PHOENIX, June 1, 2016 /PRNewswire/ -- Today, the Arizona Financial Choice Association denounced the recent announcement by the Consumer Financial Protection Bureau (CFPB) of its proposed short-term credit rule, which would restrict access to small-dollar credit for thousands of Arizonans and eliminate the ability of Arizona to develop its own small-dollar or installment loan regulations.
"This week's announcement is a blow to Arizonans who favor free markets and the ability to make their own financial decisions," said Melissa DeLaney, a spokeswoman for the Arizona Financial Choice Association. "This decision will force consumers into higher cost alternatives like bank overdrafts and late fees, perhaps even to unlicensed and unregulated lenders that operate in the shadows and will inevitably prosper under this new proposal."
Despite the CFPB's claims, its rule would effectively pre-empt in whole or part Arizona consumer lending and title lending statutes. These laws were developed specifically to address the needs of customers in Arizona, unlike the untested one-size-fits-all regulations proposed by the federal CFPB.
State regulations, such as those in Arizona, already successfully balance access to short-term credit with consumer protections. However, the overbearing regulations proposed by the CFPB would leave states unable to develop their own regulations for small-dollar or installment loans in the future.
In addition to pre-empting existing Arizona regulations, the CFPB's rule would harm the thousands of Arizonans who use small-dollar loans responsibly to manage unexpected and periodic financial difficulties. By limiting access to credit, many Arizonans would be unable to stave off financial emergencies or shortfalls.
According to a recent report by the Federal Reserve, 46 percent of Americans cannot pay for an unexpected $400 expense.
About the Arizona Financial Choice Association
The Arizona Financial Choice Association is an organization made up of national, regional and Arizona-based financial services companies including: Community Choice Financial, Inc.; Axcess Financial Services, Inc.; Speedy Cash Holdings Corp; Check into Cash, Inc.; PLS Financial, Inc.; and Checkmate. The companies operate within Arizona and 34 other states as well as overseas. They also finance title loans, conduct check cashing, issue prepaid debit cards, have bill pay services, and in states where allowed, offer other small loan products and payday loans. AFCA member companies currently represent more than 150 locations and 1,700 employees in Arizona.
Melissa M. DeLaney
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SOURCE Arizona Financial Choice Association