A fairness-in-lending advocacy group is targeting Advance America CEO J. Patrick O’Shaughnessy as part of a name-and-shame campaign directed at top financial industry executives. Of the six executives profiled by Americans for Payday Lending Reform so far, their latest target has a unique credential: He's also a member of the Consumer Financial Protection Bureau's consumer advisory board.
The CFPB is considering whether to draw up new regulations for an industry that advocates say traps consumers in debt by charging exorbitant interest rates.
“It's hard to imagine how a someone who has made a career benefitting from high-interest lending will help usher in needed reforms if he thinks it will undercut his profit margin,” wrote Liz Ryan Murray, policy director of the left-leaning National People’s Action, which is producing the "Preyday Lenders" campaign. “And yet that seems to be exactly what the CFPB has asked him to do.”
Agency chief Richard Cordray earlier this year appointed O’Shaughnessy to a three-year term on the 31-member advisory board –which includes a mix of public interest attorneys, consumer advocates, academics, and executives representing non-profits, and the financial services industry, among others.
O’Shaughnessy, a former investment banker, heads one of the largest payday lending operations in the U.S., and is the board chair for Community Financial Services Association of America, an industry trade group.
A spokesperson for the association said the National People’s Action campaign is “highly questionable,” in response to a request for comment from International Business Times.
Jamie Fulmer, a spokesperson for Advance America, told IBTimes that O’Shaughnessy brings “the invaluable—but often overlooked—perspectives of our customers” to his role on the CFPB's advisory board.
“His insights into the consumer lending marketplace will help the bureau and others better understand and ultimately serve consumers’ best interests,” Fulmer wrote in an emailed response. “As the marketplace evolves, and consumers turn to new and increasingly complex products and services to meet their financial needs, regulators must seek to keep pace.”
In response to questions about the campaign's criticisms, the CFPB told IBTimes in an emailed statement:
“The Consumer Advisory Board members are a diverse group of experts, community leaders, and advocates that are selected through a public process. We strive to include perspectives from a wide range of viewpoints and constituencies. The board is a source of outside expertise for the Bureau and helps inform us about emerging marketplace trends and practices, especially those that impact underserved communities.”
A study by the CFPB released in March found that in more than 80 percent of payday loans, consumers have to renew the loan, or take out another loan, within 14 days. The report also determined that “monthly borrowers are likely to stay in debt for 11 months or longer.”
In July, the regulator issued a $10 million enforcement action against the payday lender ACE Cash Express over alleged illegal debt collection practices. Last November, the CFPB reached a $19 million settlement, which also involved debt collection practices, with Cash America International.