The unfair and inaccurate attacks on the payday lending industry are now reaching new heights.  On September 1, 2022, the Better Business Bureau (BBB) released an investigative report lumping all payday lending operations together as scam artists who violate the law to take advantage of people and make money.  While consumers should be wary of bad actors in every industry and learn how to distinguish them from legitimate companies, the BBB report is doing a disservice by failing to provide such information.  The comments made certainly do not adhere to the BBB’s mission to call out and address “substandard marketplace behavior” as “the leader in advancing marketplace trust.”

 Payday loans tend to be short-term, small dollar loans that help Americans pay bills, some of which are needed for emergency purposes, that are due between their paychecks.  These loans typically are for small amounts of money, have a short-term repayment plan, and have a higher interest rate than conventional loans.  According to Mississippi State University Professor of Finance Thomas Miller, Jr., at, who testified before the Senate Banking Committee on July 29, 2021, “Americans who rely on nonbank supplied small dollar loans are not wealthy, and many live from uncertain paycheck to uncertain paycheck.” Small dollar payday loans help these consumers make ends meet and improves their credit rating. 

Despite the benefits that small-dollar payday loans provide to consumers, legislators and regulators have been antagonistic to the industry.  Sen. Elizabeth Warren (D-Mass.) has long been hostile toward payday lenders and suggested that the “problem” could be solved by allowing the U.S. Postal Service to get into the banking business.  For this idea, Citizens Against Government Waste (CAGW) named her the February 2014 Porker of the Month.  In the Postal Service Reform Act of 2022, which was signed into law on April 6, 2022, Congress wisely kept the USPS from getting into postal banking which Sen. Warren continues to promote.

In 2017, the Consumer Financial Protection Bureau (CFPB) finalized a rule that the agency claimed would end “payday debt traps” by taking away payday lenders’ ability to enforce repayment by cutting off repeat debit attempts.  In May 2019, Citizens Against Government Waste sent a letter to CFPB Director Kathy Kraninger urging the agency to rescind that rule, which would deem offering a payday loan without determining a borrowers’ ability to repay as an “unfair” and “abusive” practice. 

 Among other recommendations, the BBB report suggests imposing an interest rate cap of 36 percent as has already been done in several states (and to which CAGW has objected), and enacting legislation that would allow the Federal Trade Commission (FTC) to recover monetary damages in federal court.  If Congress follows the BBB’s recommendations, it would empower FTC Chair Lina Khan to continue her mission to wield power over every possible industry. 

The payday lending industry allows consumers to make ends meet and build credit, especially lower-income Americans.  Despite the benefit they provide, several Democrats in Congress, federal agencies, and now the BBB, are assaulting an entire industry by implying that legitimate payday lending companies are equivalent to the scam artists that take advantage of low-income individuals and households by illegally obtaining information about these Americans and defrauding them.  Rather than attacking legitimate payday lenders, the states and Congress should ignore the BBB’s report and focus on identifying and prosecuting scammers.