Lenders of payday installment loans have oftentimes been charged with abusive lending practices. The increasing complaints filed against them by some consumers has led legislators to impose certain regulations and prohibitions on their practices. But despite the numerous regulations and state laws imposed to regulate the industry, there have not been any signs of drastic changes concerning the issues of alleged predatory lending of payday installment loan lenders.
For this reason, the payday loan industry is willing to spend millions to defeat consumer advocates and regulators who are pushing for more regulations. Payday installment loan lenders have spent millions on campaigns to improve their reputations and are ready to dig deeper in order to maintain their right to charge interest rates which are suitable for the nature of the loan they are offering.
In fact, the Citizens for Responsibility and Ethics in Washington (CREW) has found that many lenders of payday installment loans are donating money to in the candidacy of certain federal candidates in the coming election. Payday loan lenders, Political Action Committees (PACs), trade associations, and employees have contributed at least $1.32 million. This amount is equal to the amount contributed during the entire 2010 elections.
Political contributions serve only as a back up for many lenders to ensure that no further regulations will be enacted against their business. Many of the voters are consumers of payday installment loans and have supported the industry in their justification for expensive interest rates. These consumers believe that the short-term, high-interest payday installment loans benefit all cash-strapped people as reported by a Consumer Affairs Analysis, where there were 1.2 million comments received on various social media sites, such as Facebook and Twitter, showing support for the industry.
So, with this consumer support, can lenders be assured of freedom from regulations? In a 2011 survey, it was found that though lenders made contributions during the 2008 and 2010 elections, regulatory laws have not been overthrown. In fact, payday installment loan lenders are still waging a multi-million-dollar war to fight back against federal regulations in the industry but Congress has given the new Consumer Financial Protection Bureau (CFPB) authority to look over and regulate payday lenders.
Many lenders are now participating with CFPB about ways this government authority should be set up. They are now barring state legislators from writing new regulatory legislation, through the American Legislative Exchange Council or ALEC, which is a corporate group that advocates business-friendly regulations and bills.
Payday installment loan lenders are set to fight back additional regulations on their business. However, as long as there are unsatisfied consumers and meticulous critics out there, regulations on the lending practices will not disappear.