In the world of consumer finance, they are chameleons: payday lenders that alter their practices and shift their products ever so slightly to work around state laws aimed at stamping out short-term loans that can come with interest rates exceeding 300 percent.
Such maneuvers by the roughly $46 billion payday loan industry, state regulators say, have frustrated their efforts to protect consumers.
Now, for the first time, a federal regulator is entering the fray, drafting regulations that could sharply reduce the number of unaffordable loans that lenders can make.
The Consumer Financial Protection Bureau, created after the 2008 financial crisis, will soon release the first draft of federal regulations to govern a wide range of short-term loans.
The rules are expected to address expensive credit backed by car titles and some installment loans that stretch longer than the traditional two-week payday loan, according to industry lawyers, consumer groups and government authorities briefed on the discussions who all spoke on the condition of anonymity because the deliberations are private. Certain installment loans, for example, with interest rates that exceed 36 percent, the people said, will most likely be covered by the rules.
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