Andrew Barovick is a respected New York law practitioner who guides Alegria & Barovick, LLP and undertakes plaintiff’s medical malpractice and product liability cases. Andrew Barovick has a longstanding interest in consumer protection laws that provide American citizens with assurance of product safety and fairness in transactional matters.
One area that has been addressed by the federal government recently is payday loans, which often involves lending money with exorbitant interest rates. Borrowed against future paychecks, these loans are designed to be paid back within two weeks, with significant fees and interest payments tacked on. On average, the person who borrows $500 will have to pay an effective rate of nearly 400 percent, or $75, for a two-week loan.
While mainstream banks are typically barred from these sorts of loans, and a significant number of states have enacted rate caps, more than 30 states allow a thriving, little-regulated payday loan industry that encompasses more than 16,000 online and storefront operations.
New Consumer Financial Protection Bureau rules aim to mandate customer income verification and repayment ability. They also will limit the number of times that existing loans can be rolled into new ones at even higher interest rates. These regulations are critical in providing consumers with financial protection against spirals of uncontrollable debt.