth discussion about high prices that put lifesaving medications out of reach for countless people. Go to ConsumerReports.org/highdrugprices to read our special report, "Is There a Cure for High Drug Prices?"

And Urvashi Rangan, Ph.D., our director of consumer safety and sustainability, moderated a panel on food labels that included executives from Campbell Soup and Whole Foods. She advocated for more transparency to better serve consumers who want to know more about what’s in their food. To read more about our efforts, go to ConsumersUnion.org/topic/food.

Editor's Note: This article also appeared in the October 2016 issue of Consumer Reports magazine.