Advocacy group and payday loans

Consumers often feel that no one is looking out for them, but a consumer advocacy group belied this belief by spending more than $100,000 in the first quarter of this year to fight against what they labeled predatory payday loans and credit card fees.

The Center for Responsible Lending spent $130,000 on lobbying efforts to persuade the federal government to pass stricter regulations against the credit card and payday lending industries. The advocacy group, which is based in Durham, NC, also lobbied the federal government regarding the creation of a new consumer financial protection agency.

The advocacy group didn’t stop with Congress, either, according to the Associated Press story. The Center for Responsible Lending lobbied the U.S. Treasury Department, the Federal Reserve, and the Federal Deposit Insurance Corp.

That $130,000 seems like a lot of money spent to combat payday loans and credit card fees, but it’s actually less than the $180,000 that the group spent in the first quarter. It’s lower, too, than the $175,000 that it spend in the fourth quarter of last year.

It’s little surprise, though, that the group has spent as much as it has. Both credit card fees and payday loans receive regular criticism from consumer advocates and legislators. Critics say that payday lenders charge interest rates that can sometimes be as high as 400 percent, and that credit card companies often artfully mask their credit card fees until unwary cardholders accidentally rack them up.

Critics say that payday lenders, especially, earn their livings by preying on consumers who are desperate enough that they’re willing to overlook the high interest rates and fees that they’re paying for these short-term loans.

Of course, there’s always another side to every argument. In this case, supporters of payday loans say that they are necessary products. Some consumers need short-term infusions of cash. By taking out payday loans, they’re able to keep their lights on, their phone service active, or their car’s fuel tank filled.

The debate over both payday loans and credit card fees won’t be going away anytime soon. In fact, legislators across the country are either drafting or passing new legislation designed to curtail the interest rates and fees that payday lenders or credit card companies can charge. You can bet that for every Center for Responsible Lending, there’s an even more powerful lobbyist working for the credit card companies and payday lenders.

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