Payday loans are a notorious debt trap. They often prey on consumers who are vulnerable and desperate, then send them into a downward spiral of debt. Here are the issues customers complain about most, along with the five worst offenders.
Using data from the Consumer Financial Protection Bureau, David Chen of Millennial Personal Finance put together a list of the top overall consumer complaints about payday loans, along with the lenders who have the most complaints. Chen explains his methodology:
Only the top 25 payday lending companies are included from a list of over 200 companies, but these 25 companies account for over 70% of the complaints filed about payday loans in 2016…Data was pulled from the Consumer Complaint Database from the CFPB on January 6th, 2017. This data includes all complaints made to the CFPB about “payday loan[s]” during the entirety of 2016. In total, 1,539 complaints were analyzed. All data was sorted by companies and complaint type, respectively seen in the published tables.
Unsurprisingly, the most common complaint was that the lender “charged fees or interest I didn’t expect.” Considering payday loan rates can be as high as 780% and they don’t exactly make this clear, it’s not surprising that consumers wouldn’t expect these fees (and it’s an important reminder to always read and analyze the fine print of any financial agreement). However, there were a few other complaints that were concerning:
- Can’t contact lender
- Received a loan I didn’t apply for
- Can’t stop charges to bank account
- Payment to account not credited
The top five lenders with the most complaints:
- Big Picture Loans, LLC
- ACE Cash Express Inc.
- Enova International, Inc.
- Speedy Cash Holdings
- CNG Financial Corporation
As terrible as they are, payday loans are a legal business practice so this is a good reminder that it’s up to the consumer to do the research and read the fine print. It’s also a heads up to anyone considering a payday loan: make sure you know what you’re getting into because they’re not exactly designed to work in your favor. For more detail, head to Chen’s full post at the link below.
CFPB Payday Loan Complaints – Data Analysis | Millennial Personal Finance
Photo by Kevin Dooley