Direct Deposit Advance Products

Well, as if on cue–the OCC and FDIC have issued new guidance that places new restrictions on consumer access to Direct Deposit Advance products, which are functionally similar to payday lending but offered by banks. The main beneficiaries of new guidance, however, are not likely to be consumers, but payday lenders and bank overdraft programs, as consumers who had used these products shift to less-preferred substitutes. This is exactly the dynamic that I and my co-author Robert Clarke (former Comptroller of the Currency) describe in our new working paper¬†describing the market competition between payday lending, direct deposit advance products, and overdraft protection.

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