NCUA issued its recent letter to federal credit unions about permissible payday lending alternatives after it received a January letter from an interest group.
The National Consumer Law Center sent the agency a 20-page letter in January alleging that payday lending programs from various state and federal credit unions violated the Federal Credit Union Act, other federal laws and the NCUA's regulations. The group followed up its letter with a meeting with the agency, according to Lauren Saunders, NCLC managing attorney.
"Many credit unions have developed responsible alternatives to payday lending that have significantly lower rates, longer repayment periods, and other features for those in need of short term credit," the NCLC wrote. "Yet the accomplishments of these credit unions and the reputation of the industry risk being tarred by a growing number of credit union payday loans that differ little or not at all from predatory, destructive traditional payday products."
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