How to file a complaint against a payday lender

By ,
Ask a Lender
May 23, 2017 | Updated September 25, 2017

Key Points

CFPB: Main complaints about payday lenders

  • Unexpected fees or interest.
  • Unauthorized or incorrect charges to a bank account.
  • Payments not being credited to the loan.
  • Problems contacting the lender.
  • Receiving a loan you did not apply for.
  • Not receiving money after you applied for a loan.

Payday loans have a less-than-stellar reputation. This is due, in part, to their high interest rates, as well as to some payday lenders’ reportedly aggressive debt collection practices.

Payday loans — also known as cash advance, payday advance, small-dollar or salary loans, among other names — are for a small amount of money, typically $500 or less, which are usually due in full by the borrower’s next payday. Such loans often give the lender access to the borrower’s bank account.

While payday loans can be a convenient way to get cash quickly, many people are concerned about the high cost of payday loans.

“Unfortunately, some payday lending operations have employed deception and other illegal conduct to take advantage of financially distressed consumers seeking these loans,” the Federal Trade Commission says on its website.

While payday loans have their place, and many payday lenders ensure they operate fairly and in compliance with federal regulations, there may come a time when you need to file a complaint against a lender that has acted unscrupulously.

Consumers made 168,102 complaints to the Consumer Financial Protection Bureau (CFPB) in 2015. Of those, 1,585 — around 0.94 percent — were about payday lenders. An additional 2,096 complaints — about 1.2 percent — were about attempts to collect payday-loan debt. About 2.14 percent of all complaints to the CFPB in 2015 were related to payday lenders.

If you experience a problem with a payday lender, the CFPB has a simple process for filing complaints.

Filing a complaint

According to the CFPB, the reasons for submitting a complaint about a lender may include:

  • Unexpected fees or interest;
  • Unauthorized or incorrect charges to a bank account;
  • Payments not being credited to the loan;
  • Problems contacting the lender;
  • Receiving a loan you did not apply for; and
  • Not receiving money after you applied for a loan.

After you file a complaint against a lender, the CFPB will share the information you’ve provided with the lending company so that it can identify and address the issue.

The company has 15 days to respond both to the complainant, and to the CFPB. Although the CFPB aims to close complaints in 15 days, companies may have up to 60 days to do so, although there are exceptions for complicated situations.

You will be able to review the company’s response, and will have an additional 60 days to give the CFPB feedback on the complaint process. If the CFPB finds that a different agency is better suited to address the complaint, it will forward the complaint to the new agency and let you know.

The CFPB also shares the information in the complaint with state and federal agencies that oversee financial products and services. The CFPB also publishes a database of complaint information — excluding personal information — so the public knows what kinds of complaints the agency receives, and how companies respond to them.

Tell your story

If you prefer not to file a complaint with the CFPB, you can opt instead to “tell your story,” as the CFPB puts it.

Sharing your experience with a payday lender “will help inform how we work to protect consumers to create a fairer marketplace,” the CFPB says.

The online form allows consumers to share a narrative with the agency. Borrowers may opt to grant permission for the agency to share the story with the public or the media “so that others may learn” from the borrower’s experience. The agency states that it will take steps to remove any personal information from the narrative.

Uncertain Future

The future of payday loans in the U.S. is uncertain after the CFPB announced in October 2017 new regulations that will make it more difficult for many people to obtain the loans. The regulations require payday lenders to apply a repayment test to ensure borrowers can pay back a loan while still being able to meet basic living expenses. Borrowers would be able to take out a maximum of three payday loans in quick succession. Loans under $500 wouldn't be subject to the repayment test if the loan is structured to allow borrowers to quickly pay off the debt — such as by allowing for payments to go directly toward the principal balance.

The regulations go into effect in mid-2019. Republicans generally oppose the bill. Congress has 60 days to nullify the regulations under the Congressional Review Act.

Compare Personal Loan Lenders