Rep. Frank Pallone, Jr. (D-NJ) is asking Consumer Financial Protection Bureau (CFPB) Acting Director Mick Mulvaney to investigate the widespread submission of fake public comments submitted about payday lending rule.
Citing a recent report in the Wall Street Journal, Pallone said millions of fraudulent comments were submitted to federal agencies, including the CFPB, about the payday loan rule. Pallone said as many as 40 percent of the comments submitted to CFPB in opposition to the rule appear to be fake, using stolen or obsolete email accounts.
Further, the false comments opposing the safeguards in the payday loan rule were submitted under the names of victims of predatory lending practices, including one person who owed more than $8,000 on a $323 payday loan, Pallone said, citing the Journal.
The Journal article said many of the fake comments originated from a platform and web address used by the Community Financial Services Association of America (CFSA), a trade group association of payday lenders.
Payday loans, also called small-dollar loans, provide quick access to cash in exchange for full payment plus variable interest rates. Many borrowers use payday loans as a quick fix when ordinary living expenses get too high—the average payday loan borrower makes about $30,000 a year with a credit score in the low 500s.
The CFPB rule, which was set to take effect Jan. 16, states that lenders are restricted from making loans that borrowers are unable to pay back with accrued interest. The rule also limits the number of consecutive loans that can be taken and requires longer repayment timelines. However, the CFPB decided to delay implementation of the rule. During that time, the CFPB will review the rule.
“I am writing to request that you investigate the widespread submission of fake public comments to the Consumer Financial Protection Bureau rulemaking to curb predatory payday lending practices,” Pallone wrote in a letter to Mulvaney. “I also urge you to take immediate steps to ensure that such interference in the comment process is prevented going forward.”
Pallone has requested a formal inquiry by the Department of Justice (DOJ) and the Federal Bureau of Investigation (FBI) to determine whether the submission of fraudulent comments violated federal law.
“As you work to determine who was involved and to hold them accountable, you must also adopt procedures to ensure that such foul play cannot continue. The public comment process simply should not be undermined in this way,” Pallone wrote.