For instance, loans under $500 could be issued without assessing a borrower's ability to repay, however there are various conditions geared toward insuring that a consumer cannot get stuck in debt. The CFPB has suggested a few alternatives that would help consumers get access to cash when they need it, but in a safer manner. “At a time when consumers are demanding choices for flexible, responsible credit products, we’re very concerned that this initial proposal could severely restrict their options,' said Lisa McGreevy, CEO of the Online Lenders Alliance. 'This proposal is complex and we are concerned that it will unnecessarily confuse consumers.' These rules, which have long been anticipated, are strongly opposed by lenders who argue that people depend on payday loans in an emergency when they have precious few other options. Under the proposed rules, lenders would have to give written notice before attempting to collect a loan payment, and could try only twice before having to get new authorization from the borrower.

Lenders also often have access to a borrower's bank account and can make repeated attempts to withdraw funds, triggering bank fees and even the loss of a bank account. 'Where lenders can succeed by setting up borrowers to fail, something needs to change,' said Cordray. The rules would restrict the number of times someone can take out or refinance payday loans within a certain amount of time. The $38.5 billion payday loan industry counts on borrowers to take out loan after loan, which is something regulators and consumer advocates have come out hard against. “At the heart of this proposed rule is the reasonable and widely accepted idea that payday and car title loans should be made based on the borrower’s actual ability to repay – while still meeting other basic living expenses,' said Mike Calhoun, President of the Center for Responsible Lending.

The rules takes square aim at the tendency for borrowers to get stuck in a debt trap by suggesting an underwriting process.

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